This blog is aimed at finding happiness in the context of money… but that def doesn’t mean that money is the root of all happiness!

The Need for Speed Theory of Spending

I like to drive. Sometimes fast. But my reaction time isn’t instant, my car and tires have their limits, and other cars and animals and the police don’t always want to cooperate.

What does speed have to do with spending?

Even though it’s sometimes fun to push the limit, some things are best enjoyed in moderation.

This blog is about happiness and money, but on a deeper level, it’s about how balancing money with all the other needs and wants of life leads to happiness. Pursuing only money will not lead to happiness, even if you find your riches. Repeat: Money itself will NOT provide you with happiness… unless your idea of a good time is sitting alone in a room counting rectangular pieces of paper and little metal coins.

A friend once told me about a study that found living a happy life only requires around $75,000 a year – enough to cover basic needs and a moderate lifestyle, plus a little.
I’m not here to sell you on ‘settling’ for a specific lifestyle, and on the other hand maybe 75k sounds like a lot to some of you. (And that number can be very different depending on your specific situation, and where you live – 75k in San Francisco won’t go very far, but in Eastern Kentucky you might have trouble spending it all).
I am here to help you figure out how your decisions and actions impact your life, happiness and bottom line.
If you want to spend $5 a day on Starbucks, great, as long as you realize that adds up to ~$1250 per year (if you only buy it on workdays). Is that trade-off worth it? That’s up to you.

The real point is everyone has some standard of living they’re used to, and hopefully you’re living it and staying within your means.
Most of us want to improve our lives and may want a few extras here and there. It’s true that if you don’t have enough money that life can feel very difficult. But once you make enough to cover your needs and a few of your wants, spending more and more will often lead to diminishing returns in your overall happiness.

And speed isn’t the only analogy here. Lots of our needs and wants in life are best enjoyed in moderation.

Food – hunger is not a comfortable feeling. But neither is being overstuffed.

Happiness is found in the middle

You eat until you’re somewhere between ‘not hungry anymore’ and ‘stomach exploding.’

Heat – if you go outside in 0 degree weather, coming inside and sitting in a tub of boiling water isn’t going to feel much better than it normally would – the guy who stayed in the 72 degree climate-controlled room the whole time will be much, much better off than the extremist.

The advantage of money, unlike most food (except Twinkies) and heat is that money can be saved for use at a later time.
So overspending is even worse than overeating. For example – did you ever finish off some left-overs just because they were about to expire or go bad? That doesn’t happen with money. You don’t ever say “I had $20 left in my pocket, so I spent it, cause it was going to be worthless tomorrow,” right?! You can save that $20 for next week or 50 years from now.

So I’m all for making extra money when you can, working hard, and definitely for saving, saving, saving, but as far as consumption goes – establish a lifestyle that’s comfortable for you, within your means, and stick to it. Spending more won’t make you that much happier and you might come up with a better use for that money further down the road.

-DD

One more thing that is best consumed in moderation – sleep – too much is not good, too little is definitely not good, and you can’t save it up! Can you think of more examples?

Also check out Theory 1 – The Iceberg Theory of Income!

And Theory 3 – The Mountain Biking Theory of Happiness!