Your Money_ The Missing Manual - J. D. Roth [4]
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Part I. Blueprint for Financial Prosperity
Chapter 1
Chapter 2
Chapter 3
Chapter 4
Chapter 1. It's More Important to Be Happy Than to Be Rich
"Happiness, not gold or prestige, is the ultimate currency."
—Tal Ben-Shahar
You don't want to be rich—you want to be happy. Although the mass media has convinced many Americans that wealth leads to happiness, that's not always the case. Money can certainly help you achieve your goals, provide for your future, and make life more enjoyable, but merely having the stuff doesn't guarantee fulfillment.
This book will show you how to make the most of your money, but before we dive into the details, it's important to explore why you should care. It doesn't do much good to learn about compound interest or high-yield savings accounts if you don't know how money affects your well-being.
If personal finance were as simple as understanding math, this book wouldn't be necessary; people would never overspend, get into debt, or make foolish financial decisions. But research shows that our choices are based on more than just arithmetic—they're also influenced by a complex web of psychological and emotional factors.
This chapter gives you a quick overview of the relationship between money and happiness. You'll also learn techniques for escaping the mental traps that make it hard to be content with what you have. As you'll see, you don't need a million bucks to be happy.
How Money Affects Happiness
The big question is, "Can money buy happiness?" There's no simple answer.
"It seems natural to assume that rich people will be happier than others," write psychologists Ed Diener and Robert Biswas-Diener in Happiness (Blackwell Publishing, 2008). "But money is only one part of psychological wealth, so the picture is complicated."
There is a strong correlation between wealth and happiness, the authors say: "Rich people and nations are happier than their poor counterparts; don't let anyone tell you differently." But they note that money's impact on happiness isn't as large as you might think. If you have clothes to wear, food to eat, and a roof over your head, increased disposable income has just a small influence on your sense of well-being.
To put it another way, if you're living below the poverty line ($22,050 annual income for a family of four in 2009), an extra $5,000 a year can make a