Being Rich Doesn't Guarantee Your Happiness

You Don't Have to Be Rich
by Jean Chatzky

(Page 3 of 3)

Sophie Tucker Was Wrong

I've been rich and I've been poor. Believe me, honey, rich is better. — Sophie Tucker

No disrespect intended to the Last of the Red Hot Mamas. Not only was Sophie Tucker (who also wrote a song called "I'm Living Alone and I Like It") a brilliant vaudevillian, she was an independent woman ahead of her time. But when she made this whopper of a statement, she was off her game.

Being rich doesn't guarantee your happiness. Being poor doesn't rob you of it.

Want proof? Meet Nancy and Lloyd. They're a two-career couple living outside Chicago. They have two beautiful daughters, live in a cozy house in a nicely wooded suburb, and, like many of us, pursued '90s style living with a vengeance.

Nancy spent two decades building up her corporate résumé and her salary. By the late '90s, as an investment banker and money manager, she was bringing in a decent six figures. As a consultant with a major accounting firm, Lloyd was doing the same. They took two vacations a year to fabulous places like Puerto Rico and Belize, had a sizable cushion in cash and stocks, no credit card debt, and knew that when college for their two girls rolled around, paying for it wouldn't be a problem.

In fact, they were so comfortable so secure that in late 1999, Nancy decided to quit banking and start her own business. She had developed a product, an educational toy, that she felt passionate about, and she wanted to see if she could make a go of it. Lloyd was as supportive as you could ask a spouse to be. They sat down together, ran the numbers, and figured that if she just broke even, they could more than manage on the salary he was earning. Even if she lost a little money, they'd be okay. Their portfolio was fat enough to get them through. Do it, Lloyd encouraged.

Their ambitions were right on target. But their timing couldn't have been worse. Just as Nancy geared up, the market shut down. She was ready to deal with a bit of a roller coaster, but not primed for companies slashing their budgets and having little to spend on an unproven product like hers. By the time 2001 rolled around, the market had decimated their fat portfolio. Then Lloyd lost his job. And when, more than a year later, he was still unable to find a new one, he settled in to work with Nancy in her business.

So how are they doing? In fact, they're doing pretty well. Much better than you'd probably imagine. For the first time in years, Nancy says, they both feel fulfilled by the work they're doing. They're spending more and better, more satisfying time with the kids. Their marriage is stronger than it's been in years because they're communicating more honestly.

All of which is not to say that making the transition to live on less hasn't been a bit of an adjustment. Nancy had little trouble cutting out vacations and dinners out for her and Lloyd. But when it came to weighing extras for their daughters things like the Irish dance lessons that are the highlight of their week, but that run $1,200 a year it was a hard call.

The surprising reward is that Nancy and Lloyd feel more in control of their spending than ever before. Things last longer. Fewer things are wasted. "When you have a big paycheck coming in every two or three weeks, very few people can tell you what they're spending. They figure, if they go a little over, it's okay because they have a paycheck coming in. That's how we were. But now, every transaction is well thought out. They're all pure," Nancy says. What's more important, she and Lloyd are "at peace" on issues they weren't able to confront before things like the importance of family, of friends, of feeling fulfilled by your work. "We're happier," she says.

It makes her wonder, "Do you have to be rich to be happy? I don't think so." Nancy shrugs. "I certainly haven't felt rich the last couple of years, and yet I've had more great moments in the last few years than I had in the previous twenty. Maybe it wasn't supposed to happen to me until I was old enough, experienced enough, to actually get it."

What We Know for Sure

It's an interesting and tough series of questions: Do you have to be rich to be happy? Would being richer make you happier? Does money buy happiness?

If you're like most people, you came up with some very strong gut answers.

You either thought, Of course I'd be happier if I was richer. If someone handed me $10,000 on a street corner, I'd be delighted. Wouldn't you?

Or you thought, Don't be ridiculous. I have a spouse (significant other) and kids I love. I have a challenging job that I really enjoy. I have great friends. Money can't buy any of these things.

In both cases, you'd be right. And you'd be wrong. Why? Because, it turns out, these are not simple yes or no questions. Rather, they are very complicated issues that some of the world's top economists, sociologists, and psychologists have spent decades studying. They've debated, tested, researched, butted heads, written papers, gotten those papers published, stomached the feedback, and started all over again. And at the end of the day, this is what we know for sure: Money can't buy the sort of happiness you and I are looking for.

To persons in a developing country, a little extra money absolutely can bring happiness. An extra $100 or $1,000 means they can eat every day. It means they can afford a warm place to sleep or an electric fan to drive off the heat. Money brings a huge happiness boost in these circumstances because it can provide basic comforts. Existing without these comforts means living with great discomfort, and that leads to unhappiness.

But in wealthier, developed countries like the United States, that extra $100 or $1,000 even $10,000 isn't going to vastly improve your life. Maybe it will buy you that new pair of shoes you saw in the window at Bloomingdale's. Maybe it will cover a plane ticket to somewhere warmer and sunnier than you happen to be right this minute. It might put a short-lived smile on your face. But will it buy you lasting happiness? Not a chance.

Once you've achieved life's basic comforts and necessities, more money doesn't necessarily buy more happiness. In part that's because we make poor choices about how to spend that extra $100 or $1,000. All too often, we spend $5 here and $10 there rather than do something significant or meaningful with it. But happiness is also a product of things that can't be bought. To people who live in the sort of places where electric fans long ago gave way to air conditioners, happiness is what your husband or wife said to you this morning. It's how you're getting along with your children. It's the pat on the back you get on the job.

Which is why on a national level, it's not surprising that the average happiness of people in the United States hasn't grown over the years, despite the fact that our cumulative wealth has shot up since World War II. The same has been proved in Great Britain. In fact, there's been shown to be very little relationship between income and happiness among most of the world's well-off countries.

Consider: Americans are twice as likely today to own cars, clothes dryers, and air conditioners as we were in the 1960s. In the '70s the average house was 1,700 square feet with three bedrooms and one and a half baths. Today our average home is more than 3,200 square feet. We have islands in the kitchen, televisions the size of small cars, and master bedroom suites you could land a plane in. Yet the divorce rate has doubled and teen suicide is on the rise.

But that doesn't mean money has no role at all in determining your happiness. It does.

Copyright © 2003 Jean Chatzky. All rights reserved. This excerpt, or any parts thereof, may not be reproduced without permission.

About the Author

Known to millions of readers and tv viewers, Jean Chatzky is the financial editor of NBC's Today show and also appears on CNBC. She is a regular columnist for Time, Money, and USA Weekend magazines. She is also the author of Pay It Down!