Many people have asked me a simple simple question – are rich people happier?
Plenty of people have extreme views on this. Some assume the answer must be yes, whilst others think the opposite.
The reality is quite complicated. Therefore, on this article, I will take some of my answers from Quora, where I am the most viewed writers on financial matters with over 236 million views, to explain my viewpoint.
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Table of Contents
Do only rich people say money can’t buy you happiness?
Two kinds of people tend to say that money can’t buy happiness:
- Those that have money and know it is partly true
- Those that don’t have money and want to engage in wishful thinking
I would make a few points:
- Money in isolation can’t make you happy. If you knew they were going to die tomorrow, you wouldn’t be happy, even with more money! Now that might be an extreme example, but many people don’t get happier with more money, because they make the wrong choices, like staying in a job they hate even though they no longer need the money
- If you go from poor to middle-class, you will see a big difference. Middle to high-income? Much less so. High-income to ultra high? Almost 0. It is about declining marginal utility:
- The economic crisis changed many economists minds. Most used to think happiness and money weren’t correlated above say 60k. But after 2009, there was a huge increase in people feeling anxious, even at higher income levels. Many changed their minds.
- Some of the studies are misleading as if you ask people “how happy are you on a scale of 1 to 10”, and you say 6, you can’t say 12/10 if your income doubles.
- If you use the money to give yourself more freedom, time and options, you are more likely to be happier. Use it to just consume more? Less likely. In other words if you hate your job, and you are 55, you will almost for sure be happier if you can quit your job because of private wealth.
So it is complicated. Money can make you happier, if you don’t have enough of it, or if you use it properly.
It can make you unhappier if you use it in the wrong way.
Do wealthy people have perfect lives? If not, why not?
Not 100% of them. Because many people use wealth in the wrong way. People can get happier from wealth if they use it to:
- Help others
- Relax more – get more sleep
- Buy better foods, exercise more and spend on their health
- Give money to others – charities and their kids. You feel great when you do that
- Give yourself security through passive income and so on
- Focus on what is important
- Say no to things you hate doing
Too many people, instead, use wealth to:
- Show off
- Stay on the treadmill
I saw this quote a few days ago;
Not 100% sure what she means, but i guess she is referring to people who use wealth to buy status symbols or houses. In London, NYC and many other places, countless people spend loads on houses. On paper they are wealthy. However, as the bills are expensive, they are quite poor – London has many of these 70–75–80 year old pensioners in $2M houses, but they struggle.
So getting wealthy doesn’t mean you are comfortable if you do it in the wrong way.
Why do people sacrifice their health for money?
It is human nature to want something we don’t have. When we are young and healthy, we don’t tend to care as much about health as we take it for granted.
People start to think about it more after 30, or when something happens to a family member or friend.
Likewise, when people have more money, they tend to think more about their health and time.
Yet despite all of that I would make one point. The evidence is clear – wealthier people live longer and healthier lives than the average person.
To quote directly from the researchers “Think the health disparities between rich and poor are simply a matter of unequal access to health care? Think again.
Health disparities exist in the United Kingdom and other countries with universal health coverage that should flatten differences. Disparities exist even in the upper brackets, with Americans who make $500,000 a year enjoying fewer health problems and longer lives than those making a still-hefty $100,000 a year.
“As you move up the socioeconomic status hierarchy, your health prospects continue to improve,” says psychologist Norman B. Anderson, PhD, a professor of health and social behavior at Harvard University’s School of Public Health and former director of the Office of Behavioral and Social Sciences Research at the NIH. “Why that happens is the $100,000 question.”
Don’t get me wrong, wealth doesn’t automatically secure health.
People can have accidents regardless of their wealth. Others can be born with problems.
Some foolish wealthy people do also sacrifice their health for money, rather than use some wealth to free up time and make healthier choices.
Yet the averages are pretty clear. This isn’t very politically correct and goes against wishful thinking which is that wealthier people sacrifice their lives and health for that money, but it is the truth.
An inconvenient truth but a truth nonetheless. In addition to that, let’s not forget another point.
Technology has changed the world. These days, outsourcing and leveraging technology has made it easier than before to earn more but work less hard.
Wealthy people have always leveraged workers and other people, but can now leverage technology as well.
So, I suspect in another twenty or thirty years, these results will be even more stark as more wealthy people will work out that they can make healthier choices without affecting income.
With that being said, it isn’t impossible to be poor or middle-income and very healthy.
I know plenty of people like that.
Yet it is much harder to make healthier choices.
Think back to when we were all students and most of us were living on a small income.
In that situation making healthy choices is difficult. It is even more difficult if you start to feel stressed about money.
Do you think rich people are always happy?
Depends. I think there are happy and unhappy ultra wealthy people. What I would say is that it its hard to be ultra-wealthy and maintain your privacy, and have trusting relationships with people.
In comparison, for people who `only` have 10M-50M, it is possible that nobody will know you, and they don’t have any money worries. If money is used as a mean to an end, as opposed to the end in itself, it can reduce anxiety.
As an example, if somebody hates their job, and works hard to become financial independent, and then after 10 years of trying, quits, it is hard to imagine they won’t be happier in retirement than working.
In comparison if you use money to impress people you don’t even like, you won’t be happier.
How can I finance happiness?
You can’t buy happiness in isolation with money. However, money can be used as a tool to reduce anxiety.
If money is used in the right way, it can help, as it can allow you to:
- Say no to things you don’t want to do
- Help you give money to others which does usually lead to more happiness
- Help your children
- Save you time
- Give you security and stability.
- Sometimes change the world for the better
But many people use money in the wrong way. For example, to:
- Impress others
Just look at these two men. One looks very happy and one always looks miserable:
The issue becomes that you get declining marginal utility. If you are poor and become middle-income, that usually (just on average) leads to a huge increase in happiness.
The reason is simple. You have less anxiety and few are happy struggling.
In comparison, once you have achieved middle-income status, it is less likely more consumption will lead to more happiness.
Will staying at a 5 star hotel really make you happier than 3 or 4 star? Will flying business class make you happier than economy? Probably not.
So it makes more sense to use the money to increase your wealth, as opposed to your consumption.
Should someone have to suffer to gain wealth?
It depends how you define suffer. You don’t need to suffer to the extent of sacrificing your health and happiness. There are alternative ways.
One thing I would say is that most people do want to get rich or at least wealthy, regardless of what they say.
Actions speak louder than words. Most of the people who criticise the rich, want to be rich themselves.
Many of the politicians posing as radicals now in the US, like AOC, started (and failed) to run their own businesses.
Therefore, it is a crowded and competitive space. So, there is no easy way to get wealthy, unless you inherit it.
Do you need to have an Einstein IQ to get wealthy? No. Do you need to work 20 hours a day? No.
They can help, especially if you want to get super-wealthy, but there are many people who work hard and are smart.
What you do have to do though, is be willing to do things that others aren’t willing to do.
Examples of this include
- Investing from a young age to compound. Many people do know that even small amounts invested over 50 years can really add up. Not many people are self-aware enough at 18, 20 or 22 to do that, and keep it up.
- Taking big, but calculated risks. That could mean emigrating for better opportunities, starting your own business or getting paid on results and not time.
- Not giving up too soon. Many people will be persistent and work hard. Fewer will keep going for 10–20 years if they aren’t succeeding.
- Doing things in business that make you feel uncomfortable but are profitable. In the 1970s, 1980s or even 1990s that might have been cold calling and door to door sales. These days, there are more efficient ways. Nevertheless, uncomfortable tactics aren’t as easy to copy for obvious reasons. Other people don’t want to take the pain for the gain.
- Sometimes just being yourself, and having some people hate you and others love you. Few people are willing to put themselves out there completely.
Remember making hard decisions might feel painful short-term, but it leads to a better and easier life long-term.
Whereas, taking no pain right now feels best short-term, but not long-term.
It’s a bit like going to the gym and taking your health seriously.
It certainly doesn’t feel as good as the opposite route short-term, but it pays off in the long-term.
There is a lot of politically correct advice saying things like “do what you love, follow your passions, and you will work harder and do better at it”.
There is some utility in that advice, but many people follow their passions.
So it still sometimes needs to be merged with something else – the ability to make sacrifices.
If you aren’t speaking about self-suffering, then other people, like random members of the public, don’t need to suffer due to your wealth building efforts.
Pained by financial indecision? Want to invest with Adam?
Adam is an internationally recognised author on financial matters, with over 236.2 million answers views on Quora.com and a widely sold book on Amazon
In the answers below I speak about:
- What do millionaires do that most people don’t? Is it actions, words, persistence or something else entirely?
- Would a person who already lives a comfortable live be any happier getting an inheritance big enough to retire?
- What are the pros and cons associated with thinking big?
- At what amount of wealth does it make sense to consider yourself wealthy? My definition might be quite different to the typical one!
- With so many wrong predictions, why do people still listen to Jim Cramer?
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