Why You Should Put a Price on Happiness
I wake up more or less with the sun streaming in through the port side window. It’s early, but hardly an impressive hour to be rolling out of bed.
Barefoot and bare-chested I grab some cold water in the kitchen and head up deck. Our sailboat is bobbing gently in the morning waves, then sun is hot but the steady Caribbean breeze makes up for it. Erin’s up already and exercising on deck while streaming to her students.
Heart pumping from the swim, I sit at the table outside and pull out a notebook, a book, and my laptop. Doing a bit of ‘copy work’, until I get my mind rocking and ready to journal and then write for real. Coffee time.
A few hours of ‘work’ which involves 2 hours of uninterrupted writing. Essays, a book on our industry, blog posts for my fun side projects, landing pages/email copy to be sent off to developers, whatever.
By 10:30 or 11 it’s time to hit the real business/management stuff. Check in on how our deals are going, respond to any questions/fires etc. Maybe I need to give someone a ring, but the team’s capable of getting the job =done in the meantime.
The afternoon is for reading, and exploring (depending on where we are). Fun in the sun, and some relaxing with occasional mischief. A long nap with Erin (and maybe someone else), a few chapters of a book off my ever-present list.
The evenings for a nice dinner, and open time. If we have something good planned great, if we don’t, I’d watch a movie and maybe hack on some personal little initiative (a research project for the business, or one of my personal blog projects).
Now’s the time to ring a good friend and catch up.
Now it’s getting late, and time to unwind properly before bed with Erin (this can mean a whole variety of equally excellent options)….
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Every 90 days I take another look at what would a perfect day be like for me, and then try and work backwards from there. This is a modification from Taylor Pearson’s get focused article (definitely worth the read by the way).
Setting goals, having dreams, your ‘vision board’ etc. is all fine and good. But when it comes to actually breaking down the things you ‘want’ in this life, most people fall short. Here’s how.
They don’t actually want the things they say they want.
This is a topic for another time, but the more I ask people about their dreams the more I wonder if they even know. Most people list either the same tired handful of high-end luxury brands (The Ferrari, the Gucci, whatever), or that they want to ‘travel more’.
Boring. And you don’t even like to drive in the city.
The second part of dreams that I find even more fascinating is this:
They have no idea how much their dreams would cost them.
We’re talking in real dollar terms, how much does your perfect life cost each year? “Way too much,” they scoff. But they never took 20 minutes to sit down and calculate it.
You can lease a Ferrari for a few thousand per month. Most people without a truckload of kids and a mediocre corporate job could afford it if they really wanted to. But that’s not the point, this isn’t an ‘how to lease overrated luxury cars’ article.
My point is that if you don’t break down the financial requirements of your dream lifestyle, you’ll never be able to architect a career/life plan that can ultimately get you there. Or, you may find out that some version of your dream life is attainable today.
Defining Your Dreams (For Real)
I find the best way to do this is to work backwards from a ‘perfect day’ daydream. This exercise isn’t new, and plenty of lifestyle design people have talked about it over years (despite few sitting down themselves to write it out).
So what does a perfect day look like? Where are you, who are you with, what do you see, smell, touch? Go into is a much detail as possible, and don’t worry about overkill, we’ll prune it down later.
Got it written? Ok, now let’s make a list of all the other major things that give you joy to spend money on. Ramit Sethi has some great writeups on this if you’re having trouble figuring out what you love to splurge on (everything is not an acceptable answer). What kind of stuff are you into that other people find funny you spend on? Does buying beautiful designer shoes bring you joy, or would you be fine rocking converse every day?
Here’s my list of major life value-adds:
Flying business class on long-haul flights
Having my ‘toys’ (Sailboat, and Motorcycle) to tinker on.
Books, all the books.
Staying in lavish Airbnb’s with a killer view.
Sit down and think through all the things in your life that spending on brings you joy. The idea is that if you could spend on all these things, that you’d be a major step closer to hitting your ideal life.
Buying Experiences Instead of Things
Advertising has us chasing things we don’t need, so we can impress people we don’t like (Fight Club paraphrase).
This is true, and can be incredibly sad if you really think about it… but I’d go one step further to alter this.
“Advertising has us chasing things, when what we really want as humans are feelings.”
The average man that buys a fancy or luxury car doesn’t derive his really pleasure from the machinery itself (except for a smaller percentage of mechanic enthusiasts that pick a very specific car for how it’s made), what they are really after is the feeling of owning it and being admired… ideally with a sexy companion in the front seat.
Think about any of your fantasy daydreams that involve expensive things (the yacht, the jet, whatever)… in your dream is it really the item itself that matters? Or is it the visceral experience that comes up. Ripping through the mountain pass curves on California’s Highway 1, looking out at the sunset with the warm salty breeze flowing over your head in your convertible…
That feeling is amazing, right?
Now think about it again. Would it matter if you were in a 150k BMW convertible, or a 5 thousand dollar used Mazda Miata to feel that same experience?? It wouldn’t, my friend.
And that’s my point, what someone at first blush would call at 100+ thousand dollar experience, can be had for a few thousand. Or even LESS, if you just rented the miata for a week and did a road trip with your partner.
Tim Ferriss, and Ramit Sethi have alluded to this in varying levels (they have drastically different styles), but it all boils down to the same thing.
The experiences you actually want, cost much less than luxury advertising would have you believe.
Lifestyle Arbitrage - Considering Your Options
Where you live matters drasctically in how much your dream life costs. Want to always go to amazing restaurants to eat every weekend? That’s going to come with a very different price tag in New York VS. Guadalajara.
Make sure you’re exploring the possibility of leaving your current big expensive city for an exotic affordable one. The world has become a very globalized place in the last 20 years, and with that standards of food, living, and entertainment have skyrocketed in notoriously cheap places.
In love with your New York or LA and couldn’t dream of moving? Fine, you’ll have to work harder and make more (but still doable) to get where you want t ogo.
If you’re not married to your current city, I’d encourage you to check out other parts of the world and see if you can get the experiences on your list, for less.
A quick note on relationships
“But money can’t buy you happiness!” you say? Well my friend, you are absolutely correct. However, it can buy the space, and situation to facilitate your ultimate happiness. If you hate the winter, money can buy you a ticket to the beach. If you love your family, money can get you a nice apartment that’s close to where they live (or vice versa).
I’d imagine on your list somewhere is a few entries about your family, friends, or a future partner to be-named-later who looks as good on the outside as they are on the inside.
You would be correct in saying that money can’t buy you relationships like this. But it can certainly help set you up for success. If building a strong relationship with your parents is important to you, then being able to fly out to visit them (or take them on epic family vacations) would be insanely valuable to you.
Your Perfect-Life Cost Spreadsheet
Once you have a list of all the components of your perfect life (where you’ll live, what you’ll do, what you’ll own etc.) it gets pretty easy from here.
Figure out roughly how much things cost (basic googling will suffice here) and start listing it out in a spreadsheet. What’s rent of a nice place in New York City? A few minutes of searching on Airbnb/apartment finders should get you a picture. These numbers don’t have to perfect, they just can’t be overly optimistic.
The main expenses you want to hit are where you live, how much you’ll travel, how much you’ll eat out, and any kind of hobbies/toys you want to pursue. I also like to factor in the more boring living costs (healthcare, retirement investing/saving etc.).
At the end of this exercise, a simple sum is all you’ll need to figure out roughly how much you’ll need to make per year to afford the life you’ve been fantasizing about. This number may shock you in both directions. For some people, it’s been well within reach all this time, for others a brief moment of sadness might wash over you as you realize there is no way to attain your budget without a lot of luck.
I made my spreadsheet template public by the way, you can copy it from Google Sheets here.
What Happens If I’ll Never Be Able to Afford My Dreams?
You really have only two options (aside from doing nothing).
The first is that you alter your career/business trajectory radically to give you a shot at earning what you have listed in your spreadsheet.
The second, is taking a long hard look at your wish list, and determining if you really do want what you say you want. This exercise is a bit more involved, and involves some introspection and a pretty major mindset shift (for some).
How do you approach it? My next article is going to tackle this in insane detail. Be sure to jump on my ragtag list of travelers, entrepreneurs, lifestyle designers and mainstream misfits so you don’t miss it.