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What an incredible episode: ‘What Most People Get Wrong About Wealth, Fame, and Happiness’ on the Plain English podcast. My favourite topics of psychology and wealth intersecting. It was presented by two journalists I really respect, Morgan Housel and Derek Thompson.
The conversation circles around a question most people ask at some point: does more money make you happier? The interesting part is that the question itself hides a false assumption. The assumption is that money increases happiness in a simple linear way.
The better way to think about it is that money often does not increase happiness as much as it reduces misery. That difference matters.
Why money and happiness is not a linear relationship
The relationship between more money and more happiness is often viewed as linear. Happier people tend to have more money. But why would that be true? This is why the idea tends to be controversial.
Happiness is the wrong word. Contentment is the better word
Contentment and happiness are subtly different, but it matters. Happiness is often pictured as waking up grinning ear to ear. That is not what most wealthier people experience. What money can do is remove stress and reduce uncertainty.
If money removes the stress of medical bills, gives you a shorter commute, or creates leeway during a recession, those are real improvements in life wellbeing.
Money as a vaccine against misery
It is hard to understand what will make you happy. But you usually know with certainty what will make you miserable.
Reducing misery moves the needle more than chasing joy
If you can use money to reduce the things that reliably create misery, you improve life more than chasing the idea of constant happiness. This is why raises and a rising net worth often do not create the level of happiness people expect. It is because happiness is the wrong variable to track.
Money is more like a vaccine against misery than a performance enhancing drug for joy. That framing is incredibly useful. It shifts the goal from chasing a feeling to reducing stress, instability, and uncertainty.
Two ways people use money
There are two broad ways people use money. One, use it as a tool to give yourself a better life. Two, use it as a yardstick for other people to measure you by.
The yardstick trap is where people get stuck
This is where you get people who are wealthy but still unhappy. They are not using money to buy independence, autonomy, privacy, quiet time, health, or even comfort. They are using it as a measure of status, and letting other people gauge their usefulness in the world.
Comparison is the thief of joy
When money becomes a scoreboard, you are signing up for anxiety. The Will Smith line captures it well: becoming famous or wealthy is a great feeling. Being it is okay. Losing it is misery. When identity is attached to status, the downside is real.
Luck plays a bigger role than most people admit
Do you believe in luck? Absolutely. Luck is one of the main drivers in the world.
The more outsized the success, the more luck played a role
Daniel Kahneman made this point bluntly. It is not an argument for helplessness. It is a reminder to stay humble in good times, and to be kinder to yourself in tough times.
It also matters for strategy. If you respect luck, you build buffers. You avoid leverage that can wipe you out. You plan for uncertainty.
Too much, too soon, too fast
There is a pattern that shows up in investing, careers, and business: too much, too soon, too fast. Some things have a natural growth rate and a natural size. If you push beyond it, things break.
The danger is when something looks good, and you ask how to get it faster
This is the moment to be careful. In investing, it can show up as taking on too much risk after a good run. In business, it can show up as scaling before foundations are in place. In personal finance, it can show up as lifestyle inflation that locks in stress.
Wealth is built by staying in the game long enough for compounding to work. Fast shortcuts often end the game.
Expectations, reality, and why we adapt
There is a phrase that happiness is reality minus expectations. I understand it at a gut level. Disappointment is a major driver of unhappiness. But I have always disliked the hidden prescription. It suggests we should expect less, which is not a great way to go through life.
Expectations rise with progress, and that is not changing
As a society, wealth, technology, and medicine will likely improve. But expectations grow in lockstep, often faster. You can imagine our grandkids being twice as wealthy, living longer, and living more comfortable material lives, but feeling no better off because their expectations rose just as much.
This is less a prescription and more an observation. It helps explain why people are not dramatically happier today than in the 1950s, even with much higher living standards.
Truth scales in a way lies do not
Jason Zweig has an incredible line about writing. There are three ways to be a professional writer. Number one, lie to people who want to be lied to and you will get rich. Number two, tell the truth to those who want the truth and you will make a living. Number three, tell the truth to those who want to be lied to and you will go broke.
Truth scales in a way lies do not
This is a helpful reminder in the finance world. It is easy to sell certainty. It is harder to sell honesty. But in the long run, the most useful advice is usually simple, practical, and true.
What this means for a better life
If you want a more grounded way to think about money and happiness, start here:
- Use money to reduce misery before you try to use it to chase joy.
- Use money to buy autonomy, stability, and time.
- Be aware of the yardstick trap.
- Respect luck, and build resilience.
- Be careful with too much, too soon, too fast.
- Remember that expectations change as your circumstances change.
What to do next
If you want to improve your wellbeing through your finances, the goal is not perfect optimisation. It is building a plan that reduces stress and creates flexibility. A good wealth strategy is not only about returns. It is about having more leeway in life.
If you would like help clarifying what financial moves would reduce stress for your situation, and what a sensible wealth creation plan looks like from here, we can sense check it with you in a complimentary initial chat.
How Satori Advisory works
At Satori Advisory we integrate your tax, business, wealth and lending as a prosperity engine, aligned with what matters most to you. We do not offer pre-packaged solutions. We deliver tailored, end-to-end advice that reflects your reality and ambitions, informed by data and backed by decades of strategic experience. You work directly with senior advisers who listen deeply, think boldly and act with purpose, supported by our trusted team and curated network of financial and business specialists, so you can realise your potential, powered by numbers.
Frequently asked questions
Does more money make you happy?
Not in a simple linear way. The better framing is that money reduces misery more than it creates joy. It removes stress, instability, and uncertainty rather than guaranteeing happiness.
What is the difference between happiness and contentment?
Happiness is often pictured as a peak feeling. Contentment is the steady state of having what you need, when you need it, without comparison or fear. Contentment is the better target for most financial planning.
What is the ‘yardstick trap’?
Using money as a measure of status rather than as a tool for autonomy, time, and stability. People in the yardstick trap are often wealthy and still unhappy.
Why does luck matter to my financial plan?
Because the more outsized a success or failure, the more luck likely played a role. Respecting luck means building buffers, avoiding catastrophic leverage, and planning for uncertainty.
What is ‘too much, too soon, too fast’?
A pattern where pushing beyond a natural growth rate breaks the system. In investing, it shows up as too much leverage after a good run. In business, it shows up as scaling before foundations. In life, it shows up as lifestyle inflation.
Is happiness really ‘reality minus expectations’?
It captures something real, but the prescription to ‘expect less’ is not great. Expectations rise with progress. The more useful framing is to be aware of how expectations move and not let them outrun reality permanently.
What does this mean for my financial plan?
The plan should reduce stress and create flexibility, not just chase returns. Buffers, autonomy, time, and stability are the variables that actually move wellbeing.
Ready to talk?
If you would like a calm conversation about how to use your money to create more leeway and less stress, we would be glad to set one up. Call 1300 925 081 or email [email protected].
Please feel free to get in touch on 1300 925 081 or send an email to [email protected] if you’d like to book in a chat on the above or on other matters.
Disclaimer
This article contains general information only and has been prepared without considering your objectives, financial situation or needs. It is not personal financial advice, taxation advice or legal advice and should not be relied upon when making financial decisions. Before acting on any information, consider its appropriateness to your circumstances and seek professional advice where appropriate.
