Harvard Professor Reveals the Worst Thing To Do with Your Money
Summary
TLDRIn this insightful discussion, happiness expert Arthur Brooks explores the complex relationship between money and happiness. He highlights that while debt and material possessions can lower life satisfaction, investing in experiences, time, giving, and saving can significantly enhance happiness. Brooks emphasizes the importance of delayed gratification and living within one's means for a more content and fulfilling life.
Takeaways
- 📉 Debt negatively impacts life satisfaction, with student debt, car debt, and credit card debt being particularly detrimental.
- 💸 The belief that more money will significantly increase happiness is often misguided, as our expectations about money's impact on happiness are frequently out of sync with reality.
- 🔑 There are five things one can do with money: buy stuff, buy experiences, buy time, give it away, or save it. Four of these actions can bring happiness, while one (buying stuff) typically does not.
- 🎁 Giving money away can actually make individuals feel richer and more effective, leading to increased problem-solving abilities and earning potential.
- ⏰ Buying experiences, especially with loved ones, creates lasting memories and is a source of happiness that outlasts material possessions.
- 🕰️ Purchasing time, such as hiring help for chores, can free up time for more meaningful activities and contribute to overall happiness.
- 💰 The act of saving money and making progress toward financial goals is a source of happiness due to the human desire for progress and achievement.
- 🚫 Spending money on consumption when one does not have it, especially through high-interest debt like credit cards, is a significant happiness killer.
- 🤔 The idea that paying off the highest interest debt first is not always the best strategy; sometimes, the psychological burden of debt affects happiness more than the mathematical approach to debt repayment.
- 💼 Spending time with a boss is identified as a common source of daily unhappiness, highlighting the importance of work-life balance.
- ❤️ Investing in faith, family, friendships, and work that serves others are key components of a happy life, emphasizing the importance of love and connection.
Q & A
What is the correlation between student debt and life satisfaction according to the transcript?
-The transcript suggests that student debt lowers life satisfaction, indicating a negative impact on an individual's happiness and well-being.
How does car debt affect life satisfaction according to the discussion with Arthur Brooks?
-Arthur Brooks explains that car debt has a detrimental effect on life satisfaction, describing it as 'tanking' happiness, which implies a significant negative influence.
What is the impact of credit card debt on life satisfaction as mentioned in the transcript?
-The transcript states that credit card debt is 'catastrophic for life satisfaction,' suggesting it has a profoundly negative effect on an individual's happiness.
What does Arthur Brooks suggest about the relationship between giving money away and personal wealth?
-Arthur Brooks suggests that people who give more money away tend to get richer, implying that generosity may be associated with increased wealth.
What is the connection between giving money away and problem-solving according to Arthur Brooks?
-Arthur Brooks explains that when you give money away, you become a problem solver, and this change in mindset can lead to increased effectiveness and potentially higher earnings.
What does Arthur Brooks believe are the five things one can do with money?
-Arthur Brooks identifies five things one can do with money: buy stuff, buy experiences, buy time, give it away, and save it. He suggests that four of these actions can bring happiness, while one (buying stuff) does not.
How does Arthur Brooks describe the psychological impact of debt on individuals?
-Arthur Brooks describes debt as a psychological burden, likening it to carrying a heavy backpack, which hinders one's ability to run a race, symbolizing the struggle to achieve happiness and progress.
What does the transcript suggest about the relationship between experiences and long-term happiness?
-The transcript suggests that experiences, especially those shared with loved ones, contribute to long-term happiness more than material possessions, as they create lasting memories.
What is the 'happiness death' as described by Arthur Brooks in the context of financial decisions?
-The 'happiness death,' as described by Arthur Brooks, refers to the act of spending money on consumption when one does not have it, leading to debt, which in turn snuffs out happiness.
How does Arthur Brooks view the concept of saving money in relation to happiness?
-Arthur Brooks views saving money as a path to happiness, as it represents progress and security. He suggests that every dollar saved contributes to an individual's happiness.
What is the significance of the 'happiness 401K' concept mentioned by Arthur Brooks?
-The 'happiness 401K' concept signifies the importance of investing in life experiences and relationships early on, similar to investing in a retirement account, to ensure long-term happiness and well-being.
Outlines
💼 The Impact of Debt on Happiness
The first paragraph discusses the negative effects of various types of debt on life satisfaction, emphasizing that student debt, car debt, and credit card debt significantly lower happiness. The speaker introduces the idea that giving away money can paradoxically lead to wealth and happiness, as it changes one's mindset to become more of a problem solver. The conversation then shifts to an interview with happiness expert Arthur Brooks, who is introduced as a social scientist, professor, and author. The focus is on understanding the relationship between money and happiness, and the speaker encourages viewers to engage with the content by liking, subscribing, and sharing the video.
💰 The Misguided Pursuit of Material Possessions
In the second paragraph, Arthur Brooks explains that humans have an evolutionary tendency to accumulate possessions as a status symbol, which is a misguided approach to happiness. He suggests that buying stuff is not the path to happiness, but rather, experiences, time, and giving away money are more effective. Brooks shares a personal anecdote about choosing between a beach vacation and buying a couch early in his marriage, illustrating the lasting value of experiences over material goods. He emphasizes that experiences with loved ones create enduring memories, while material possessions are quickly forgotten.
🌅 Prioritizing Experiences and Giving
The third paragraph continues the discussion on how to spend money to achieve happiness. Brooks highlights the importance of buying experiences, especially with loved ones, and the value of using money to buy time by outsourcing tasks, allowing for more meaningful activities. He also stresses the joy of giving money away, explaining that it not only benefits the recipient but also changes the giver's mindset, leading to increased effectiveness and earning potential. Brooks shares research showing that those who give more tend to become richer, suggesting a positive feedback loop between generosity and financial success.
🏦 The Benefits of Saving and Avoiding Debt
In this paragraph, the conversation turns to the benefits of saving money and the dangers of spending beyond one's means. Brooks explains that saving money and making progress towards financial goals are deeply satisfying, activating the brain's reward pathways. He contrasts this with the negative impact of debt, which he refers to as 'happiness death.' The speaker and Brooks discuss the psychological burden of debt and the importance of being debt-free for overall life satisfaction. Brooks also mentions the progress principle, which states that making progress in one area of life can lead to improvements in other areas as well.
🤔 Understanding the Psychology of Money and Happiness
The fourth paragraph delves into the psychological aspects of money and happiness. Brooks discusses the concept of delayed gratification and the cultural tendency towards immediate satisfaction. He emphasizes the importance of knowledge about one's own emotions and happiness in making better financial decisions. Brooks argues against the common misconceptions that material consumption and borrowing are paths to happiness. The conversation also touches on the idea that debt, especially consumer debt, is a psychological burden that can hinder overall life satisfaction.
💼 The Role of Salary in Happiness
In the fifth paragraph, the discussion focuses on the relationship between salary and happiness. Brooks references a study that shows different generations have varying expectations for the salary needed to feel happy and less stressed. He explains that these expectations are often based on speculation and are not grounded in reality. Brooks suggests that living within one's means and understanding the true cost of avoidingable unhappiness are key to achieving contentment. He also mentions that the actual amount needed for life satisfaction is often less than people think, and that the pursuit of ever-increasing income does not necessarily lead to greater happiness.
🌟 Investing in Love and Relationships for Long-term Happiness
The final paragraph wraps up the conversation by discussing the concept of a 'happiness 401K,' where Brooks suggests that investments in faith, family, friendship, and work that serves others are crucial for long-term happiness. He emphasizes that love is the core investment that leads to a fulfilling life, regardless of whether every moment feels enjoyable. Brooks concludes by encouraging viewers to focus on love and meaningful relationships as the foundation for a happy life, rather than solely on material wealth.
Mindmap
Keywords
💡Life satisfaction
💡Generosity
💡Debt
💡Progress
💡Delayed gratification
💡Happiness expert
💡Empower study
💡Neurological effects
💡Financial burden
💡Happiness 401K
💡Love investments
Highlights
Student debt, car debt, and credit card debt negatively impact life satisfaction.
People who give more money away tend to get richer and experience a change in mindset.
A study by Empower reveals varying salary expectations for happiness across different generations.
Material possessions do not bring long-term happiness, unlike experiences and giving.
Our brain's evolutionary tendency to seek status through material goods is misguided for happiness.
Buying experiences with loved ones creates lasting happiness and memories.
Spending money to buy time and reduce stress can increase happiness.
Giving money away can make individuals feel more effective and potentially earn more.
Saving money and making progress towards financial goals is a source of happiness.
Avoiding debt is crucial for long-term happiness and financial stability.
The psychological burden of debt can significantly lower life satisfaction.
Mortgage debt is less likely to lower happiness compared to other forms of debt.
The feeling of making progress in life, including financial progress, contributes to happiness.
Spending beyond one's means and accumulating debt can lead to a decrease in happiness.
Arthur Brooks emphasizes the importance of delayed gratification for long-term happiness.
The concept of a 'happiness 401K' suggests investing in love and relationships for future well-being.
Investing in faith, family, friendship, and service to others can lead to a happier life.
Arthur Brooks' latest book 'Build a Life You Want' co-authored with Oprah Winfrey discusses happiness.
Transcripts
[Music]
student debt lowers life satisfaction
car debt tanks life satisfaction credit
card debt is catastrophic for Life
satisfaction we've been seeing this for
years and years people who give more
money away they get richer what happens
is when you give money away you become a
problem solver and your mind changes a
recent study from Empower asked
Americans how much their annual salary
needs to be for them to feel happy less
stressed Millennials locked in at 525
and the deal is that you think that with
more money you're going to be a lot
better off that's something that's
really out of sync because we have those
expectations about what money's going to
buy with our happiness and it doesn't it
turns out there's five things that you
can do with your money four of them will
bring you happiness and one won't your
brain is telling you to do the one thing
that won't bring happiness the worst way
the worst thing you can do that brings
you no satisfaction and lowers your
happiness is
[Music]
to and and
done what's up guys George camel here
and today I've got a very special guest
on the channel happiness expert Arthur
Brooks More officially he's a social
scientist and professor at the Harvard
Kennedy School and the Harvard Business
School where he teaches courses on
leadership happiness and social
entrepreneurship and because he does the
most he's also a columnist at the
Atlantic where he writes the popular
weekly column how to build a life he's
written 13 books and his latest is a
number one New York Times bestseller
called build a life you want the Art and
Science of getting happier co-authored
with Oprah Winfrey yes that Oprah Oprah
can do anything going to add that to my
summer reading list and today I have the
distinct privilege of nerding out with
this brilliant man about the
intersection of money and happiness but
before we get started let's get click
happy with those like And subscribe
buttons and share this video with your
friends like Oprah because I want to
write a book with Oprah 2 here's my
pitch getting over the hump one camel's
journey to writing a book with Oprah
pretty meta right I'm thinking forward
by Gail obviously we all have big
dreams and sometimes it's better not to
dream that dream all right let's get to
my conversation with Arthur
Brooks Arthur it is such an honor to
have you here how you doing I'm doing
great how are you we built this whole
studio just for you well thank you are
these all my books they're all books
that you've either written or read I
assume especially the textbook of
medicine from 1928 yeah that's I did
right what your favorites
I'm aging well this is amazing we got a
lot to cover you ready to get into it
I'm ready we did our research here first
of all I love your work in the Atlantic
thanks you did a piece called why you're
better off not borrowing and I was doing
jumping jacks because of what we teach
around here here's what you said want to
buy happiness wait until you have the
money can you talk about what you found
about how debt affects happiness yeah so
it's really clear I mean there there's
there's a lot of I'm an economist by
background but I but I study you know
the science of happiness and so the
putting those two things together one of
the things that I teach my students and
I talk about a lot is the ways that you
can buy happiness it turns out there's
five things that you can do with your
money you can buy stuff you can buy
experiences you can buy time you can
give it away or you can save it those
are the only things you can do with your
money right four of them will bring you
happiness and one won't your brain is
telling you to do the one thing that
won't bring happiness which is to go buy
stuff
[Music]
more why is our brain that wrong because
we're evolved in that way so humans were
evolved we're we're we're kin based
hierarchical tropical species Homo
sapiens now some of that we're going to
get Beyond like we invented coats so we
don't have to live in tropical places I
live in Boston which is the world's
worst weather it's fun agreed you know I
can live in a house that has heat Etc
but I'm not going to get away from this
hierarchical kind of kin based species
and so the result is that we have this
natural evolv tendency to want to rise
in the hierarchy how do you do that by
signaling how do you signal by actually
being able to to to to to have more
stuff than you need to survive the way
that you display that that's the reason
people have five watches why in the heck
do you need five watches because you can
and if you can what that suggests to
potential mates for example and to
people who might want to understand if
you're the alpha or the beta in your
tribe is they look at all your stuff and
say huh George has got more watches than
he needs clearly he should be able to
have 75 children this is kind of what
your brain is doing now of course that's
anachronistic you don't know that you're
doing that but it's about status and
success status and success and and and
then you try to connect the dots inside
your brain by saying well since I want
that it must be that I really enjoy that
and then you say if I get that better
car my car is fine but if I get that
better car I'm going to really enjoy it
a lot and it's going to make me happier
and then it doesn't you're like I guess
I needed a better car that makes sense
to me so you're telling me that the
louder the car the higher the truck the
more primitive of a species they're
they're trying to attract mates this is
what we're doing this is what our brain
is giving these particular signals but
we never quite figure it out now once
you know that you're going to notice it
and you have a Fighting Chance of
changing your behavior wow yeah so
that's the whole point now the other
four actually do authentically bring
happiness but those aren't our tendency
buying experiences with people you love
that's really important now experiences
they cost money depending you can walk
in the park with your beloved and and it
might be free except time but if you
want to go to Cancun it's going to cost
you some dough right but if you're going
to spend the money do that and and do it
with somebody you truly love because
then you'll remember it forever we think
that stuff is permanent and experiences
are evanescent they're impermanent it's
exactly the opposite you'll forget the
stuff and you won't forget the
experiences I learned this by the way in
in a in a very real way I'm a social
scientist but I'm I'm living in a
laboratory environment called my life
cuz I studied best experiment and you
know I've been married 33 years 32 years
ago my wife and I were having this
knockdown drag out fight ironically
about how to how to celebrate our first
wedding anniversary and the reason was
because we had no money we had just
immigrated to the United States from
Spain and and my wife didn't speak
English yet and and I was working this
very basic job I was in school was my
late 20s but I was in college just
trying to you know get my life together
and and we had just enough money to
borrow or beg or whatever to do one or
two things we could go to the beach for
3 Days on our to celebrate our
anniversary or we could use the same
money to buy a couch and we didn't have
a couch and so my wife who's Spanish
she's all about the beach and I'm a
Thrifty practical American so I'm like
the couch we'll have it forever so
you're thinking utility she's thinking
fun the beach is over in 3 days man the
couch is forever I mean it makes perfect
sense so we're going back and forth
Beach couch Beach finally finally we
compromise and and we go to the beach
and that's why I've been married 33
years but took me but but my point is
that we thought about that recently and
we got the couch six months later right
because we had the money and got the
couch I don't remember the couch I don't
remember what color it was gray blue but
I remember that Beach vacation
everything that we did because we were
in love and we still are so your
experiences with the people that you
love are truly permanent and I could
explain the Neuroscience of how you
store those and and reconstruct those
memories over and over again goes into a
a folder in your brain it goes into a
series of folders in your brain actually
you reconstruct the memories and every
time you do that it frames up the
current context of your life the couch
nothing who cares it's a couch but the
beach vacation with your beloved no joke
that's number one number two is you buy
time and spend it wisely for example you
know if you don't like cutting your and
you've got a little extra cash spread
the love and hire somebody to cut your
lawn you just created a job that's a
really a lot of Americans are very
snoody about that or they're kind of oh
that's classist you know that's an
elitist H someone yeah but that's nuts
yeah it's it's the best thing you can do
if you've got extra money to to hire
somebody to clean your house and by the
way pay them fairly and pay them a fair
wage and do it honestly and do it
legally super important but then don't
waste the time don't Fritter it away on
Instagram that's stupid because that's
just a waste of your time spend the time
in something meaningful reading a book
that you want to read going for a walk
in the country spending the time with
the with the person that you love that's
the second way you're truly buying
happiness and you're cting your job
third is to give it away give it to your
something in your community something
that really speaks to you and it'll give
you Joy we get so much Flack for this I
tell people hey in the budget 10% should
go to giving and they go this guy's an
idiot why is he telling people to give
away their money F it's counterintuitive
to do that but what is the science
behind the happiness and joy well it's
it's not even behind that I mean we can
even talk more mechanically about how
that works so I've been tithing my whole
life I'm I'm come from a Christian
background and my dad was a tither and
and one time I asked him when I was you
know coming of age I said dad before or
after taxes right and he's like I tithe
before taxes I'm like Dad after taxes
what's wrong with you and he's like just
in case just in case I get up there and
like it's like I don't care about the
system said St Peter and and the with
the keys to heaven anyway it's a really
important thing and one of the things
that I've shown in my research going way
back this goes back 25 years in my
research is that the more you give to
charity the Richer you get and what do
you find yeah yeah you find that in
subsequent years when you give a dollar
to charity you on average there's about
A1 60 that comes back to you in
subsequent years now I was thinking when
I first saw this got to be the hand of
God nah it doesn't make sense I didn't
believe it actually I thought there was
something wrong with my data and then I
was working with this psychologist I'm
an economist I was working with a
psychologist he says no we've been
seeing this for years and years people
who give more money away they get richer
and they make way more money back than
that which they give away and I'm like
is this you know the the wheels of you
know this isn't like a Karma thing like
you get you give what you get it's not
one of those what happens is when you
give money away you become a problem
solver and your mind changes you become
a more effective person people who solve
problems and give their money away are
people who feel more effective and they
earn more money and I talked about the
Practical side I could tell you about
you know how it makes people think
you're better looking I've got data on
that wow yeah yeah it's unbelievable
women find men more attractive when
they're seen to be giving in volunt give
a big tip at the end of that dinner they
go man that guy's good looking I like
now of course evolutionarily it says I
should this he's got enough money you
know he's he's got he's got extra money
so there's a piece that's Financial if
he has the money to be a generous Giver
that's attractive on its own but what
you find also is that that people who
are already in couples women find men
more attractive even if they're already
in a couple if they been married 25
years your wife likes you more when she
sees you being charitable toward others
that's there's a lot of laboratory
evidence that suggest that using human
participants in these experiments so
that's giving money away but you got to
find something you got to do the work to
find out what animates your soul to
figure out what you want to give to and
last but not least that's one two and
three that'll buy happiness here's the
biggie
put your money away and save it every
dollar you save will buy happiness for
you and the reason is because we're
evolved to make progress human beings
don't get that much satisfaction from
arriving at a goal but making progress
toward a goal you know I've done a lot
of research over the years on you know
why people are so happy when they're on
a diet and the reason is because the
scale goes down and it's well worth not
eating what they like because the scale
going down is a daily reward we're
making progress is that own drug in a
sense it is it is incredibly rewarding
and it actually satisfies the
dopaminergic pathways I mean the the
dopamine Pathways give you an
anticipation of reward and that
anticipation is really the it's the
sweetness of life well we've been
helping people get out of debt for
decades now and there's something about
that sacrifice when you're knocking out
you're doing the debt snowball method
smallest to largest balance you free up
a payment and it it seems to change
their physiology and give them more
agency over their life other areas they
start to lose weight their marriage is
better they're communicating more so
that's amazing that's the progress
principle that's how it works when
you're making progress in one part of
your life you start making progress in
all parts of your life now the better
way to do it is to not be in debt in the
first place and just start making
progress toward a bolus of savings
because what that says is life is going
to be more secure later I'm going to
leave more for my kids I'm going to be
able to buy a house without a mortgage
at some point or maybe I mean how
wonderful is that kind of thing but but
even if you are in debt getting out of
debt will give you the same progress
principle the problem the the worst
thing that you can do with your money
the worst way the worst thing you can do
that brings you no satisfaction and
lowers your happiness is to spend it
when you don't have it for consumption
in other words buy something you don't
have the money for that's just fun for
you right now so for example running up
your credit card bills is the stupidest
thing you can possibly do now I get it
sometimes there's like a moment of
desperation you got to put groceries on
your credit card okay that's not what
I'm talking about I'm talking about like
I don't know man I can't afford this
vacation to Cancun right now but you
know what I'll pay it off over the next
6
months okay if you do it with your
beloved that's good enough I guess even
worse than that would be I want to buy a
big screen TV and put it on my credit
card and pay that off over the next 5
months worse worse worse is I'm going to
buy an $85,000 truck oh boy and I'm
going to put it almost all on credit and
I'm going to pay it off over the next 5
years $600 a month that is insanity
because the truck enjoyment will wear
off very very quickly and 5 years from
now is still eating away at you and
you're not making progress you're going
backwards and if progress brings
happiness regress brings unhappiness
that's the reason that debt that debt is
a form of Happiness death M I love that
happiness death it's the best way to
Snuff out your happiness I got to tell
you this conversation is making me very
happy and the other thing that makes me
happy is saving money it feels really
good and one of the ways I've that
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all right back to the conversation well
we we found you know as people make
these decisions the car depreciates in
value financially they're underwater on
the car so there's this long-term stress
that ends up happening they end up
calling the Ramsey Show saying how do I
get out of this at the time it seemed
like a good idea so a lot of this points
to the the concept of delayed
gratification um and instead of the get
rich quick get happy quick I just want
it now which is our entire culture how
do people sort of shift away from that
into that delayed gratification building
the habits over knowledge is power
knowledge is power about your own
emotions and about your own happiness
this is the reason I teach happiness
because I want people to have the
knowledge and I've found that when
people understand some of the science
like I talk about the blah blah blah you
know the science in the brain and the
neurom modulators and all this stuff but
when people have a little bit of that
they're like huh I understand me so
don't make the two biggest errors when
it comes to money which is thinking that
consumption of stuff will bring you
happiness and that borrowing is somehow
okay those are the two big errors and
when you combine those two errors you're
you're in big trouble and you wind up
calling the ramsy show how do you argue
against the math cuz here's what we get
on the show and on this channel people
say well George it makes sense to pay
off the highest interest first and why
would I pay off my low interest mortgage
when I can make more by investing the
money and so they want to argue about
staying in debt because of the math no I
understand how the math works and as an
economist I can if you're rich enough
you actually might want to keep your
2.85 mortgage even though you can afford
to pay it off and then put more money
into the market I get that if you're
rich enough the problem is if you're not
what happens is that the debt that you
have especially Consumer Debt is a is a
is a burden it's a psychological burden
and when you have a psychological burden
it's like you're carrying an enormously
heavy backpack and trying to run a foot
race you need to actually be free you
need to be psychologically free and the
best feeling you can possibly get and I
say this on the basis of somebody who
studies behavior and this is about
happiness not about sheer economic
calculations is not having the burden of
having somebody have a piece of you you
need to be free it's the most amazing
feeling when you have can you imagine
having zero debt in your life you owe
nobody anything I I remember telling my
my my father taught me this he said debt
is a form of slavery now there's certain
cases where it's it is logical you're
just not going to have enough money to
buy a house and you want to be a good
member of your community and you want to
raise and there's a a very fluid market
for mortgages and okay fine but there
aren't that many other cases where
you're and by the way if you're paying
rent you're not making progress and if
you're paying a mortgage at least a
little tiny piece of the house is
becoming yours and so that's one of the
reasons that the research shows that
Mortgage Debt is the only kind of debt
that doesn't lower happiness ah it
actually doesn't lower happiness unless
it's too big unless it's become to you
can't the payment well you can AF even
if you can't afford the payment if it's
such a big thing that you're worrying
about it every month then it's going to
lower your life satisfaction quite a lot
student debt lowers life satisfaction
car debt tanks life satisfaction credit
card debt is catastrophic for Life
satisfaction so that's the important
thing to keep where have you been all my
life this exactly what I needed you
smart you very smart well we're we've
both lived in Boston for a long time
yeah you you grew up in Boston 20 years
and so I moved out of there I got to the
South a happier place I've lost it uh my
parents are Middle Eastern and so I
didn't really accumulate the Boston
accent as quickly as my Irish Italian
Catholic friends yeah yeah are they are
your parents from from Lebanon uh Syria
okay mom and dad from Egypt there you go
I got the Syrian side clearly I'm like
an albino Middle Eastern well the the
Syrian and you're raising a Christian
home yes Arabic Baptist nonetheless okay
so there you are so like all good things
all entrepreneurial things all smart
things in America you dig a little tiny
bit you're going to find a Middle
Eastern Christian in there hey I like
this guy well being that we both spent a
lot of time in Boston why does everyone
from Boston seem
unhappy that's a shtick part of is a
stick I mean cuz they love it they'd
never leave so I'm like well they're not
unhappy enough to leave yeah no similar
with any big city you know New York it's
a very just like you just got to muscle
your way through the day you have to you
have to B part of the shtick is that
everything sucks and you're stupid
anyway that's my view but it's also one
of the things that we find in the
science of happiness that one of the
greatest barriers to happiness and that
actually brings unhappiness which is not
the same happiness and unhappiness are
processed largely in different
hemispheres of the brain so they're not
opposites and we have both kinds of both
negative and positive emotions in
response to threats and opportunities in
the environment one of the greatest
stimuli for negative emotion negative
affect in our lives is is is
aggravation and so people will say to me
sometimes like will I be happier if I
cut my commute and move closer to my job
the answer is no but you will be less
unhappy
if you do that because commuting is the
number one activity not involving other
people that people do that brings that
that brings unhappiness to their life
you want to know what the number one
interaction with another person that
brings unhappiness to people's lives
every day is what's that spending time
with your
boss that's the number one unhappiness
provoking interaction in the average
person's day spending time with your
boss that is why I don't know if I can
agree with that Dave Ramsey I would love
hanging out wuss seriously but work is a
is a source just like finances can be a
source of unhappiness yeah well a lot of
people in the you they're miserable at
their jobs and they're wondering why
they're not making good money and why
they can't make Financial progress It's
all kind of tied together a lot of it is
tied together and a lot of it has to do
with the way that they're designing
their lives um and so life design is a
lot of what I do emotional
self-management is a lot of what I do
and again the secret is in the science
you know once you understand what's
going on between your ears then you can
manage yourself a lot better you can you
can change your habits and once you
change your habits you can actually
start passing on these ideas to other
people and that's the real gift is when
you become a happiness teacher that's
powerful um let's get into salary and
happiness cuz we've done a lot of
content around here about salery and
happiness celery is part of it our
writer wanted us to have celery and I
said Arthur he's a he's a he's a
professor at Harvard we can't have
celery salary jokes and now that I know
you enjoy this I regret not having C hey
man I'm turning 60 next week and uh I'm
all about plays on words that are
incredibly annoying that's perfect I am
looking forward to 60 now because this
is I am this is kind of what I'm going
to do for the rest of my life it's like
Dad jokes and grandpa jok that reminded
me of a thing and so I'm just going to
talk about it for like an hour that's
amazing and they're like Grandpa's going
crazy guys he's finally lost it now for
an openmouth nap he's on the celery
salary train again it's amazing I love
this guy uh recent study from Empower
asked Americans how much their annual
salary needs to be for them to feel
happy less stressed gen Z said 128k Gen
X 130k Boomers 124k Millennials clocked
in at
525k what is going on here what what why
is it with Millennials are so much
higher and is there actual correlation
between salary and happiness so yeah
when people are asked to speculate on
the amount of money that would be enough
cuz that's really what it is it's not
about happiness it's about having enough
be comfortable comfortable what that
means is to not be B
that's really what it comes down to all
of those how much would you need to be
happy are really questions about how
much would you need to not be unhappy
and the sources of the unhappiness of
the aggravations that come because
you're worried about money or you're
feeling pressure for money that's really
what it comes down to and so people are
speculating on man how much would I need
so I'm not feeling kind of out of sorts
I'm not thinking about money all the
time it's not living in your head
rentree exactly right and what you find
is we do know what that number is but
the speculative number isn't very
meaningful because according to the data
it's almost 40% more than you have and
so that's a moving Horizon and the
reason is because they're not watching
the ramsy show and trying to live within
their means if you live within your
means your Horizon's not going to change
but if you don't live within your means
in other words you're going to go to the
hilt and what you can spend to be
comfortable is always going to be 40%
out means you'll never achieve it
because it's always what's the magic
salary more and that's no way to live
but if you're living within your means
then then then it's sweet and that's
really why this is so critically
important get out of debt don't spend
beyond your means you will live a
happier and less unhappy life bottom
line is what it comes down to now how
much do people actually need if they
live within their means and the answer
is less than you think the answer is
less than you think even with inflation
and all the rent going up yeah I mean
with the okay I mean index it for
inflation if you want but there was a
very famous study in
2005 that was that was um was actually
put together by two economists at uh at
Princeton that looked at how much people
needed to max out in their life
satisfaction and what they found is
$75,000 a year now of course if you're
in New York San Francisco versus
Nashville versus Tupelo Mississippi I
mean different you know it relative so
really it really is relative but the
whole point is it's less than you think
why because you get above that threshold
of avoidable unhappiness problems where
your kids are getting fed you're able to
make the rent um you're able to go to
the doctor you're able to do all the
stuff and that stuff's not bothering you
anymore and anything above that is not
really going to wipe out that much more
unhappiness if you're living within your
means now maybe it's 250 maybe it's 400
and there's new research out there from
a guy at Penn um named Matt
Killingsworth who's a great researcher
who says that it's actually a higher
number here's the really interesting
thing about it it does get flat at a
relatively low Pace people evaluate
their lives as much better with more
money but don't feel it so this is a
funny thing this is a fun on paper they
go I'm happier they they say I should be
happier but I'm not so this is a weird
thing where I valuate my life and I'm
like that's a lot of money yeah yeah my
life is really really good but I feel
crummy what's the deal and the deal is
that you think that with more money
you're going to be a lot better off and
so when you find that you're actually
pretty prosperous you judge your life as
being really good but your mood balanc
and your level of anxiety don't match
that that's something that's really out
of sync because we have those
expectations about what money's going to
buy with our happiness and it doesn't
unless so we think my life will be
perfect and then it's still my life
should be perfect my life should be
perfect but it isn't perfect and that's
a cognitive dissonance that people are
struggling with an awful lot when you
can make when you can understand the
science that we're talking about here
you can marry these things up and be at
peace and that's one of the great
secrets well I'm going to end with this
idea that you wrote about called this
this happiness 401K you've said half the
population tends to get happier after
age 65 or 70 the other half starts to
become unhappy and I love this quote as
well from you your well-being is like a
retirement account the sooner you invest
the greater your returns will be are
those two things coinciding the people
who invested earlier they're on the
upper trory and the ones who don't thr
back down it's that simple it's how you
it's what you invested in your life and
again you can it's a metaphor for what
we actually do with our budget you know
if you inv invest intelligently and you
know early on more growth stocks and
later on more bonds and having more in
cash and such that such that when you're
older you're stable and secure and and
not worried that's great but the same
thing is true with the Investments that
you make in your life and there's four
Investments you need to be thinking
about over the course of your life your
faith your family your friendship and
your work that serves other people
that's what it comes down to and what
that really really comes down to the
bottom line on that maybe the best last
word is that when I talk about those
things I'm talking about love of the
Divine and love of your family and love
of your friends and the love that you
express to the whole world whether you
enjoy it every single second or not to
the way you earn your daily bread it's
love love love and more love your
Investments are love Investments and if
you do that you're going to be on the
upper trajectory for the rest of your
life all you need is love I can't think
of a better ending hey man this is so
fun I I could talk to you all day I want
to be you when I grow up but
unfortunately I don't think I'll ever be
a Harvard Professor you'll always have
that hair too hopefully by the way
you're GNA when you grow up and you're
my age you're going to still you know
will I still have this if I had it I'd
be president of the United
States you know what that means guys
2028 it's my year baby if you were the
president what's the first thing you
would do I I I'd buy a mini fridge
Arthur is such a pleasure make sure to
check out all of his work his books
they're all incredible you're a genius
and thank you for supporting the work
that we're doing here with the than for
doing this you're helping a lot of
people to be happier and I think we need
a happiness revolution in this country
and all you're doing here at Ramsey
Solutions is at the center of that
Revolution I appreciate that so much and
I will aim in and retweet that all or
reexit all day long right on thank you
so much Arthur
pleasure man I am happy to have had that
conversation and I am sad that it is
over what a delightful human being so
grateful for Arthur and his time with us
today be sure to check out his books
from strength to strength and the newest
one build the life you want among many
others I'll also drop a link below to
his piece in the Atlantic on why you're
better off not borrowing be sure to read
that and if you like videos of me having
a conversation with other smart humans
check out this next video with two of
the biggest personal finance YouTubers
out there just spr from Minority mindset
and Humphrey Yang definitely worth a
click I'll drop a link in the
description as well thanks for watching
we'll see you next
time on to the next read
Robert dairo
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