“Money is on my mind, again” – Sam Smith
Rich people are told to think more about money than everyone else. This is probably why they are rich. Of course, we all want to be rich. Yet regular people, like you and me, we often think about money in a whole different way. So what is the right way to think about money?
Wrong Way To Think About Money
For one, the first thing we thing when it comes to money is about all the different things we would love to afford and all the different bills we have to pay. Essentially, we are thinking about all the different ways want to spend our money. This is a wrong way to think about money, as it starts from a position of scarcity.
In turn, the right way to think about money is by thinking different ways how we can earn money, such as how we can create new income sources, which rich people think about constantly.
Sources of New Income and How To Cultivate Them
Most of us, regular people, we think about new sources of income when we are looking for a new job opportunities or we for a next promotion. But J.O.B.s is an acronym for Just Over Broke, which implies that it is virtually impossible to get rich with jobs.
Jobs offer a comfortable and per-established road to money, which most people follow. In modern world, however, jobs are not secure. Its often hard to get hired for a position we want and it is easy to get fired from it. The salaries are often low or simply are fixed, meaning that we can’t earn more no mater how many hours we work. Still, there are jobs that pay 5 euro per hour and other that pay 5,000 euro per hour, meaning that a single hour of work can earn us a disproportional amount of money. So why don’t we chose a former option?
Furthermore, jobs often violate other rule of being rich, which states that often we want to have multiple sources of income. Thus, the idea for diversified income comes from financial market, whereas multiple income sources guaranty that we always have income if something goes wrong with one of our income sources.
But, more money is not always a solution for financial success, as sometimes we can do more with less.
Money and Short-Term vs. Long-Term Happiness
Some people think that rich people are greedy and that they don’t like share their wealth. But, this is exactly how they got rich. They don’t spend their money everywhere and instead learn to save.
In this sense, I often get asked why I don’t buy this or that, such as why I don’t go surfing. My standard reply is “because I like money in my pocket, and not in someone else’s pocket”. I guess, I would love to learn how to surf and I can definitely afford spending 20 euro. Still, there is a ton of other activities, like surfing, which I have opportunity to do everyday. If I do all these activities, I will be happy, but poor. By saving money today I may not be as happy in a short-term, but I will be happier in a long-term.
Indeed, we can pursuit short-term happiness indefinitely and we can spend an infinite amount of money on doing so, just to have this short-term happiness short lived. Even worst, we can get addicted to this short-term gratification. Thus, when we constantly overstimulate our mind we become addicted to that stimulation, and as soon as it becomes calm, we feel uncomfortable, almost as if we are not living our lives to their full potential, which leads us to seek more short-term stimulation. It is a vicious cycle.
Oppositely, investing into a long-term happiness, in a form of savings, removes most financial concerns we will ever face, which are always there if we don’t have money. Indeed, if an unexpected bill appears, which tend to do on a regular basis, a person with savings will easily pay that bill and continue a happy existence, while a person without saving will be rather unhappy. This is to say that money means happiness, specially when we don’t have money.
Of course, a moderation is the key. We need to have some short-term gratifications AND save for long-term happiness. We can even do better if we spend on short-term gratification mindfully.
Spending Money So It Is Conducive To Most Happiness
Like I said, surf means little to me as it is nothing thing to do, but it does not really contribute to my ultimate vision. Instead, there are range of activities I want to do which will be much more relevant, doing which will make much happier. This is to say that targeted spending are always more effective.
Thus, some things we can’t live without. We need some basic food, clothing, housing, and medicine. Everything else is superficial and unnecessary, except:
- Buying products that align with our long-term goals
I guess, there were no more points on this list. So, what are our long-term goals?
In a short-term, besides spending money, we may want to eat junk food. It will taste good, which will make us feel happy, while in a long-term it can be rather unhealthy, meaning that we can become rather unhappy by our short-term decisions. Oppositely, healthy food is often known to be much more tasteless and expensive, meaning that in a short-term it may make us unhappy. Still, in a long-term we will enjoy prosperous and healthy life with less disease, more energy, and more focus towards everything we want to do, which will make us happier.
Similarly, we may feel lazy and tired in a short-term to make sport. It may feel easier to just sit and procrastinate, rather than to do sport. But constant physical procrastination is rather unhealthy and it can bring us a lot of unhappiness in a long-term. Oppositely, doing sports on regular basis may be a difficult in terms of motivation and physical pain it causes to our body, which is just few reasons we don’t like to do sports on regular basis. Still, it is a healthy way of living, meaning that doing sports today can make our lives better tomorrow.
Thus, ideally, our goals should be long-term oriented. To know what these goals should be we need to know what we want to do and who we want to become is several years from now, working towards these goals today. This approach will put things into perspective, organizing our finances accordingly. This is because, when we know what exactly what we want, it becomes easier to see what we don’t want, which is everything else.
A Common Mistake We Do Regarding Long-Term Financial Happiness
But there is a really common mistake most of us do when it comes to long-term finances. Specifically, we often have very superficial and erroneous reason to buy big houses and expensive cars, which are considered for most people the most expensive purchases they will do in their lives.
Thus, most people think that buying these items is just a normal thing to do and they don’t bother with more details. But there are many reasons not to buy these items, such as:
- Unnecessary debt – Most people incur unnecessary debt to buy these items;
- No valuation, but only depreciation – In most cases, houses and cars don’t get more valuable with time, but rather less valuable, meaning that they are bad investments;
- Attachment to one place – Buying these items creates an anchor. It makes removes flexibility from our lives, it prevents us from traveling or being where we want when we want to;
- There are better alternatives – Instead of buying a car or a house, we can also rent these item. Indeed, we may now event want to use them every day, making our lives more flexible and more dynamic.
- Cost of opportunity – Instead of buying these 2 items, we could potentially buy a ton of other cheaper items, that can take our lives to a next level.
Thus, we need to be mindful about our invests, specially when it comes to buying a house or a car. We almost need to do a mathematical equation, weighting pros and cons of this decision and then only if the answer is indisputably to buy a property than we should do so.
Money, Happiness, and Your Life
There is no doubt that money is important in our lives, so we have to be serious about our finances if we want to be happy. This means that we always need to have financial considerations high in our minds and be a bit less impulsive than we may want to be. This, is turn, will contribute to a more successful and happy life.
Furthermore, if financial happiness is your goal than I recommend to also check out:
- My other posts about Happiness and Money;
- See Chapter 4 of my book “How to Act Normal”, as it is all about relationship between Happiness and Money;
- Stay in touch with my happiness blog via my FB page & Happiness Newsletter.
Stay rich and happy!