What happy people know about money

Today is launch day for All the Money in the World. A lot has changed on this blog since my last launch day, for 168 Hours in 2010 (here’s the “Hello World” post on that, which I think is worth a read, but I’m biased). That book brought a lot of opportunities into my life, including the chance to write this book.

But, like many opportunities, writing All the Money in the World (ATM) was not easy. 168 Hours was a breeze to write. Not this book. I think the introduction alone of ATM went through six entirely different versions. We worked out a book deal in September 2010 but we didn’t settle on a title until late April 2011, at which point I’d written 90% of a draft of a book. So there was some shuffling around. The whole manuscript went through beta-testing, and what I like to think of as fermentation as I moved to the ‘burbs and had various other thoughts on how people spend their money. Finally, in September of 2011, as I was editing yet again, putting in more stories, I realized…I actually liked this book. I was having fun reading it. And I hope you will too.

So what did the happiest people teach me about money?

1. Sweat the big stuff. In the course of my writing this book, my family moved from New York City to suburban Philadelphia. The top tax rate in NYC (state plus city) is above 12 percent, and comes out around 10 percent for middle incomes. The top tax rate in these parts is about 6.5 percent for PA state plus Philadelphia wages (for non-residents). Income earned outside Philly (as mine is) is a flat 3.07 percent. So we’re talking a 4-9 percent spread, depending on how things go. I love NYC, but at this point in my life, I didn’t love it enough to pay a premium to keep living there. I visit frequently instead. You can afford a lot of train tickets for the difference in cost of living.  

2. Splurge on little things. This is the corollary to point #1. If flowers make you happy, buy flowers. If lattes make you happy, buy lattes. Even if you go wild, you probably won’t manage to spend 4-9 percent of your income on either of these categories! If you spend less on big stuff, you’ll have space for the little things in your budget, and likely will still be able to save.

3. Money may not buy you love, but it does buy you options. None of us knows what life will bring, but in general having more assets gives you more control over a situation, and can make even a bad situation more comfortable. Money can’t keep you from getting cancer, but it means you probably have good insurance, and can afford extra help while you’re in treatment, the ability to stop working without it bankrupting you, etc.  

4. Don’t scrimp more, make more. No matter how badly you need more cash in your life, cutting back from your current standard of living is painful. Set your expenses low if you can, but if they’re already set, it might be more pleasant to figure out a sideline that could bring in some extra cash that you can then save and put toward big goals. If you can’t stomach the thought of working more, then you’ll have to cut back, but at least you’ll be more motivated if you know that you feel the alternative is worse.

5. Reconsider the Joneses. I know who my “Joneses” are. I run past their house once or twice a week. It’s this gorgeous estate on 6 acres. I looked up the address the other day and it turns out the house is for sale. But as I was looking through the photos, I realized that even if I could afford it, there was no way this house would make me multiple times as happy as mine does. Frankly, I’m not sure I’d be any happier in it (the basement looked kind of musty). The owners are also paying multiple times what I am in property taxes for the same services and schools. This realization has made me even happier with my abode.  

6. Not everyone needs to raise backyard chickens. Lots of people are into chicken-raising. Lots of people are into gardens, too. I think both are neat ideas, but I don’t like spending my time on gardening or chicken-raising enough to make such things rise to the top of the priority list. We should spend our time and money on things that are meaningful to us.  Just because DIY living is meaningful to other people — or any other activity — doesn’t mean it will be for you. Know yourself.

7. Spend on adventures. Doing things takes time, money and energy, and especially if you have little kids those things are often in short supply. But life is basically one giant memory. Creating good ones is a good use of cash.

8. Give big and thoughtful gifts. Both to people and to organizations. Gifts nurture social ties and happy relationships are key to happiness overall.

9. Do work you love. Then you won’t want to retire. That’s important because retirement is not generally good for one’s financial situation. Create multiple streams of income so even if one gig goes, you’ve got money coming in.

10. Dream big. Whatever your financial situation is now, over time you can probably change it. And when you do change it, your life will feel more purposeful if you know what you want to do with your resources. Money is a tool that can help us build the lives we want, and a world we’d want to live in. Someday you may have a fortune. So build a life worthy of it just in case.

If you haven’t already purchased a copy of All the Money in the World, I would be incredibly grateful if you’d do so. Please let me know! If you see the book somewhere, I’d appreciate a picture, and please send me links to any blog write-ups you see.

20 thoughts on “What happy people know about money

  1. Congratulations on the launch! I just ordered my copy and am looking forward to it. We have more disposable income this year in no small part due to choices made after reading 168 Hours and the essays that led to this one. I’m excited to read it and share it with friends!

    1. @Calee- yay! That’s the kind of impact I like — the kind that results in more disposable income. Congrats on your new business and thanks so much for ordering your copy.

  2. Congrats! I just finished reading it — great book! I’m already thinking about how to create perfect weekends…not just for myself, but as “gifts” for my husband and sons!

    And just in terms of the general structure of the book, I think you were very smart to state pretty explicitly in the beginning of the book just who your intended audience is (and isn’t)…hopefully that’ll deflect some of the “well, not everyone can do this,” remarks that some people seem to just love to make when they read a book like this one (or 168 Hours).

    1. @CMWP – oh yes, I’m aware of the “who is this book for” issue, and so far the reviews have been pretty fair on that point. Hopefully that will continue. Thanks for reading it and I’m glad you liked it!

  3. Congratulations, Laura. I look forward to reading the book. Perhaps it will soon be coming to an English-language bookstore in Bangkok? That’s where I bought my copy of 168 Hours.

    Your focus on examining values and priorities and then deciding the best way to spend & save money is refreshing!

    1. @Heather- thanks! It’s already available in ebook form. Hopefully it will make it out there, though I’m not sure how many international editions there will be given the dollar-denomination of my money talk. Personal finance books seem to translate less well overseas.

  4. I like the comments on the state wage tax or for example switching to a 15-year mortgage. I haven’t started the book yet but I own it! In Hawaii the state income tax is 11%. In Florida it is 0. We pay close to 9% in NJ which for the very small business owner with the pass through LLC or sole proprietorship OK it might be a smaller amount like $100-150 a month or so..but even if the small business owner earns $100,000, 6% is $500 a month… that is a lot of little pleasures right there or a hell of a family vacation .. if you earn $50,000 that spread is only like .. I think state taxes are flat but not sure… so if you are married and together you earn more then it also might be higher? What is it for Philadelphia city and how does this compare to NYC. Also if you are self employed from home office you can set that office anywhere.. I think technically I could also work from PA. This is a big issue in job creation or maintenance b/c why would a shareholder at a S corp who earns say $1 million in pass through income… for them 6% is $60,000 a year.. I mean it is still not that big a difference but when you add it to the 35% those folks are paying in fed income tax in hawaii those folks are giving back 44% of earned income…that is a lot and we don’t hear much about that in the conversation about economic policy.

  5. Another interesting issue might be how is reinvestment in busienss affected by economic policy .. like in NJ or NY or CA you’d think a business owner would be more motivated to show less income — i.e. if they are part of an LLC or Sole Proprietorship they might be more likely to buy equipment or hire than if they are paying 0 tax in Florida. Has anyone ever looked at this. The Feds had some perks in 2011 that are a bit less in 2012 with regard to investment in equipment etc and depreciation bonuses. The general argument I hear is that with high social security and medicare taxes on employees the businesses selling less than $1 million are not as likely to hire as hiring comes out of net income to the business owner etc I tend to agree with this analysis and think we should waive ss and medicare on an employee or waive state tax on.. interestingly state govs have discretion in this area .they can say to a company hey don’t leave our state so don’t pay this… so i dont’ see why they can’t help out the smaller guys or the woman’s “second” income in tax policy.. What would happen if we had a woman politician who said.. hey married women.. your tax is 0-2% if you stay married..or we won’t count your income in tax if your husband earns 200,000 or more .. now that is some social conservatism I’d like to see ! gov in general has a lot of discretion in how tax policy is enforced (this is a little scary if you think about it the whole idea that you owe the all-powerful, gov, that you owe it money)

  6. I can’t wait to read this book. It comes at the perfect time in my life. This year I will be leaving the glitz and glamour of teaching seventh grade so I can freelance full time and write my second novel. While I’m looking forward to more flexible, sane work I’m sure going to miss that steady, guaranteed paycheck!

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