Frugality, Life Satisfaction, and Stress

[MasterBlaster]

Frugality for peace of mind versus wealth for buying a bunch of stuff

Free Money Finance: The Joy of Wealth

While I was promoting The Millionaire Next Door on the Oprah Winfrey Show, a rather well dressed woman from the audience asked me the same question I had heard a thousand times before: "What good does it do to have all this money if you don't spend it?" The woman was agitated, even indignant, that I was touting frugality. She further indicated that "these people couldn't possibly be happy." She, like most people who are not wealthy, believed that the more one spends, the more satisfying life is. Thus, more money translates into more spending and therefore more happiness. But she does not completely understand the benefits of being wealthy. It has much more to do with being financially independent and secure than owning prestige brands. High self-esteem is related to achieving financial independence. Both the sense of achievement that comes from success and financial independence lead to happiness and life satisfaction, not meaningless badges.
What percentage of the millionaires who live in homes valued at under $400,000 are happy? More than 9 in 10 (91%) indicate that they are extremely satisfied with life.
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[Sarah in SC]

Here's some more recent research by Dr. Stanley:

What explains happiness in life? I don't have all the answers. But, as a review of both my books and blogs, happiness in life has little to do with the brand/price of the watch one wears, the stores one patronizes, the make of car one drives or the brand of vodka one consumes. One's overall happines in life has nothing to do with the overall price one pays for wine, the size or market value of a home, not even the price one pays for a haircut.

To shed more light on this issue, I examined the relationship between happiness in life and more than 200 characteristics, behaviors and attitudes of 1,574 high income/high net worth respondents from one of my national surveys. Note that correlations do not necessarily indicate cause and effect.
Beyond health, family and job factors, why are some people more satisfied with life than others? In terms of statistical significance, the higher one's level of happiness the more likely he/she is to agree with the following statements [by rank order of variation explained]:

1. I have more wealth than most people in my wealth/income group.
2. We are financially better off than our neighbors.
3. I donated 5% or more of my income last year to charity.
4. I live well below my means.
5. I was raised in an atmosphere filled with love and harmony.
6. My parents taught me how to invest and manage money.
7. Politically, I am more conservative than liberal.
8. I inherited less than 1% of my net worth.
9. My spouse is more frugal than I am.
10. I invested 10% or more of my income last year.
Also note that both net worth and income are associated with happiness. Statistically, net worth is the more important of the two. But even more important than net worth is relative net worth (as suggested in Item 1 above). Relative net worth is all about how productive one is in transforming his/her income into net worth compared to others in one's income and age cohort as well as within the context of one's neighborhood environment.

Those who can easily afford their consumption lifestyle tend to be significantly happier than those who struggle to make ends meet by acting rich. I have consistently found that those within the same income/age cohorts who were raised by loving and nurturing parents tend to spend less and save more of their incomes than those who are not raised in this type of atmosphere.

Retrieved from: To Be Happy-Stop Acting Rich

 

[W2R]

quoting from MasterBlaster's quote of the article,

But she does not completely understand the benefits of being wealthy. It has much more to do with being financially independent and secure than owning prestige brands. High self-esteem is related to achieving financial independence. Both the sense of achievement that comes from success and financial independence lead to happiness and life satisfaction, not meaningless badges.
What percentage of the millionaires who live in homes valued at under $400,000 are happy? More than 9 in 10 (91%) indicate that they are extremely satisfied with life.

That is so true. Often the very wealthy folks that I have met could afford Rolexes but don't like that brand, and prefer a simple Timex, for example.

And as for houses - - it all depends on housing prices where you live, but I'd jump off a cliff if I had to own one of the $400K+ homes in my area. That is just too much home for me to have to deal with, and I only really use about half the square footage that I already have for less than half that price.

 

[TomG]

Having an extra $9 in my bank account makes me more happy than having a pack of cigarettes, so I don't buy them. Other people are more happy having the cigarettes than the money, otherwise they wouldn't buy them

That can be applied to every purchasing decision. If someone disagrees with that, they should offer something more than "you're wrong"

 

[MasterBlaster]

Wow $9 for a pack of cigarettes. I wouldn't buy any either.

 

[2soon2tell]

I was given a Rolex watch as a gift from a relative. The only time I wear it is when we are together. I prefer my Swiss army watch and a couple of Timex sport watches.

I am not comfortable wearing the Rolex and it sends a message to others that I don't want to send.

Weird ain't it.

2soon2tell

 

[unclemick]

I like the part about having a $1 mil IRA and shopping at the Salvation Army Family Store (only on sale days of course).



heh heh heh - the shear joy of being a cheap SOB has to be experienced to be believed. .

But there is this vicious rumor going around that you can't take it with you.

 

[W2R]

I like the part about having a $1 mil IRA and shopping at the Salvation Army Family Store (only on sale days of course).



heh heh heh - the shear joy of being a cheap SOB has to be experienced to be believed. .

But there is this vicious rumor going around that you can't take it with you.

We were at the Salvation Army just yesterday. They have some pretty nice stuff in there compared with the quality years ago. And the prices are very reasonable even though it wasn't a sale day. We didn't buy anything, though, since we are more interested in donating right now.

 

[Dawg52]

I like the part about having a $1 mil IRA and shopping at the Salvation Army Family Store (only on sale days of course).



heh heh heh - the shear joy of being a cheap SOB has to be experienced to be believed. .

What an inspiration.

 

[BunsGettingFirm]

I got a mysterious letter from some corporate legal/HR flack today regarding some urgent business conduct issue that she needs to speak to me one on one. I don't think I surfed porn on my computer (too busy at work), so for the life of me, I can't fathom for what it is. Then again, the project I run has dozens of contracts with external companies, friends and enemies throughout the company, and significant exposure worldwide, so I could have pissed off someone without knowing it. If at any time the conversation turns into a modern day version of the Salem witch hunt, I'll just tell her to bend over really far and kiss her own ass, and she can take over the project so that she can enjoy being on midnight calls with India. I'm off to bumming around Southeast Asia and getting me self some much-needed brown honey. :0

 

[ejman]

I got a mysterious letter from some corporate legal/HR flack today regarding some urgent business conduct issue that she needs to speak to me one on one. I don't think I surfed porn on my computer (too busy at work), so for the life of me, I can't fathom for what it is. Then again, the project I run has dozens of contracts with external companies, friends and enemies throughout the company, and significant exposure worldwide, so I could have pissed off someone without knowing it. If at any time the conversation turns into a modern day version of the Salem witch hunt, I'll just tell her to bend over really far and kiss her own ass, and she can take over the project so that she can enjoy being on midnight calls with India. I'm off to bumming around Southeast Asia and getting me self some much-needed brown honey. :0

Well, I can certainly see the connection to the Life Satisfaction and Stress parts of the OP thread tittle. The connection to the frugality part however is somewhat mystifying...

 

[BUM]

Here's some more recent research by Dr. Stanley:

What explains happiness in life? I don't have all the answers. But, as a review of both my books and blogs, happiness in life has little to do with the brand/price of the watch one wears, the stores one patronizes, the make of car one drives or the brand of vodka one consumes. One's overall happines in life has nothing to do with the overall price one pays for wine, the size or market value of a home, not even the price one pays for a haircut.

To shed more light on this issue, I examined the relationship between happiness in life and more than 200 characteristics, behaviors and attitudes of 1,574 high income/high net worth respondents from one of my national surveys. Note that correlations do not necessarily indicate cause and effect.
Beyond health, family and job factors, why are some people more satisfied with life than others? In terms of statistical significance, the higher one's level of happiness the more likely he/she is to agree with the following statements [by rank order of variation explained]:

1. I have more wealth than most people in my wealth/income group.
2. We are financially better off than our neighbors.
3. I donated 5% or more of my income last year to charity.
4. I live well below my means.
5. I was raised in an atmosphere filled with love and harmony.
6. My parents taught me how to invest and manage money.
7. Politically, I am more conservative than liberal.
8. I inherited less than 1% of my net worth.
9. My spouse is more frugal than I am.
10. I invested 10% or more of my income last year.
Also note that both net worth and income are associated with happiness. Statistically, net worth is the more important of the two. But even more important than net worth is relative net worth (as suggested in Item 1 above). Relative net worth is all about how productive one is in transforming his/her income into net worth compared to others in one's income and age cohort as well as within the context of one's neighborhood environment.

Those who can easily afford their consumption lifestyle tend to be significantly happier than those who struggle to make ends meet by acting rich. I have consistently found that those within the same income/age cohorts who were raised by loving and nurturing parents tend to spend less and save more of their incomes than those who are not raised in this type of atmosphere.

Retrieved from: To Be Happy-Stop Acting Rich

I'm about 9.5 out of 10

 

[bbbamI]

What an inspiration.

Oooooooh, I thought we all did.

 

[NW-Bound]

Finally, people are admitting that counting money can be more fun than spending it!

Many descendants and relatives of Scrooge McDuck here! We might be all related.

 

[FUEGO]

Well, I can certainly see the connection to the Life Satisfaction and Stress parts of the OP thread tittle. The connection to the frugality part however is somewhat mystifying...

Frugality gives people the financial resources to be able to stand up for oneself even if it means you get canned.

 

[BigNick]

But there is this vicious rumor going around that you can't take it with you.

I'd like to try, but I'm afraid it would melt.

 

[Retire2013]

I believe that if Henry David Thoreau were alive today, he'd be a member of our Forum, perhaps even a Moderator/Administrator--unless he chooses not to have a computer and internet, etc.

 

[Onward]

I believe that if Henry David Thoreau were alive today, he'd be a member of our Forum

I guess I'd have to change my avatar.

 

[rockyj]

Perhaps it's readily apparent from comments and embedded quotes above (if not from any number of previous threads here), but a key point about frugal living (and here I'm using "frugal" only in the fullest positive sense of the empowering habit of living beneath your means - not cheapskate, not deprivation, etc., per another recent thread - just dealing with your situation and learning to be happy with enough - however you choose to define that), is that it works both sides of the equation. By definition, living beneath your means is a requisite condition for accumulating wealth; i.e. if you spend all your resources, you won't have anything left to accumulate, and if you spend even more you end up a slave to debt. So frugal living and investing the difference "will get you there", whereas the alternatives definitely will not. At the same time, living beneath your means "lowers the bar" for the target level of ongoing expenses that will need to be met by future income streams from whatever wealth you are able to accumulate - making it easier to "get there" than doing otherwise. That seems less stressful to me on both counts, during accumulation and once you've started withdrawals. I would think it very empowering (and therfore stress reducing) over time for just about anyone.

 

[haha]

Well, I can certainly see the connection to the Life Satisfaction and Stress parts of the OP thread tittle. The connection to the frugality part however is somewhat mystifying...

Have you tried to buy any stateside honey lately?

Ha

 

[Onward]

Have you tried to buy any stateside honey lately?

 

[kcowan]

The problem with wealth is that it creates too many choices. If you can live anywhere in any type of home, how do you decide? How many homes should you have.

Is the best entertainment system really good value?

Is the Rolex better than the Movado?

Is Grey Goose better than Smirnoff (yes)?

Obviously such people have been used to different living than most people here. And studies have shown that they are not happy because they are not sure they are making the right choices since they have so much flexibility.

 

[ziggy29]

Either my wife and I spend it all and enjoy it or else it will go to charities we support if our money lives longer than we do. Seems like we win either way.

 

[rescueme]

Many descendants and relatives of Scrooge McDuck here! We might be all related.

Sure are (Quack!)...

 

[Amethyst]

The problem with wealth is that it creates too many choices. .

Oh the horror! The pain! The agony! Please, may I take some wealthy person's choice-provoked distress upon myself? I gues Mr. Amethyst should be happy he drives a 5-year-old Ford Focus and doesn't face the awful choice, Ferrari vs. Lamborghini

OK, I do apologize for that uncontrollable burst of sarcasm....the idea of poor people being happier than rich ones has always had me rolling on the floor.

Well, if the rich person is dying, while the poor person is bursting with health, I would trade places with the poor one. Or if the rich person has been kidnaped by terrorists...who are forcing him to listen to bubblegum songs 18 hours a day....well, you get the idea.

Amethyst