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This is the first part in my “How Much Money Is Enough To Live The Good Life?”-series.
These articles will be of philosophic character and questions about money and happiness will be raised.
Part 1 – Introduction
In 1928 John Maynard Keynes (economic philosopher) addressed an audience of Cambridge undergraduates on the theme “Economic Possibilities For Our Grandchildren”.
In his speech he showed them this forecast of how many hours of work you had to put in every week:
John Maynard Keynes predicted that by the 21st century, we would grow so wealthy that we would need to work only 15 hours a week (3 hours/day).
Keynes was right. We did grow wealthy—even wealthier than he predicted.
GDP per capita is four times what it was in his time.
But he was also wrong. We aren’t working 15-hour weeks. Weekly work hours in the US have hardly budged from the average of 48 in Keynes’ day.
In Europe the average is aprox. 37,5 – 40 hours per week.
Keynes thought that as we got richer, each additional unit of money would be less and less valuable to us, until we reached a point where it wouldn’t make sense to pursue more.
If each extra dollar yielded a little less extra satisfaction, then why don’t we prefer more time off work?
Human Needs And Wants Are Not The Same
Keynes made the mistake of thinking that human wants are finite.
He failed to distinguish wants from needs. Needs (the objective requirements of a good and comfortable life) are finite in quantity, but wants, being purely psychic, are infinitely expandable, as to both quantity and quality.
However, it turns out that there is a certain need that requires an infinite supply of money to satisfy: the need for social status.
It’s not too hard to understand how status competition leads to increase in spending. And therefore it doesn’t matter that we’re richer than we were in 1930.
What matters is where we stand on the economic hierarchy, and that means spending more and more to stay there. Keeping up with the Joneses.
What Defines The Good Life For Me?
And is it possible to give up the status game and work less than 15 hours a week?
Since becoming aware of how much of my energy goes into playing and winning the status game, I’ve decided that what I want is a life where I can live quietly, read books, walk in nature, do sports and just enjoy quality time with my wife.
It’s quite ironic, because no one knows that I try to reach financial independence at my work place.
They might think I’m all into high spending and living a luxury life.
They see me as an high achiever always performing at my best.
But deep down I’m working hard now, so that I can be free from modern day slavery in some years.
I dream of working less at my 9-5 job and more on what I’m passionate about.
To me it’s not important to impress others. My lifestyle is not expensive at all.
My average monthly spending in 2019 was only $1,646. Apparently this brings me the good life.
This year I’ve been to Australia & Singapore for almost a month, one week in Spain, almost two weeks in Denmark and lots of weekend trips to Sweden.
I’ve done what I wanted to do. Spending more money on those trips wouldn’t make me happier. Spending more this year wouldn’t make me happier.
Now my main goal is to invest $500,000. I’ll reach this milestone in aprox. 2,5 years.
After this I’m free to do whatever I’d like to do. Working part time, start a business, travel more etc.
For me $20,000 per year is enough to live the good life. If I’d make more than that, the money would only be invested anyway.
Three question for you to ponder until next time:
-What is enough for you?
-What is your dream life?
-If you’re not living your dream life yet, what has to be done for you to get there?
This was part 1 in the series “How Much Money Is Enough To Live The Good Life?”.
In part 2 we will look at the reasons to why we don’t work 15 hours per week (joy of work, insatiability and pressure). We will also look more at the question of how much money that is enough.
Have questions, comments or suggestions? I would love to help you with your FI-journey.
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Having a goal written down with a set date for accomplishment gives you something to plan and work for.
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