Understanding “happiness” will fast track your financial freedom journey
There is a correlation and causality between happiness and financial freedom, but It might not be the first one that comes to your mind right now!
While we can all have different definitions and reasons for walking the path towards it, I think we all agree Financial Freedom is only a means to an end. It can be a proxy for security, wealth, freedom (living on your own terms), more options, satisfaction, social impact…you name it. Financial freedom will also demand personal development. You will become a new person, probably a wiser one.
SPOILER ALERT: In this article, I want to make the case that Financial Freedom will NOT secure your “happiness”. Still, happiness can play a fundamental role in achieving your financial freedom!
Let’s first cover Happiness. It is a tricky word. I personally think it is overused. It also casts a shadow over other important feelings and worthwhile goals: being in peace, being satisfied, being aligned with yourself, and being content.
What is worse, and it is the subject of today’s article, is that too often money, wealth and financial freedom – through their different representations (luxury, power, comfort, etc.) – are often seen as means to be happy. Call it bad marketing or popular belief, but the message is out there. At least, it is a popular school of thought. I have no intention of writing a moralistic article. I have also no intention of going into the opposite territory, naively stating that there is no need to look for money and wealth. Far from that, but I have to spell it out:
1) Financial freedom is based on your decisions and lifestyle: spend less than you earn, invest, and make sure your investments cover your financial needs. That’s it. There is a formula, there are tools, and there is a mindset and discipline to be mastered. As long as your investments cover the expenditures, you are free to spend. You can even go wild on a shopping extravaganza as long as your passive income (dividends and interests) can cover it. You just need to control yourself and your budget, because, bigger or small, you still have a budget to manage!
2) Financial freedom will provide you with freedom, security, satisfaction, a sense of achievement, comfort, and more opportunities, but not happiness. Forget about it. Happiness does not come from Financial Freedom. Why? We are entering into philosophical territories. Let me quote a few authors that I value:
- Happiness cannot be pursued. At least, not for Victor Frankl: “happiness must ensue, and it only does so as the unintended side-effect of one’s dedication to a cause greater than oneself”.
- Naval Ravikant shares another way to look at it: happiness is a default state. It should not be related to positive thoughts and positive actions, because any positive thought still brings its duality, its negative pair. Happiness is when nothing is missing. When you stop chasing the future or the past when you have an absence of desire for external things. You are therefore content. You are no longer a prisoner of your own ego.
- Author Marcy Shimoff treats the subject in her book, whose title covers it all: Happy for no reason.
- happiness is not the absence of suffering. Suffering occurs. The issue is how to respond to it, and how mitigate it. For instance, a certain level of suffering is caused by an untrained mind that feeds an underlying pain, making it even bigger. (Naval Harari).
- What makes for a happy life? Well-managed expectations, according to (98’s years old) Berkshire Hathaway Vice Chairman Charlie Munger.
- Having the financial resources needed to remove a source of misery or discomfort from your life can lead to the conditions required for you to pursue happiness, but it cannot deliver happiness itself. I realize that this is a counterintuitive idea, but I assure you that it is true for almost everyone. (The Rational Walk).
My take? Once you properly frame what is happiness to you and achieve a certain level of content, it will be much easier and faster for you to achieve and maintain financial freedom. Here is why:
A) if you are “happy”, inside out, as a person, in your default mode, if you see the glass half full or, even better, if you are always ready to refill it, you won’t need to tap into excessing spending or an unsustainable lifestyle to pursue or maintain happiness. As such, you won’t compromise your savings and investment goals. You will not jeopardize your financial freedom.
B) the moment it becomes clear you don’t need to spend a lot of money to be happy (only what is left after saving and investing), it will be easier to control your spending, investing as much as needed, and fast-tracking the accumulation of your nest egg. In this way, you will achieve financial freedom sooner than later, and you will be able to effortlessly sustain it.
On the other hand, unhappiness is a terrible drag on your wallet. An unhappy person, rich or poor, falls into the trap of spending to buy happiness, spending to keep himself busy trying to forget about his unhappiness. An unhappy person does not even have the focus, energy and discipline to plan for his present and future. He, therefore, feels to deserves everything at that exact moment. He needs to fill with stuff and activities the internal void. I always recall this witty thought: “most people spend more time planning for their vacations than for their lives”. As long as a person is unhappy and busy to fill the void, he misses out on the opportunity of focusing on what really matters to feel happy/satisfied /content. He also misses out on all the opportunities to build a healthy habit and lifestyle, control his expenditures, and invest for the future.
As such, along your path toward financial freedom, make sure to work on your mindset, and live an intentional lifestyle. If you are at peace with yourself, if you are able to be “happy” – in the form that suits you most – you will definitely be in a better position to achieve financial freedom.
Financial freedom will ultimately buy you the time – your most precious asset – to live your life on your own terms. But it is still up to you to make sure it will be a “happy” one.
Keep it real. Sweat Your Assets.
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