Why do people who “have everything” always seem to want more?
One explaination is that we get bored of what we have.
The satisfaction of all needs, the elimination of all discomforts, produces a state, not of contented tranquillity, but of dissatisfaction, which has to be relieved by novelty, as an itch needs to be relieved by scratching.
As affluence increases, boredom grows, provoking an ever more frantic search for stimulating experiences.
Our nature is such that we are never satisfied with what we he have. So we keep on working to stimulate our jaded appetites.
Humans are rational utility maximizers
While the economist John Maynard Keynes saw leisure/free-time as an universal desired benefit, another economist named Gary Becker, looked at leisure as the cost of not working.
Becker pointed out that the cost of an evening at the theatre is not simply the price of the ticket, but the cost of not earning in those hours.
Leisure is therefore a substraction from hypothetical income.
Gary Becker pictured the individual balancing at the margin of the advantages of earning income vs. spending it.
This way, the choice between work and leisure is essentially a time-allocation problem.
Leisure is therefore not free time, it is costly time. And the higher your income, the costlier the time.
If this is right there is no reason to believe that people will work less when they earn more.
Probably people will work even more because of the opportunity cost.
People Spend More Money To Enhance Status
Economists and sociologists have identified 3 types of spending designed to enhance status:
1. Bandwagon goods: Goods that are desired because others already have them
2. Snob goods: Goods that are desired because others do not have them
3. Veblen goods: Goods that are desired as long as they are expensive and known to be expensive
Think about when you were little.
You wanted that cool pair of Fila sneakers because all the cool kids had them (bandwagon goods).
Antother time in life you probably wanted to be the first to have something too, eg. I remember I was one of the first that had a Siemens C35 cellular phone (snob goods).
I haven’t been an offer for Veblen goods yet, but maybe I would if I became filthy rich? Examples of Veblen goods is buying several sports cars, flying first class, ordering the most expensive champagne when you’re out at party etc.
As long as you’re an offer for these status expenditures you won’t reach financial independence.
I believe that insatiability leads us away from the good life. It takes us away from what is truly valuable in life.
What Is the Good Life?
Every human being aspires to live a good life. The problem is, we all define the phrase “good life” differently.
When it comes to living the good life, we almost all have a certain idea how such a life should look like.
For some, the good life is all about spending time playing video games or watching television, while eating and drinking as much as they please.
Others associate the good life with days spent in nature, pondering and philosophizing about life.
Some simply want to spend their time in a worthwhile and productive manner, for example by trying to make this world a better place.
Others believe that the good life is all about pleasure, wealth and the fulfillment of all their (material) wishes.
These examples raise an important issue. When it comes to the good life, some understand it as the continuous pursuit of their desires by means of mundane activities.
Others consider it as the striving for personal excellence and the wish to contribute something meaningful in life.
We then have to ask ourselves the question: can a good life really be characterized by a high standard of living alone?
If this were the case, living the good life would primarily consist of the never-ending attempt to fulfill one’s desires and material wishes.
A high standard of living can certainly be regarded as part of the good life. But in itself, the good life does not alone consist of wealth and abundance. As such, it would be quite limited and out of balance.
In line with this arguing, the popular philosophers Socrates and Plato primarily define in their works the good life as the examination of life, the mastery of the self and the contribution to one’s community.
To them, living the good life integrated aspects of self-control and civic duty.
As such, the good life consisted of reining in your passions by attaining mastery over yourself and to contribute to your community.
But Seriously, What Is The Good Life?
Living the good life means living a life that sets you free.
A life that satisfies and fulfills you, that adds happiness, joy and a sense of purpose to your life.
But it also means to live a life that is worthwhile – a life that makes a contribution, instead of being solely self-centered.
The good life is a life that is not primarily wasted with mundane activities.
Instead, it adds value and contributes to making this world a better place.
Even more so, it also contributes to your own growth.
The attainment of a high standard of living alone might not be fully fulfilling and will definitely not set you free.
Therefore, the good life combines aspects of exploration, self-mastery and civic responsibility with the endeavor to spend your time in a worthwhile manner that both satisfies and fulfills.
It is only through the combination of these aspects that a joyous and happy life can be truly considered the good life.
Even further, people that do not reflect on the nature of things are not living a worthwhile life. If a person is not examining what they value and why, the chances of them being able to live a good life are reduced.
In their quest to live the good life, the vast majority of people shift their attention from the present moment to a desirable state in the future.
They think that the good life can only be attained through the acquisition of wealth, status and a variety of other things.
Therefore, these people will never truly be able to live the good life, because there will always be something missing.
They either do not have enough material possessions to satisfy all their desires. Or they are no longer able to enjoy these possessions after a certain period of time.
For this reason, the ability to draw happiness from life’s simple pleasures is essential.
It’s a person’s ability to take pleasure from even the most simplistic things in life that will help in understanding how worthwhile this present moment is.
Conclusion about the good life
Living the good life means to strive for self-mastery, exploration and the improvement of the world around you.
It is a worthwhile life that sets you free. A life that is in balance and fully satisfies and fulfills you.
But the good life is not just a life that adds happiness, joy and pleasure, but it also desires to attain mastery over the self.
The good life therefore is not a life spent by the never-ending pursuit of personal desires.
Instead, it seeks to reign in your passions by attaining self-control. The one who is living the good life also contributes to the betterment of this world and adds value to it.
How Much Money Do You Need To Live The Good Life
Naval Ravikant defines money this way: “Money is how we transfer wealth. Money is social credits. It is the ability to have credits and debits of other people’s time.”
Money is necessary to survive. With money you can potentially buy back your freedom by saving and investing over a long time.
When your investments pay you more every year than you manage to spend, you’re financially free.
For me the good life costs me $20,000 per year (only for me). Using the 4%-rule this adds up to $500,000.
The success rate of my portfolio lasting for 10 – 20 years is 100%. If my portfolio should last for 50 years (I will be 82 years old), then the success rate is still 93%.
But it’s getting better.
The median portfolio value will have increased by 10,39 x my starting portfolio value after 50 years even if I withdraw 4% of it year after year. This means that my starting portfolio value will be worth: $500,000 x 10,39 = $5,195 million!
PS! My index fund portfolio is currently worth $305,232.
If the market continues to deliver 10% per year from now, I’ll be financial independent in april 2022!
This was part 2 in the series “How Much Money Is Enough To Live The Good Life?”.
If you missed part 1, you can read it here: How Much Money Is Enough To Live The Good Life? Part I
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