Is it true about money that it doesn’t buy happiness? Say that there are two people, Jim and Carol, and both of them can be considered “rich.”
Jim makes $30,000 a week. He has a yacht, drives a Porsche, and flies a G6 to a snowy mountain resort he owns on the weekends. Jim doesn’t feel like he’s making enough money. He works around 80 hours a week, and he feels like there’s always more he can do. Every lost minute feels like wasted opportunity. Jim feels like the people around him, in his world, are laughing at the amount of money he brings in. It is nowhere near as much money as he thinks he needs.
Carol is retired. She owns her home outright and lives off of her investments, which net her about $30,000 a year. It’s not much, but with few home related costs she feels like it’s more than enough money to support herself and her family, and live the life of leisure she has always wanted for herself.
The difference between these two people is that they have different money goals. Because Jim has really high, unrealistic money goals, his mental wealth is very low, despite the fact that he makes so much money. Carol on the other hand is completely satisfied with her life, maybe even too satisfied, because her money goals were so low that they have all been met. Carol has a high rate of mental wealth. In real income and net worth Jim far outpaces Carol. However, Jim never feels rich. Carol does.
Jim also has a quality of life problem in that his money goals require a constant increase in dividend from him: time. Basically Jim needs to work at all times in order to make the income he needs to meet his money goals. Though his money goals are all directed at creating a life he can enjoy, in order to achieve them, Jim gives up all his available leisure time, depriving himself of those things. Jim is poor, by those standards.
If Jim could realign his money goals to be in proportion to his actual income he would be able to consider himself wealthy, just like Carol considers herself wealthy. This is called your mental wealth.
Realigning your money goals to be more realistic doesn’t mean you have to start living like a pauper. You don’t have to wear a sack instead of clothes or go dumpster diving every time you feel like you need a snack. Having realistic or attainable money goals means that your mental wealth will skyrocket.
Can someone like Jim become someone like Carol without losing the high level of real wealth he already has? Sure. Anyone can. The trick is that adjusting their money goals isn’t going to cost the Jims out there a dime. Wealth is a concept that isn’t quantified in money, but it takes money to feel wealthy. The trick is being realistic about how the money you make can create a life for you, not how you can use your life to make money.