Money Myths Series

This article is part of the money myths series. In each article, we explore one money myth and how this money myth may be keeping you from more money.

Here are the other articles in the series:

• Money Myths: Are You a Slave to Money?
• Money Myths: The Rich Stole Their Riches
• Money Myths: Money Isn’t Important
• Money Myths: Money Tore My Family Apart
• Money Myths: All Debt Is Bad

Money Is Important

This is one of my favorite myths to bust it’s so counter-intuitive. It seems we do not or should not be dependent on material possessions to be happy. Yet, we are reliant on money to a great degree for happiness.

For example, if you lived in a rural area, with no public transportation or ride-sharing services available, would you be very happy without a vehicle to help you get around? Life would be difficult or at the very least inconvenient without the availability of mobility.

We need money to some degree to be happy. Some studies have pinpointed the optimal income for happiness to be from $60,000 to $75,000. Any more money doesn’t make a person happier. After all, don’t forget money’s purpose:

• It enables you to live comfortably. The more money you have, the more comfortable you are able to live.
• It is an amplifier of the good you can do in the world.
• It shortens the time for you to do that good.

Money buys you time, that most precious and nonrenewable of all resources. You may have a job you really hate right now. You may be at a point in your life where you are trying to figure what you really want. Having more money, even at a job you currently hate, helps make figuring out the meaning of your life easier. If you are able to work less for more money, this brings you some happiness. When you’re happier, you tend to want to work on things.

You ultimately reach a point in your life where things are good, you make just enough, perhaps more than enough money to be happy.

Money Helps Bring Happiness

Everyone talks about being financially free, retiring early, or having so much money they never have to work again.

What does this really mean? For every single person, financial freedom means something different. Certainly, retiring early is a form of financial freedom.

Have you ever thought about why you want to retire early?

For most people, it’s just something they were told when they first joined the workforce. They don’t give it much thought, to the point that they don’t do anything. In fact, 66% of people between the ages of 21 to 32 do not have anything saved up for retirement (National Institute on Retirement Security).

Guess what happens when they find themselves at 40 or 50 years of age, with nothing saved up for retirement? In a panic, they walk into a financial planner’s office, only to be told bad news: It’s too late for you to save enough to have the retirement you want. I can only help you make things a little more comfortable (rather than very comfortable, which is likely what you wanted in the first place).

The so-called “Golden Years” of retirement suddenly turns into something far less pleasant. In fact, most retirees worry about running out of money in retirement.

So if you want to be happy in your old age–or even now–start saving now. Remember that no one ever complains about saving too much money.

What Is Retirement?

The traditional definition of retirement is stopping work after about 30 or 40 years, leaving the workforce. Before 401(k)s became popular, the traditional model also included a pithy amount of social security.

This is a flawed and antiquated view of retirement, intended for a time when people only lived 5 or 10 years more after retiring. Now, we are living much longer than anyone ever thought possible. The expected life expectancy for men in my age group is currently at 85. In 10 or 20 years, I wouldn’t be surprised with advances in medicine and technology that men in my age group will live to a 100 or more.

Because we are living older and healthier lives, the retirement model as we know it for the past 50 or so years has become an antiquated idea. So if you haven’t been saving and investing into a 401(k), solely relying on social security to be there, you really need to change your mental models.

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Think about how much more happy you’ll be in retirement with a handsome nest egg. Do you still think you don’t need money to be happy?

So I challenge you to really think about what it means to retire. What would you do if you logged onto your bank account and found a legitimate couple of million dollars, courtesy of a mysterious benefactor? Another way to ask this question is what would you do if you won the lottery?

Now you’ve effectively begun retirement.

Would you continue to work? Quit your job? Pay off all your debts and take your family on a dream vacation? Buy your dream car? Dream home?

Did you notice how the word dream is recurring? It’s all about living a life filled with joy and happiness. In the end you don’t need money to be happy but you still need money to be happy. What a paradox!

For me, even if I won the lottery I would continue working, if on a part time basis, because I enjoy the industry I am in. How many other people can say that they are helping to make self-driving cars a reality? In this hypothetical situation, now that I have all the money in the world, I would spend more time working on my novels and blogging, simply because I enjoy doing those things. I would also travel more.

Basically, I would do everything I am doing now but do more of them. Having money enables me to do the things I love.

Happiness Is Money

We want happiness now, not in retirement. It’s too easy to think “some day, I’ll have what I want. Then I’ll be happy.”

Pursue that happiness now. Discover what makes you tick, what gets your juices flows, and your inner spirit excited. Then start doing all those things to the best of your ability.

I can tell you from personal experience that you can chase a magical retirement number for several years, obsessing and thinking about it constantly. Then, one day my calculators show that if I keep up what I’m doing that I’ll reach that number.

While this made me very happy, the happiness was short-lived and fleeting. After that, things seemed so anti-climatic. Now what do I do?

That’s why it’s important to take care of our finances as quickly as we can, then (or even in parallel) pursue what makes us happy or brings us more happiness into our lives with money no longer a primacy concern in our decision-making processes.

Then you can say you don’t need money to be happy, because you already have boatloads of money.