Friday, 12 August 2011

How Not to Let Money Be the Cause of Unhappiness

Money cannot buy you happiness, but it lets you choose your own form of misery.

One of my friends was fond of this quote, and that about summarizes the real role money plays in happiness. Beyond a certain point of basic needs and comfort, money really does not make a person happier or sadder. That "basic point of comfort" differs from person to person, but almost every single person has a point like that. Let me make this clear: people who have no money at all, mired in poverty, do need money, and it is essential to their happiness. We need to create wealth so that people can enjoy a reasonable standard of living. That's the fundamental reason we are in business, to create and share that wealth. In a country like India, there is a strong moral necessity to create wealth.

I am not talking about that here. I am talking about the case where you have already achieved a certain standard of comfortable living. What then? What role does money play?

I have observed, both in my own case, and those of many friends, that after that basic standard of living is achieved, happiness and money are no longer correlated. I am about as happy today as I was when I had my first job. Yes, I have more money now, but that hasn't made any difference one way or another in terms of happiness. This observation is broadly true - so many other people would confirm the essential truth of this.

Let's look at the ways we use money. First and foremost, we use it to acquire goods and services we really enjoy ourselves. You may really like a good dinner, you may enjoy a good movie, you may enjoy driving a car and so on. But no one really could enjoy 3 dinners a night or enjoy watching a movie every single day - you get my point; there is a point of saturation for every single thing. Given that we all are only granted 24 hours a day, whether we are rich or poor, there is naturally a point of saturation for the sum total of things we can experience in life, regardless of the money we have.
If we recognize that, we will focus on things that can truly add to happiness, or at least not let money cause us misery. How can money cause misery? First, when we fight about money with relatives or friends. That is the first and foremost cause of misery, by destroying relationships. The second cause of misery is envy - either envy we experience when other people splash money around us or the envy we create by splashing money around ourselves. This peer-pressure-driven-misery is extremely common and extremely powerful. If you find yourself spending money just to "keep up with someone" - may be a relative, may be a friend - then you are entering the peer-pressure-driven-misery phase of money. Fortunately, early on my parents taught us never to compare ourselves with anyone, but live according to our own means. We were the last house to get a TV set in our neighborhood but that never ever bothered us. We really never missed that TV set we didn't have. In fact, I guess I developed good habits like reading, directly because we did not have a TV set.

How do you avoid peer pressure? Avoid friends who spend money just to show off to their friends and thereby implicitly put pressure on you to spend. Have the kind of friends who teach their kids to donate some money on their birthdays, rather than friends who teach their kids how to spend lots and lots of money to show the entire neighborhood how important they are. There is no faster way to spoil a kid than to spoil them with money and people who don't realize that aren't really worth having as friends.

Now, if you are the kind who likes to show off money yourself, all I will say is this: please think of friends who are not in as fortunate a position as you. Keep in mind that while hard work plays an important role in how much money you make, luck also plays a role. Think of smart friends who didn't luck into the IT industry for example. Try to have some empathy for such friends. Is it really worth making your close friends or relatives feel bad by a vulgar display of wealth? Instead, can you help someone in your close circle who actually needs the money? They would be so grateful if you helped them silently and discreetly. You will build a tremendous reservoir of goodwill that will last a lot longer than the temporary satisfaction you achieve by a vulgar display of wealth.



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