Wealth AND Happiness in 2007, Part 3

“What you get by achieving your goals is as important as what you become by achieving your goals.” – Henry David Thoreau

Last Friday, in ETR #1931, I started this series of articles by telling you about my conversation with friend and former partner JG. He helped me realize that I’d been making a mistake by considering achieving wealth and achieving happiness to be two separate goals – and reminded me that (as I’ve proven through my own experience) wealth and happiness can be achieved simultaneously.

JG cautioned me to remember that everyone is different – that my way of finding a relationship between wealth and happiness may not work for my readers. “Each individual must discover his own nature and find his own balance,” he said. And he encouraged me to help my readers do that by writing about something they could all identify with: the feeling of wealth.

“When people think about being wealthy,” JG pointed out, “what they are really thinking about is the feeling of having those things they think money will buy them.”

He’s right, of course. So I decided to add that – how to feel wealthier (and, thus, happier at the same time) – as a third, more “advanced” component of my New Year’s resolution recommendations for you.

It’s not difficult to become wealthier every year. In ETR #1931, I gave you seven simple rules to follow that will lead you to a higher net worth this year. It is also not difficult to be happy. Just develop the five habits I outlined in ETR #1933 and you will be happier in 2007 than you were last year.

But now let’s talk about taking the next step: how to find a way to balance both of these objectives in your life. (A worthy challenge for 2007, wouldn’t you agree?)

With that in mind, your wealth goal should not be a specific monetary target (i.e., a particular amount of net worth) but to achieve the feeling of being wealthy.

Not sure how feelings come into play? Well, think about your buying habits. No doubt you’ve experienced pleasure while planning to make a “special” purchase – a new car, a new house, a lavish gift. You felt a sense of pride, knowing you could afford it – and felt a great deal of happiness when the moment finally came.

No, you won’t make yourself feel wealthier (and happier) this year by buying more things. Neither will you feel wealthier (and happier) simply by accumulating piles of money. As I explained in Automatic Wealth, wealth and the feeling of being wealthy are two different things.

The Difference Between Being Wealthy and Feeling Wealthy

When researchers asked a group of millionaires to give a monetary definition of “rich,” most named a figure that was approximately twice the amount they themselves had accumulated. Individuals who were worth a million dollars said $2 million would make them feel rich. Those who had acquired a $5 million net worth said they believed $10 million was the magic number. And so on.

Even professional financial planners couldn’t agree on a number.

If you have acquired a significant amount of wealth, you know what I’m talking about. You start by telling yourself you’ll be happy if you pay off your mortgage, sock away college money for the kids, and have $500,000 in savings for retirement. When you hit that goal, you raise the ante to buying a little vacation home in Colorado and having $1 million in the nest egg. When you hit that target, you raise the bar higher. Your net worth objective goes to $5 million and then to $10 million and then to $25 million and then to $50 million.

You are wealthy by everyone else’s standards, but you are not satisfied. To make matters worse, you are no happier than you were when you started out. (In fact, you look back fondly on those simple days when everything was fresh and fun.)

But if, instead of picking a monetary target for yourself, you chose the objective JG suggested – to feel wealthy – you’ll never run into that problem.

This is a very radical idea, and it may seem like a complete departure from what I’ve been teaching you. But it’s not. It’s the next step.

An Additional Goal for 2007

On Monday, I suggested that you make being a happier person by the end of the year one of your goals for 2007 – and I gave you a simple way to measure your level of happiness. Now I’m suggesting that you set an additional goal for yourself: to feel wealthier in December than you do right now.

On a scale of 1 to 10, how wealthy do you feel right now? As you did with your happiness “score,” mark that number down on your calendar and make a note to rate yourself again next January.

Now make a list of what it would take for you to give yourself a 10 on the “feel wealthy” scale. Here’s the list I came up with for myself:

  • The confidence of knowing I can buy what I need to have a good life.
  • The comfort of knowing I have extra money put away in case of an emergency.
  • The pleasure of knowing that I don’t have to do work I find repugnant.
  • The freedom of knowing I can spend my time doing work that is meaningful to me.

That’s about it. That’s my list of what I need to feel wealthy. (And I’d be willing to bet that your list is not much different from mine.)

Now for the hard part: How are you going to achieve this goal?

Know Thyself

Are you, like me, a natural tiger with the capacity to do a great deal of work, manage a large number of relationships, and rise to a host of challenges? Or are you a different sort of psychological animal, one whose natural capacities are better suited to less turmoil and frustration?

This is an extremely important question to ask and answer. When setting goals, you have to respect your essential nature. There is no advantage in trying to be something that you are not. If, for example, you know anything about martial arts, you know how foolish it would be for a 110-pound woman to try to match her strength against a 260-pound man. Yet, she can defeat that man in a contest by using her natural capabilities (leverage and quickness).

So that’s what you need to do now: Figure out what kind of person you are in terms of how much work you can do and how much turmoil you can stand.

Once you have a sense of that, you can begin to set specific objectives. Keep in mind that if your natural capacity for turmoil is limited, your financial objectives should be limited too. Since you are seeking a feeling of wealth and not any particular amount of wealth, your financial targets can be modest. The important thing is for them to be appropriate for you.

Achieving the Most Important Part of This New Goal

To move this along, let’s go back to our list of what we need to feel wealthy. Of the four, the most important is the last one: knowing that you can spend most of your working time doing work that is meaningful to you. To achieve this objective, you either have to learn to be happier with your job or change your job. The surest way to be happy with your job is to be very good at it. To be very good at it, you must identify the characteristics and habits of those who excel at it and emulate them. This you can do by breaking down those characteristics and habits and practicing each one in turn until you have mastered them all.

If you are already very good at your job and you are still not happy with it, it is probably because the job is not a natural fit for you. It may be too big or too small. It may not involve your brain enough or it may not challenge your body. Figure out what you need in a job and then make a resolution to find the right one for you this year. Changing your job will require courage and preparation – but you have to do it.

Choosing the right kind of work and then becoming very good at that work will go a long way toward making you feel wealthy. You will wake up every morning with an excited, optimistic feeling about what you are going to do, and you’ll go to bed at night satisfied that you have spent your day doing something important.

Achieving the 2nd Objective

The next feeling you need to achieve is related to this first one: knowing that you don’t have to do work that you don’t want to do. We often create undue stress in our lives by unconsciously accepting psychological burdens that, in reality, we are free to reject. So make a list of the 10 things you did last year that you most resent doing. For me, that list would include:

  1. Getting tangled up in homeowner complaints in the development projects I’m involved in.
  2. Jumping in to solve problems that can be solved perfectly well by other people.
  3. Going to meetings that don’t matter.

I have done these things out of an instinctive sense of obligation. But when I think about it, I realize that I can stop doing them simply by politely explaining why I will no longer do them and delegating someone competent to handle them for me.

Take a look at your list. You may be surprised to see how many things you can stop doing simply by deciding not to do them. There may be one or two tasks that you must do even if you don’t like them. Those you will have to learn to love and learn to do well.

Achieving the 3rd Objective

The third feeling you must achieve is knowing that you have money put aside to take care of emergencies. The only way you can do that is to regularly put money away. If you’re not already doing it, start now. Set a reasonable, specific target and put that money in the bank before you spend it.

Achieving the 4th Objective

The fourth and final feeling you should aim for is knowing that you can buy what you want. The easiest way to achieve that is to stop wanting so many things. The hard way to do it is to resolve to make a ton more money.

So, Here’s the Plan …

What I recommend is to resolve to make more money doing work you value … but to keep that target modest so you can focus on the feeling you want to achieve rather than the figure.

For example, instead of intending to double or triple your income this year, focus on desiring fewer and smaller toys. That way, the money you are likely to make by getting really good at work you care about will be enough to pay for those things you choose to desire.

Bottom Line: You can and should set specific financial goals … but don’t equate their achievement with happiness. Instead, put the achievement of your happiness goal first and foremost – and then see how you can tie that in to your wealth-building goal.

[Ed. Note: Mark Morgan Ford was the creator of Early To Rise. In 2011, Mark retired from ETR and now writes the Palm Beach Letter. His advice, in our opinion, continues to get better and better with every essay, particularly in the controversial ones we have shared today. We encourage you to read everything you can that has been written by Mark.]