Happiness and Money, With Insights from John Bogle

According to an authoritative article in American Psychologist magazine, it’s not money that determines our happiness, but the presence of some combination of these three attributes:
(1) autonomy, the extent to which we have the ability to control our own lives, “to do our own thing”;
(2) maintaining connectiveness with other human beings, in the form of love of our families, our pleasure in friends and colleagues, and an openness with those we meet in all walks of life; and
(3) exercising competence, using our God-given and self-motivated talents, inspired and striving to learn.

– John Bogle, Enough, page 131

For those unfamiliar with John Bogle, he was the founder and first chief executive of Vanguard, the investment firm that I’ve used for my own investments for many years. He’s credited for creating the first index fund and spent much of his life expounding their value in the world.

Enough was a book that he wrote fairly late in life that delved into how to balance a drive for financial success with a well-rounded life. His core argument, as you might note above, is that money alone can’t buy happiness. It can play a role in a better life, but that role is fairly limited and small.

Rather, Bogle identified three factors (noted in that quote above) that provide the foundation for much human happiness.

First, there’s autonomy. Autonomy simply means the freedom to make your own decisions. The more autonomy you have, the better. The less autonomy you have, the less you feel like you have any control over your own life, and that’s often a direct path away from happiness.

Second, there’s connection with other people. Social relationships centered around positive reciprocal interactions (meaning you’re nice to them and they’re nice to you), particularly those with lots of deep and meaningful interactions (like those with your core family and friends), are a constant source of joy.

Finally, there’s challenging and meaningful work. You do work that stretches your physical, mental, and other capabilities to the limit and produces work that’s fulfilling and that you can be proud of.

I think that Bogle’s observation that most sources of happiness are made up of some combination of those elements is spot on. Whenever I think of the moments in my life where I consistently feel happy or joyous, there’s almost always at least one of those elements present, and there are often multiple elements present.

Unfortunately, modern life often seems to run counter to these three elements. People feel trapped by their responsibilities and their debts. People interact face to face in meaningful ways far less than they once did – we’re isolated because of the internet. People often wind up in jobs and other life situations where they don’t feel engaged or challenged in a meaningful way. Those factors add up to unhappiness.

What’s interesting is that, while none of those elements are directly linked to money, they each have a lot of indirect financial implications. Let’s dig into these.

Autonomy, Happiness, and Money

The first of Bogle’s elements of happiness is autonomy, which he describes like this:

the extent to which we have the ability to control our own lives, “to do our own thing”

A good way to think about autonomy is to look through your day and ask yourself how many of those things you are doing completely of your own free choice. What things do you do only because you have to make money? What things do you do only because of a personal responsibility, like parenthood? What things do you do because you’re afraid of letting someone else down?

In general, the larger the portion of your time that you spend on tasks that you chose of your own free will, the happier you’ll be.

Note that this does not mean having your choice of anything possible to do in the world. Everyone has some sort of restriction on what they can and can’t do. It simply means that, of the reasonable choices available to you, you have the freedom to choose what it is that you want to do.

Obviously, there are varying degrees of autonomy. For example, with my own writing work, I have the freedom to decide what to write about and how to write about them, but I’m still obligated to actually write consistently if I want to earn an income. That’s a lot more free than having a boss hovering over every single article choice and an overzealous editor changing every other word that I write, but it’s less free than being able to wake up in the morning and just say, “Nope, no writing today. I want to go on a twelve mile hike instead.”

In general, the closer you get to full autonomy in all areas of life, the happier you’ll be.

Obviously, having a certain amount of money makes reaching higher levels of autonomy easier, to an extent. For example, a person up to their eyeballs in debt will have to simply accept being pushed around at work, while a person with some money in the bank can walk away from a bad work situation (though they will still have to find employment). A person with even more money in the bank can simply walk away from having to do work in exchange for money, which is an even higher level of autonomy.

The challenge for most people is that achieving a higher level of autonomy can often feel like reduced autonomy. If you want to get ahead financially, you have to spend significantly less than you earn. This means that you’re choosing to have a reduced number of options in your life so that you can have much broader options later on.

The catch, of course, is that choosing to spend less than you earn really is autonomy at work. You’re actually making a choice – you’re choosing to look at just low cost options right now so that later on you have the choice to walk away from having to work for money, for example.

The real restriction on autonomy with your money happens when you lash yourself down to a high standard of living and a lot of bills. This means that you have to stick with your job, even if it’s a miserable experience. You might have some freedom to job hop, but when you’re walking a tightrope with a lot of bills and debts and a high daily standard of living (meaning you buy lots of expensive things, even if they don’t bring any sort of lasting happiness), you must keep at least some sort of high paying job.

It’s that feeling of being trapped by your possessions and your lifestyle and your debts and your job that makes a person feel like they have no control over their lives, no autonomy at all. This is the source of unhappiness for a lot of people, something that’s so prevalent that even Hollywood picks up on it with films like American Beauty.

How do you break out of this? It’s easy. Spend less than you earn. Get rid of your debts. Adopt a less costly standard of living. Put away money for the future.

Yes, that means you might not have a lot of little treats and splurges in your life, but instead you build something that’s a source of lasting happiness: autonomy.

Human Relationships, Happiness, and Money

The second of Bogle’s elements of happiness is human relationships:

maintaining connectiveness with other human beings, in the form of love of our families, our pleasure in friends and colleagues, and an openness with those we meet in all walks of life

Here, Bogle is talking about positive, meaningful relationships with other people, ranging from the deep relationships we have with our family and closest friends, the meaningful relationships we often build with colleagues and other friends, and even the initial meeting and quick relationships we have with people we’ve just met.

This is true even for quiet, introverted people. I’m an introvert and there are many times when being social can be quite hard, but I definitely feel the incredible value of having good relationships in your life.

There are a few problems with this, however.

For starters, social media is inherently damaging to friendships. As this article points out, social media basically allows us to collect acquaintances and then devote more time to those acquaintances than we should compared to the actual value of the relationship. Think of the times you’ve fallen down a rabbit hole of finding out about a person you used to know or that you barely know at all.

At the same time, we buy into the idea that a fleeting internet connection of social media updates and the occasional text is the equivalent of maintaining a real relationship. Our relationships slowly become more and more shallow and we miss out on those deeper connections with people. It’s so easy to just send a message to someone every once in a while without actually seeing them… and then that relationship fades away.

It doesn’t help that many people treat social media as a place to insult, shock, and annoy others and to express extreme opinions and instigate arguments, none of which lead to positive relationships.

There’s an extremely powerful article on Upworthy by Mark Greene entitled Loneliness is killing millions of American men. Here’s why. Simply put, modern society doesn’t encourage close relationships between people outside of one’s immediate family. In fact, such relationships are discouraged, and that often leads to a deep sense of loneliness.

Here’s the truth: Many of us work so hard to earn the money we need to maintain our lifestyle that we often don’t have the energy left over to build good friendships with people. We get up, go to work, go home, flop on the couch, watch television, and fall asleep, and then begin the cycle anew. That’s a lonely cycle.

Again, the arrow of success here points toward spending less money. If a person spends less money, they begin to reduce the power that their employment has in their life. They don’t have to give so much of their emotional, mental, and physical investment to their work and have more energy left over for building and maintaining real relationships (not social media ones).

Another good strategy is to dump social media, or at least reduce your exposure to it. Invest instead in building real relationships with people or in putting out positive value (and blocking negative folks). If you go negative on social media frequently by arguing and trying to elicit reactions, step back and take a break. You might be getting a hit of excitement in doing so, but the overall effect is likely a negative one.

I also recommend setting aside time in your busy life to actually spend doing things in the real world with friends. If you don’t have a lot of local friends, look for community events you can go to where like-minded people might be. I recommend checking out Meetup, as well as the calendars of your local community and your local library, for starters. If you do have local friends, make an effort to do things with them more consistently, both in large and small groups.

The more real meaningful relationships you build, the better.

Competence, Happiness, and Money

Bogle’s third element of lasting happiness is this:

exercising competence, using our God-given and self-motivated talents, inspired and striving to learn

I am immediately reminded of the concept of “flow state,” which I’ve mentioned on here many times as one of the biggest sources of happiness in my life.

“Flow state” is when you get so absorbed in doing something that’s actually challenging for you in some way (mentally or physically or whatever) that you lose track of time and place. Often, when you’re in that state, you’re incredibly productive and get a shocking amount of work done, but even more than that, being in that state generates a lasting sense of joy, one that persists for quite a while after you break out of that state. It just feels good.

It’s worth noting that this state doesn’t occur when when you’re doing something that isn’t engaging and you zone out, like watching a television show or browsing websites. Often, doing that leaves you feeling tired and downbeat rather than happy.

If you want to feel more joy in your life, consistently challenge yourself. Choose work projects that are right at your skill level (or, ideally, just a bit above your current skill level). Try doing challenging things at home, like making a challenging meal or reading a challenging book. Really exert yourself with exercise.

You will have to bring competence to the table when you challenge yourself. You’ll have to bring mental and physical skills you’ve built up over time, and the use of those mental and physical skills to the fullest will make you feel good.

Yes, sometimes you’ll bite off more than you can chew and you’ll fail. You’ll mess up a meal. You’ll get confused by a book. You’ll drop a ball. You’ll throw a frisbee into the woods. That’s okay. That’s part of practicing competence right up at the edge of your skills, and it’s worth it because those moments when you’re bringing your mental and/or physical skills and focus to the table and you succeed, you’ll feel tremendous.

As I noted earlier, it’s in those moments when I’m really engaged with my abilities that I fall into a “flow state,” and I always feel better during and after those states. They just lift up my mood for a long while afterwards.

It’s worth noting that activities that produce a “flow state” don’t have to be expensive at all. I find that I achieve flow state most often when I’m working, but I often reach it when I’m reading a book, playing a deep game, hiking in the woods, or practicing taekwondo. In all of those cases, I’m doing something that’s physically or mentally engaging and it’s in a situation where I have an uninterrupted block of time to devote to it. In all of those cases, the cost is completely negligible. In all of those cases, I feel tremendously good – happy and satisfied with my life – when I “snap back” to being more aware of time and the world around me when I’m finishing up.

Final Thoughts

Bogle’s recipe for a happy life doesn’t center around spending a lot of money, though having some money for the future can be helpful.

His first ingredient, autonomy, is probably the one most tightly linked to your money, as having money in the bank and a healthy gap between your income and your spending will give you a much greater degree of autonomy in your life.

His second ingredient, strong human relationships, doesn’t really cost money. It just requires you to devote some time and attention to cultivating those relationships and putting yourself in social situations at least some of the time.

His third ingredient, competence, is found whenever and wherever you use your mental and physical capabilities. Again, that doesn’t cost money.

The role of money here is to support these endeavors by giving you more autonomy over your time so that you can build more meaningful relationships and choose activities that allow you to dig into your skills. This doesn’t mean living a life of luxury. It means living a life of meaning.

Money truly cannot buy happiness. That must come from within, and these are ways to help you cultivate it. Money’s role in all of this is simply to help you build a life where you’re doing things that bring you genuine happiness. Making decisions for yourself, having meaningful relationships, and pushing your skills to the limit are three powerful ingredients in finding that happiness.

Good luck!

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