What does it mean to have “enough money?” Is that an ever-moving goalpost, or can we actually pinpoint a dollar amount for optimal happiness? And what’s the psychology that underlies this money anxiety?
Reema talks with listener Miriam Tinburg, who tackled this question in a very practical way when she quit her job to become a content creator. Then Reema digs into the research with Wharton professor Wendy De La Rosa, who helps us understand why this is more of a psychological question than a math problem. And things get more complicated when we hear from Jo Nemeth, an Australian woman who lives “without money.”
A few takeaways:
The “hedonic treadmill” is the idea that no matter how much we have (whether that’s money, pleasure, or anything other good thing) we still feel the need for more. Our brains are really good at adjusting to the “new normal” and then looking ahead for the next target.
Objective vs. subjective wealth: Your objective net worth is a simple equation of all your assets minus all your debts. But that’s not the only way to measure wealth. De La Rosa explains, “Our subjective wealth is all about, how do you feel about your objective wealth? Do you feel like you have enough money? Do you feel like you lack money? Do you feel like you have enough resources? And it’s all subjective.”
Your feelings impact your financial behaviors more than your actual wealth. “In our lab we’ve shown that over and above your objective financial situation, how you feel is more indicative and predictive of your financial behaviors than where you are,” says De La Rosa. They’ve found that those who have been made to feel less wealthy not only spend less but also save less, too, regardless of the amount of money they have!
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