Money vs. Success
Money is often equated with success. Growing up, I definitely thought the two were synonymous. I thought that if I could just get the right job to have a certain amount of money, then I would be able to consider myself successful. As a child, I thought this number was $100,000. I somehow got it in my head that if I could achieve a six figure salary, that I would have ‘made it.’
Turns out, that number is almost absurdly easy to get to when you work in technology and it’s also simultaneously nowhere near as much money as I thought it was. At the same time, success has grown to be a nebulous term. On the one hand, we have the rise of the social media entrepreneur, of rhetoric surrounding the ‘grind’, and hustle culture - all of which equates money with success more than ever. But on the other hand, we have more people than ever questioning their own individual definition of success.
You’ve probably heard the old adage ‘money doesn’t buy happiness’. Except money does buy happiness. The caveat is that it only buys happiness up to a certain point. Income falls prey to the law of diminishing marginal utility.
The law of diminishing marginal utility is an economics principle that dictates that after a certain point, the addition of more of something, will yield less and less additional utility, or usefulness.
For example, let’s say you’re starving and you order a pizza. Eating that first slice of pizza is incredible. When you eat the second slice, it’s still good, but not as good because your appetite is starting to get satiated. When you eat the third, it’s just fine, and by the fourth, you might start feeling too full and bloated. The pizza has diminishing marginal utility for you since your base hunger changes with each slice.
This applies to income in the same way. If you’re dead broke, then jumping from $0 a year to $50,000 a year is going to feel like a huge improvement. All of a sudden, you can feed yourself regularly, afford consistent shelter, and maybe even a few extras. The difference in your life and your happiness is massive. Jumping from $50,000 to $100,000 will also feel pretty damn good. You have all your necessities covered so the utility isn’t quite as dramatic, but now you can afford some nicer things, and your happiness still increases by a decent margin. Jumping from $100,000 to $150,000 is like that third slice of pizza. It’s still nice, and you can afford even nicer things, but you are officially able to afford everything you need, and most of what you want, so the happiness and usefulness of that next $50K just isn’t as much.
Numerous studies have been done on this concept and how it relates to income all over the world. And while the numbers are different based on location (your dollar goes a lot farther in rural Wyoming than in NYC), no matter where you live, there is a point where the addition of more income provides almost no additional utility. Sure, you can buy increasingly luxurious things but the impact they will actually make on your happiness and the usefulness you’ll get from them will be next to nothing.
It is terrifyingly easy to get caught up in making more money, spending more money, and then justifying the need for an ever more demanding job to make even more money to keep up with the spending. And while money does improve happiness, it tops out much sooner than you might think (the average point where happiness starts to drop off in the US is $75,000).
It could be argued then, that you can pinpoint a number for financial success. It will be dependent on where you live and your lifestyle, but there is a number where once you hit it, no amount of extra money can change your happiness level anymore.
So let’s say you hit that number. I’m getting awfully close to mine and it’s kind of freaking me out. I considered myself a pretty money motivated person, but I’ve already noticed less and less happiness as a result from each raise or bonus I get. I will never complain of course, but it doesn’t really have the same impact it used to.
But is that it? Because I achieved financial success, I’ve topped out my happiness and success levels? Not necessarily. As I mentioned before, the definition of success is growing ever broader. The other day I heard one way of thinking about it that I especially liked - you can achieve more happiness by eliminating the negative things in your life, rather than trying to add more positive things. For example, I would love a a Burberry trench coat. But my life doesn’t actively suck right now without one, so adding it probably wouldn’t make too much of a difference. However, I had this daily 7am call for work that made me dread waking up in the morning, and when I finally got rid of it, I felt so much calmer and more productive.
Personally, I realized that my new definition of success is when I reach a point where I get to completely control 90% of my time. The only negative things I still have in my life are the instances where others impose their schedules on my time. The happiest days I have are when I get to completely schedule my own day.
Success should mean different things to different people because everyone values all the aspects of their lives differently. I put a premium on my time and my schedule. Entrepreneurs put a premium on the feeling they get from building something themselves. Artists put a premium on their freedom to create. And still others put the premium on all sorts of things like family, relationships, travel, experiences, and yes, even money.
In the U.S., we are all socialized with a similar money-driven version of success. But as we get older, and learn more about what actually affects our happiness, it’s comforting to realize that your definition is unique to you. Which means your path to it will also be unique, and there’s no reason for you to pay attention to anyone else’s version.
Coffee in bed = happiness