Updated on 05.01.09

Why Would You Choose to Earn Less?

Trent Hamm

In March 2008, I quit a full time job that earned around $50,000 per year. I did not return to the workplace.

My wife’s closest friend has a marketable college degree and a substantial amount of successful organizational experience. She’s made the active choice to be a stay at home mother to her two children, giving up that income.

A friend of mine had a factory job that paid $12 an hour. One day, he turned in his resignation, replacing that job with another where he swept floors for $8 an hour.

In each case, a person walked away from a job or a career, actively choosing another route that earned significantly less. In our modern world, what would possess someone to make this unorthodox choice? Why are there millions of stay-at-home parents out there? Why do people walk away from jobs that pay well and take jobs that pay less?

It’s simple. Money isn’t everything.

stumblingA long while back, I read and reviewed Daniel Gilbert’s excellent book Stumbling on Happiness. Today, when I reflect upon that book, I realize that one little point he made stuck in my mind. Gilbert wrote about a study that showed people’s happiness with their lives and correlated that information with their salary.

What did he find? $40,000 is a truly magic number. Below that number, people were much less happy with their lives – people with a household income of $20K or $30K were generally less happy with their state of living than people earning $40K.

What’s interesting, though, is that people earning over $40K were not any happier with their lives. Additional income did nothing to increase people’s happiness with the state of their life.

Gilbert offered a bunch of his own conclusions from that study, but my conclusion was pretty simple: any income above a certain surprisingly-low threshold does not make you happier. I won’t say that threshold is exactly $40K – it’s not, because that number varies a lot based on location, number of dependents, and so on – but I will say that the magical amount of “enough” income is much lower than many people think.

What does that “enough” income represent? It represents the amount of money needed to keep a roof over your head, food on your plate, a car in your driveway, and a little bit of breathing room to enjoy life. Income beyond that does nothing more than inflate our basic standard of living – a nicer house, a nicer car, a nicer vacation.

But over the long run, those “nicer” things don’t contribute at all to lasting happiness. Once we have those “nicer” things, we’re right back where we started, wanting something nicer yet. Our Honda becomes the Acura we’ve wanted, and then before long we want a BMW. Our 1,000 square foot house becomes a 1,600 square foot house, then we want a 2,400 square foot house. Our camping vacation in Minnesota becomes a weeklong trek through Yellowstone, then we want weeklong treks through every national park. Our freebie cell phone becomes a Razr, then we want an iPhone.

Once our bases are covered, more of the same doesn’t bring us fulfillment. Instead, fulfillment comes from the things that make you happy and bring you value in life. It might be that your “value” comes from having a big bank account or the corner office – and that’s great.

But for a lot of people, whether they’re acting on it or not, fulfillment comes from other sources. Perhaps it comes from being a parent. Perhaps it comes from work that they’re passionate about. Maybe it comes from minimalist living.

Whatever that fulfillment is, it rarely comes from acquiring more of the same things you already have.

People ask why I’m so interested in personal finance. “It’s got to be incredibly boring to read about 401(k)s all day.” To me, personal finance is just a series of techniques that allows you to widen your horizons, to make things in your life secure so that you can take that leap and fall headfirst into the things in your life that bring you fulfillment. Whatever they may be. It’s a story that I never get tired of investigating or talking about.

Whenever I see someone making the active choice to earn less, I usually smile. Why? Because there’s no clearer sign that they’ve figured this all out for themselves on some level.

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  1. Missi says:

    Excellent post. Reminds me of this one finance book I read called “The Ultimate Cheapskate.” He called this “magic number” each person’s “enough-o-saurus.” At what amount will people be satisfied. He said the first step in slaying your enough-o-saurus is to put a number on it. Then when you reach it, (and maybe surpass it) keep living on that same income you always have and pay down other debts, your mortgage, etc. Couldn’t agree more with what you’ve said.

  2. Baker @ ManVsDebt says:

    We’ve recently made this sacrifice, as well. Last year I sold a business I had founded that was really doing well and was set-up to make a very decent income over the next 3-5 years. The only problem was that it was in Real Estate, which meant we’d be completely glued down to one location for the foreseeable future. We just weren’t ready to make that sacrifice.

    My wife made a similar sacrifice, as she is leaving her teaching job (steady income, good benefits, job security). For us though, the ability and experience that will come with backpacking and traveling while we are young is irreplaceable.

    The good news is that building the business taught me that if I can do it once, I can do it again. I just have to find something that I am passionate about and that let’s me lead a much more versatile and mobile lifestyle. At least for now!

    Really enjoying these type of posts, Trent!

  3. Mrs. Money says:

    Trent, I love this post! I know personally I would rather earn less and be very satisfied in my job. Ultimately I’d like to be a stay at home mom if we can afford for me to do it. Money isn’t everything, and I think the current economic crisis reflects that. Thanks for sharing your thoughts with us!

  4. imelda says:

    Great post. I’ve been toying with the idea of buying a fancier phone to replace the cheap (but pretty chic) one I have. You’ve reminded me why I keep myself out of the tech toy craze–because once I get that slightlier fancy phone, it won’t be long before I want one even fancier. (I was actually considering the example you used–the Razr–and can see myself sliding from that slippery sloper) I’m actually happy with the phone I have now, so thanks for keeping me from falling into that trap!

    Also: I recently received 2 job offers: 1 with a former boss I respect but at an organization I have zero interest in, and a 2nd for at least $15K less in salary at my dream organization. It’s not a difficult choice–I’m going with the dream.

  5. I think it just depends on what your priorities are and how you chose to sacrifice in order to spend more time doing what is important to you and what makes you happy.

    Myself, I love traveling. In order to do as much traveling as I can I cut spending in other areas. I wouldn’t be satisfied with 1 camping trip to Minnesota each year. I have been doing 2 or even 3 major trips each year for a while now, along with other smaller trips on weekends. That is what makes me happy, and I align those priorities up with how I live my life in order to accomplish them.

    It is funny that you mention the National Park thing, as that is exactly what I will be doing in about a month. Hitting every National Park possible while on a road trip around the country. Of course I intend for this to be a low-cost trip, and will share my experience on my website for those interested.

    Travel does not, I repeat, DOES NOT have to be expensive. I spent 2 weeks in Aruba (the most expensive island in the Carribean) for LESS than what someone else might pay for 2 days. This is including my meals at the most expensive restaraunts on the island (Pago Pago). It just takes know-how and a willingness to explore your options.

    I think it is important to emphasize that traveling can be as expensive or as cheap as you want it to be, it just depends on you. I leave for Las Vegas in 2 weeks and won’t be spending very much on that trip either, for 9 days I don’t expect to spend more than $500…that includes hotels, food and entertainment.

    I save my money to do what I enjoy, and I think that is what is important. If you want to read about how I save money while traveling, check out my post about my trip to Aruba on my website hundredgoals.com

  6. Coupon Artist says:

    I agree with this post completely. I could be making a lot more money, but I would be miserable. I think it comes down to what we want- I would rather have the freedom to do the work that I enjoy and the time to spend doing other things that matter to me, than to have a big paycheck to buy more stuff. So many people think stuff is going to change their lives- if I just get that new car, I will be happy. When the car doesn’t make them happy, they think it is because the car is not good enough and that is where the drive to get a better car comes from. Until you realize that stuff is never ever going to change your life or improve your circumstances or make you a happier person, it is hard to recognize that money doesn’t matter. The problem is, for some people, it is a lot easier to buy stuff than it is to figure out what really makes the happy.

  7. Michelle says:

    Do you know anything about Maslow’s heirarchy? You might want to do some research on the topic, I think you’d find it very interesting. It goes along quite a bit with what you talk about frequently on your blog.

    Just an idea for some side reading that might interest you!

  8. Trent Hamm Trent says:

    “It just takes know-how and a willingness to explore your options.”

    Steven, you’re neglecting the time cost of such things. Sure, if you study an area in detail, you can dig out those bargains, but people are often willing to pay more just to enjoy themselves and not think about it. They pay money to not invest that time.

    I tend to think there’s a good balance somewhere in the middle. A good “… On $20 A Day” travel guide can make all the difference without a huge time investment. You might not get the absolute cheapest options, but you also don’t have a huge time investment finding it.

  9. Jim Lippard says:

    Actually, there’s a flaw in the happiness research like Gilbert’s that draws the conclusion that income over a certain level doesn’t increase happiness. The flaw is that they are measuring happiness based on self-reports on a fixed scale, such as 1-10, while income is not on a fixed scale.

    I recommend Will Wilkinson’s review of happiness research, what it says, what it can tell us, and its limitations:

    On the other hand, I do agree with your general point (as does Wilkinson, who is someone who has intentionally chosen a career that pays less well but offers other benefits like allowing him to pursue research into his own interests).

  10. Helix says:

    Great post. I can’t wait to take a pay cut because it would mean I’ll finally be out of the accounting job I hate and into something that I’ll actually enjoy doing. A job that… wait for it… I actually went to school for! I sure hope that day comes soon.

  11. Michele says:

    I quit a $60,000 a year job to stay home with my children. They are what is important in my life right now. Yes, we made sacrifices to do it – we live in a smaller house than many of our friends. We go on budget vacations, and don’t eat out much, but time with my children is more important to me than working. Work will always be there; my children will not.

  12. Mike says:

    I took a 30% paycut to go from a job when I was working crazy hours in a manufacturing facility to a nice M-F 8-5 desk job when I actually (gasp) get holidays & weekends off. Cut back on some stuff & couldn’t be happier.

  13. Trent, you have a point that people aren’t willing to take the time to do their own research and pay others to take care of the “dirty work” but I actually enjoy the hunt. It comes as part of the hobby of my traveling as I love to find ways to save money while traveling.

    If more people were willing to do the research then we wouldn’t have a need for travel agents, but that seems to be a fairly profitable business.

    I’ve never broken it down to figure out if the time I spent searching for bargains is worth it or not, but I have no doubt that it is, simply for the fact that I am learning much more about where I am traveling to and finding great deals.

    Some people like reading a pile of books about personal finance, and I enjoy reading about exotic locations, backcountry camping, and cheap travel. It comes with the hobby for me.

    Thanks Trent for the reply!

  14. Jeff says:


    Many years ago I took a gamble and surrendered 13 years of seniority to take a cut in pay for a job that I truly wanted. In addition, I had to travel even further to get to that job. It was a position that had a great deal more job satisfaction AND I needed it as a stepping-stone to get where I ultimately wanted to end up.

    In less than a year, I was hired at my most desired position; the one for which I needed the “stepping -stone” and I increased the salary I had lost by many thousands of dollars. I remained at this position for another ten years until I was promoted even further in the organization.

    I eventually retired from a very satisfying and successful career all because I was willing to take a job for lesser pay that was more satisfying and for which I was yearning!

  15. Johanna says:

    In my experiences of researching vacation destinations in advance, the return on the time invested is generally pretty good.

    For example, suppose you spend three hours looking through hotel listings, and as a result, you stay in a highly rated B&B for $100 a night rather than a bigger hotel for $150 a night. If you stay there for three nights, that’s $150, or $50/hour. That’s more than I earn at my job.

    For another example, an hour spent researching a city’s public transportation system could allow you to avoid $50 or more in cab fare (or, if you drove there, parking). Again, a good deal.

    Also, I agree with Steven that for some of us, researching vacation destinations is a form of recreation in itself.

  16. Great post and I agree that money isn’t everything. My husband has taken a big cut in pay due to the slowing economy, and we still have enough for our basic needs and some extra. I went back to work part time for a few weeks, and wasn’t any happier than when I wasn’t working. I’m actually much happier at home. I have more time for gardening, cleaning the house, cooking from scratch, bargain shopping, and working on my blog. I also have more time for reading and I’m not exhausted at the end of the day. I do think we are much happier than most of our friends. We have more time to spend with our families and work on hobbies that are important to us.

  17. Sarah says:

    I took almost a six-figure cut in pay this year to move to a less stressful job, at least for a while. I’m not going to pretend I don’t miss the money. I live in an expensive city and I like some things which are quite expensive. Nonetheless, my quality of life is so much better now that I’m not working a high-pressure 70-hour-a-week job.

  18. Michael says:

    I thought you are making more with TSD and were making about the same when you quit? Or are you referring to cutting two jobs down to one?

    I do think happiness is more important than money, but one can use money to do good and make others happy. I might be just as happy at $40k as at $100k, but at $100k I could preserve farmland, set up education trusts for my grandchildren, support charities, etc. No more happy, but having done good regardless. Maybe that’s a way to define selflessness.

  19. Luke says:

    Another good reason to avoid the accumulation of debt when you are young!

    Without debt, you are free to make choices about the kind of work you do, and the compensation received for it. When saddled with a large amount of debt it makes it harder to walk away from the chance to earn more money.

  20. Amit (India) says:

    nice post trent,
    i am working as a software engineer…however my passion always had been in teaching(training) field.
    but i think i can only get into it when i am out of debt (home loan & car loan)
    Certainly it will take me 4-5 years to be debt free…but i am only 30 right now..and i think i will achieve the financial freedom in these years and then turn to my passion…the thing i love to do…

    thanks for the post

  21. Dawn says:

    I read that book quite awhile ago and absolutely loved it. One thing that sticks in my brain from it is that people have a natural inclination to think that how things are now, is how they will always be, (which is why it is easy to start a diet right after you’ve eaten a full meal.) That little reminder has helped me be patient so many time, whether it is spending money or biding my time before making a career change.

  22. Grace says:

    Interesting. I haven’t read Gilbert’s book, but when I do my retirement calculations (I plan to retire at age 69, in 9 years), $40,000 per year is the figure I feel I need for a very comfortable retirement. That would be $35,000 less than I currently make, but I won’t have a mortgage or retirement savings taken out, either.

  23. AnnJo says:

    Although a little off-topic to your main point, it’s worth pointing out that one reason people can choose to earn less is that the American job market is more forgiving of such choices.

    In more rigidly controlled labor markets where government is both a more dominant employer and more controlling of the private sector, policies are geared toward job security. Dropping in and out of the job market or switching jobs therefore carries a much higher cost, with lower pay due to loss of seniority and a much harder time finding a job.

    In the U.S., a lot of mothers and quite a few fathers choose to stay at home with young children for a few years. This isn’t cost-free, but the cost is nowhere near as high as in many European countries. This probably helps explain not only the higher labor force participation in Europe of women of child-bearing age, but also the smaller family size of native Europeans.

    With the current economic “crisis” creating a demand for action, and a fondness in the Democratic Party for much more aggressive interference in the labor market, it’s worth making note of some of the benefits families now receive from our more unrestrained and highly mobile job market. Trent’s children may not have the flexibility to make the choices he has made.

  24. I have to agree. I was much happier living off of a smaller salary than what I have now. I still think that living in my rented studio apartment with the income I had then was far better than paying a mortgage and condo fees I have now. Money does not always bring happiness.

  25. Johanna says:

    @AnnJo: On the flip side of that, when health care is government-based, rather than employer-based, that’s a big advantage for people leaving, entering, and moving around within the workforce, and also for people leaving traditional employment for self employment. As it is in the US, if Trent didn’t have a wife with a job that could provide health insurance for the entire family, Trent would have had a lot less flexibility to quit his job to become a full-time blogger. Say what you will about other countries’ health care systems, but at least they don’t have that obstacle.

  26. Ben says:

    This is a great post and the point is well taken. My wife and I have opted for this living on my ironically 40k a year job with a little extra from a side hustle or two.

  27. dagny says:

    I think the magic lies in the concept of “enough”. Whether income, coolness of toys, etc., there is a level for each of us that’s enough. Once discovered, why expend the life energy for “more”?
    My mom once asked me why I don’t have the desire to “get ahead”. I replied “ahead of whom? myself?”.

  28. marta says:

    @Johanna: You took the words right out of my fingertips. ;)

    I’ve been self-employed for nearly a decade, in an European country with a government-based healthcare system (for better or for worse). I don’t think I would manage this if I lived in the US, especially without a spouse with a family healthcare plan or whatever. It *is* an obstacle.

  29. SaveBuyLive says:

    I agree with Gilbert about the $40,000 number. But it isn’t the right number for everyone. Some people have more expensive hobbies or larger families and need more money to be happy. And other people have virtually no discernible desires and thus need less to be happy.

    He also forgets that people’s satisfaction is often based on how much their peers and neighbors make. If you make $40K and your neighbor makes $45K you’re not going to be as happy as you would if he was making $37K. Even if everything else was the same.

    More isn’t necessarily better but rather there has to be a balance between income, personality and needs/wants.

  30. Someone says:

    One year ago, I walked away from a $48k job (and an offer of a *huge* promotion) to become a freelancer. After our first child was born in November, my wife left her solid-paying job to care for him full-time.

    It was scary, and it’s been hard. Some months have been more fruitful, but this year has been very slow so far, and I’ve had moments of doubt.

    Then, I think about this:

    1. Every Wednesday, my wife and I take advantage of a Dollar Taco Day at a fabulous local mexican place, taking tacos and our baby to the park for a two-hour lunch.

    2. Every few days, my wife gets overwhelmed with the stress and boredom of caring for an infant. I take a few hours off work in the middle of the day and make her leave the house, to do whatever she wants, alone.

    3. Several times per week, I have morning coffees with friends from church, sharing and praying until well after I’d normally have to be at work.

    4. Last night, our son had One Of Those Nights. My wife and I took turns rocking him and watching his temperature all night long. This morning, the fever finally broke. It’s 11:15, and what with napping and breakfast, I’ve not done a lick of work yet.

    None of those things would be feasible if I still worked full-time for someone else. Oh sure, I could call in sick or take a vacation day if necessary, but long lunches, random coffees, and impromptu vacation days simply aren’t as easy to get when working for someone else.

    At first blush, I seem to have taken a financial hit by going on my own, but in reality I feel more blessed and prosperous than ever before.

  31. Vckgss says:

    If I remember correctly, you mentioned that your wife was considering taking a lower paying job that would lessen her commute time. What came of that? Great post, it makes me feel pretty good about my $47,000 salary. I think I’m at my enough-o-sauras!

  32. adrian says:

    I totally agree with Marta and Johanna

    The only real reason i was able to give small business a shot (and fail!) was that i was living in australia where healthcare is free and didn’t have to worry about getting sick etc.

    to an extent, such a healthcare system (most common in world) is a direct incentive for entrepreneurship.

    however i suspect (since i don’t know – i failed!) that the entrepreneurs who succeed would probably succeed regardless of the social benefits given for unemployment/low income/healthcare etc.

  33. DrFunZ says:

    Right now I am sitting in my faculty office grading papers and occasionally gazing out my window at the vast and beautiful Atlantic Ocean. My students are stopping by for reassurance before their final exam; they are nervous about the exam, but comfortable with me. A few even sit to chat. The galley-proof of a chapter I wrote is in my briefcase to be dealt with later today. The phone rang a few minutes ago and it was a faculty colleague asking me if I want to go to lunch. My school year ends June 30th and then I will begin another research project I have been dreaming about for four months. And, because I have tenure, and because I have a burning desire for excellence in my persoanl and academic life, I can do this for the next 20 years with little chance of becoming bored or boring.

    So, if I want to make about 40K-70K more a year (double my current salary), I can become a Dean. If want to make 150K MORE I can become a Dean at a medical school. I won’t have tenure probably and might only have the job as long as the VPAA wants me. I could end up on the job market at age 57 or 58 – not good. I will have many reports to write, many MANY problems to solve. I will be able to afford REALLY BIG toys – like a boat, or a house in the mountains. But I’ll work 12 months a year with four weeks vacation and will not have “breaks” when the students have them. If I ever see a student, it will be a student in trouble – or a student in my office with angry parents. Yes, I might have the ocean view, but chances are I will not have time to enjoy it anyway.

    So, I am OK with my lower salary, lower rank and lower status. I am willing to live in a smaller house, drive a smaller car, vacation in modest places. WHY? Because I am happy.

  34. Andrea says:

    I do agree with what Trent is saying that money isn’t everything. The only problem I have is that some people use this excuse not to excel to their full potential. For example if I like my job today why would I want to apply for a higher paying job in case I hate it. I think it may say well it’s just a job and who cares about ambition. Maybe I’m different in the case where I want to excel in whatever I do. On another note, I would take a cut in pay if I hated my job to move to a better one.

  35. DebtGoal says:

    It’s not even just about “money isn’t everything,” though that’s certainly true. Even if money highly valued, it’s about risk management. For example, I have a ton of buddies that jumped into real estate sales right after college. Why? To make lots of money. But with the collapse of real estate prices and the difficulty for potential homeowners to now put together a funding plan to buy, their income has disappeared. They chose a high risk, high reward career – i.e., one with lots of money to be made and little security of income flow. Compare that to my other friend that has been working for a community college since graduation. While initially they made a modest salary, they have been moderately promoted, and now they have relative security even in this market.

  36. brandy says:

    clearly these people aren’t professionals with massive student loan debt.

  37. M says:

    “This probably helps explain not only the higher labor force participation in Europe of women of child-bearing age, but also the smaller family size of native Europeans.”

    Really???? When I lived in Europe I sensed that there were more stay at home moms in Europe than in the USA. (Western Euope, that is. I agree that more women work in the former communist states and in Scandinavia). Where do you get those figures?

  38. Anna says:

    Several years ago, I was quite happy with my job and did it so well that my work attracted the attention of managers at a higher level. I was offered a job at a higher level with better pay, and I took it for the pay and because I was flattered out of my mind that the higher-ups wanted me.

    I was miserable.

    As soon as I had the chance, I moved back to my former level — lower pay, but much more satisfying work.

  39. 5 years ago I retired from the military. Because my wife and I were debt free, I was able to take a full time position in my church, without a salary or benefits. I was able to take on the administrative tasks from the senior pastor so he can concentrate on his position in leading the church. My kids college is paid for, and my wife and I lack for nothing.

  40. Jen says:

    Forgive my sentimentality, but I must say that pieces like this–and the responses to them–have been most heartening during my job search. :-)

  41. This question is mostly not that relevant since income ranks down at 5 or 6 in terms of what is important in a job. Financial independence makes it even less relevant (which is a god reason to pursue FI in the first place). It is, however, very relevant for those (few) that thinks that a good job = a high income.

    On a side note, I think it is important to remember that the value of a job does not equal the price (income) of a job although our culture seems to believe so (economics education is terrible, what can I say). Income is set by supply/demand on the job market. Consequently, going for high paying jobs shows a willingness to compete (competition is also held in high regard in our culture, unlike, say collaboration e.g. recommending a “competitor” because you think he is better). This system works as long as scarcity is present. If a resource is no longer scarce, it will not be competed for at it will not be priced (like the air we breathe). Now, if this happens with money, and it does, … then we have exactly the situation you’re describing in the post. People quit their jobs because what the job offers is something they already have enough of. This is also why companies use other things than salary such as benefits, nerf gun fights, … to attract and retain their people.

  42. Todd @ The Personal Finance Playbook says:

    I’m sure it depends on where you live, to some extent. There are a lot of towns you can’t live well (and put money away) on 40k per year. Maybe if you’re a dual income where both people make that much, I don’t know. I do believe that not having to worry about money makes people happier, but studies have also shown that you reach a point of diminishing returns in this regard. Having more income will only make you briefly happier and only a significant jump will give you any piece of mind.

  43. Paul says:

    Unfortunately,a lot of folks have themselves enslaved to debt to the point they can’t drop down to 40K a year.

  44. Jim says:


    The US participation rate of women age 25-55 is actually relatively high. Its higher than many European countries and around average compared to Europe as a whole.

    Higher labor participation rates for women in ages 25-55 can be due to a number of factors. 1) higher acceptance and preference for women in workplaces 2) higher child care subsidies 3) better maternal leave 4) lower marginal tax rates on 2nd earners 5) better anti discrimination laws 6) more work hour flexibility and acceptance of part time work

    I hope you don’t think that these things are NEGATIVE results of “aggressive interference in the labor market”.


  45. Carlos says:

    Your friend who works for $8/hour needs to get a clue. That’s $320/week, pre-tax, which is not a living wage.

    The minimum amount of money you need to be happy depends on your expectations; the more you earn, the higher most people’s expectations become.

    One thing I’ve done a few times is pretend that I’ve received a 20% pay cut (and had that money put into a savings account without electronic transfer or ATM capability associated with it).

    Before I knew it, I saved $8k up, which is now a good emergency fund.

  46. IRG says:

    I once worked for a young woman who was the top exec at a major company in her industry. She was healthy, very pretty, talented and her life was filled with professional control and satisfaction.
    She knew celebs and lots of famous people and had a rather nice lifestyle.

    She made mega bucks (compensation plus stock plus perks, well over $2 million a year).

    She was, without a doubt, the single most unhappy person I knew at the time.

    I was struggling financially while working for her (it was one of two jobs I held at the time), but I went home each day knowing I would not trade my financially challenged life for hers regardless of the money and perks. It was a huge lesson for me, because I think we all believe that others who have money are leading such happy, perfect lives. NOT.

    FYI: Aside from her personal unhappiness, she was a not so nice boss. Clearly she let her own unhappiness spill out into the business. People were nervous wrecks in the company constantly trying to please someone who could not be pleased.

    One needs to make enough money to cover the “basics” as well as feel that you have options in life.

    It’s difficult for everyone in one way or another, particularly these days.

    The hardest thing in life is to realize that you frequently do not have options. Well, you have options but they are not tenable. (No, one can’t leave their job if they are the sole support of a family and there is no other income.)

    And the reality in life is that one partner/spouse often “funds” the dreams of another by working when they don’t want to, taking a job they hate, etc. so that the other can have their dream. (And many times, the one who sacrificed becomes the one who is tossed out when the other partner achieves their dreams and suddenly decides : Hey, I deserve a BETTER spouse/partner!)

    The price of that is very high as many couples have learned the hard way.

    In a more perfect world, partners could trade off with each respecting the needs of the other for a period of time so that one gets X years to “live the dream” while the other is say the major income producer, etc.

    In the end, you really have to be able to support your own happiness and if you can’t, no one else can.

    Happiness may not be tied to money but the lack of funds for basics and healthcare, in particular, has ruined the peace and well-being of many families and individuals.

  47. Joyful Abode says:

    I chose to earn less too… I had a full-time job working at a child development center, but after not seeing my husband at all for about a week (he is a student aviator and has a crazy changing schedule… that week he was working exactly opposite of my schedule) we both made the decision for me to go to part-time work for the second semester. I quit at the end of the school year, and from then on have been working from home.

    I don’t make as much as I did or as much as I could, but I get to see my husband and take better care of the house and the dog… which makes the tight budget worthwhile by far.

    A lot of people think this is a horrible selfish thing to do since I don’t have kids yet… I’m not a stay at home mom; I’m a work at home wife, which isn’t as popular of a title. But it IS selfish. We’re allowed to be selfish. :) We only get one life, so we need to choose what’s most important to us.

  48. Unfortunately, I think this same study – or another one that came out the same time – said that wealthy people were on average much happier than everyone.

    I think the post still brings up a good point – if you’re not going to be making a million dollars either way, why not go for a job that pays a little less if you’ll be happier doing it? I actually had this choice in the past few weeks – take an offered job that paid more with long, intense work hours or an offer that paid less but was much more flexible. I chose the more flexible job (and actually lucked out because when I went to negotiate they offered me more money + a promotion!).

  49. kat says:

    a long time ago I read about the “better towel syndrome” which is a perfect discription of spending money to replace perfectly good items just because you are making more money. It stuck with me, and I have always used things up before replacing them. Upgrading from a perfectly functional item for a higher thread count or more bells and whistles can negate any extra income. Just because I dream though of owning at least one set of 800 thread count egyptian cotton sheets sometime in my life, I will not throw out my perfectly good sets of 280 count bought on sale.

  50. Jennifer says:

    Trent, I disagree. Those studies fail to mention the fact that some people choose jobs to make money now (trading off some happiness) to be happier over the course of their lifetime. So yes, individuals surveyed at any one time will display this trend, but there’s more than the simple conclusion that earning above $40,000 wont make you any happier (this may be true for some individuals, but certainly not all).

  51. Becky says:

    I left a job that paid quite well in a low cost-of-living part of the country 4 years ago. Honestly, it was a great wake up call for me and my husband. We threw money away like no tomorrow when we had money to burn. Now, staying at home with 2 kids and my husband being the “bread winner”, I feel like we are happier even though our income is lower. We appreciate money more and find enjoyment in more simple things in life.

  52. Andres says:

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    Register today for the live webcast on Saturday, May 9 and attend via the web. You’ll get to hear Mellody’s speech, participate in workshops and learn from certified financial planners from the Financial Planning Association.

    To register visit, http://www.vodium.com/login.asp?lib=pn100688.

    AARP and Mellody Hobson, President of Ariel Investments, and Financial Contributor to ABC’s “Good Morning America,” have joined together to bring AARP members and the public action-packed virtual workshops and presentations aimed at improving your financial quality of life and giving you peace of mind.

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  53. Craig says:

    I read the book too and enjoyed it and his takes on money and happiness. It’s true that money isn’t everything, money is just a tool and resource that can make life more stress free, and that is usually where the happiness comes in.

  54. George says:

    Visit http://www.earlyretirementextreme.com/ to see how $8/hr actually can be a living wage. It might not be your dream, but it can be done.

  55. Robin says:

    This is a lightblub statement … for me anyway. Thanks for sharing it.

    “Whatever that fulfillment is, it rarely comes from acquiring more of the same things you already have.”

  56. Cookie says:

    I agree with the premise of your post.

    But I want to point out another reason there are so many stay at home parents…the cost of daycare. 5 years ago, I was paying $250 a week on daycare for one child, an infant. I can’t imagine what it costs now. And that was the only spot I could find before my FMLA was up. Shopping around was not an option. When you start to add more children, it doesn’t make sense even if you look at it from a strictly financial standpoint.

  57. Alan Schram says:

    Trent, quick question.

    The 40k, is that household (like, husband/wife combined income?) or individual? Or both or neither?

  58. Bill in NC says:

    I chose to leave a Fortune 500 career at about Trent’s age to take care of my mom.

    I tried my best to work full-time and care of her, but after a year or so I was tired of vomiting into the toilet from the stress.

    I have to say I missed the structure and normality of a “regular” office job during the decade of illness before her death.

  59. AnnJo says:

    Joanna, Marta and Adrian,

    As I understand it, the “employment-based” aspect of our health insurance system is a left-over from FDR’s tax hikes and war-time wage controls, which exempted benefits and so created an incentive for employers to offer health care benefits in lieu of higher wages.

    This has unquestionably caused great harm to our health care system by creating a disconnect between the purchaser of insurance (the employer) and the user of it (the employee), but that disconnect will only grow wider in a fully government-based system.

    But Marta and Adrian, I’m here to tell you that excellent private individual health insurance has been available at reasonable cost for most of my working life, and dramatic price increases only kicked in about 10-15 years ago, when governments at the state levels started trying to “fix” it.

    My health insurance cost about $27 a month when I started my business in 1976 and was still only about $77 a month in 1996, rising no faster than ordinary inflation during that time. Then our state insurance commissioner decided to solve the problem of the uninsured by trashing the private insurance market and loading on a bunch of mandates. In spite of her best efforts, I still have excellent private health insurance, only now it costs me $263 a month, about $100 of which is probably due to government action.

    I believe Trent’s wife is a teacher; if she and Trent knew what the real cost of their insurance coverage is, they’d likely find that they could buy a plan more suitable to their needs at a lower price in the private market (assuming their state government has not already destroyed the private system in their state). Just like my plan, it would be portable through any job changes, and if the feds allowed cross-state competition, it would be portable anywhere in the country.

  60. AnnJo says:

    M @30 and Jim,

    I was speaking from memory on the comparative labor-force participation of women of child-bearing age, and the data I remembered were a little old. I just checked OECD stats (OECD Europe compared to US), and for women between 25-39, labor force participation is about 18-20% higher in Europe (i.e., 13% in OECD Europe, 11% in U.S.), and about 8% higher for 40-44. Before and after those ages they are about the same. The gap also seems to be narrowing in recent years, but then labor regs in Europe have changed a lot in that time too. I also noticed that European women in the 24-39 bracket seem to have higher unemployment rates, so maybe the actual participation is the same, they just call themselves unemployed instead of atay-at-home moms.

    Some of the factors you mentioned are not due to government interference, others I would dispute are better in Europe (I believe occupational segregation is higher there than here and discrimination remedies are greater).

    In my early years, I took a very active role in forcing an end to sex discrimination in a number of businesses AND government institutions, back when it was actually hard and risky, so I earned the right to say this:

    There is hardly ANY policy, no matter how desirable, that doesn’t have some undesired consequences. Rational people try to figure them out, don’t you agree?

  61. Kami says:

    In March 2009, I left a comfy job making $58K/yr to an internship making $45K. I left because what I was doing was not interesting to me and I felt that I was wasting my time (all 7 yrs of it). I dont feel like I did the wrong thing but sometimes the old “I want to buy something to make me feel better” feeling pops up. But now instead of giving in, I realize I simply dont have the extra $$ to do it anyhow. But now the nagging question for me is, “Where did all the money go?” from when I was making $58K…

  62. Kami says:

    I did this to start over.

    In March 2009, I left a comfy job making $58K/yr to an internship making $45K. I left because what I was doing was not interesting to me and I felt that I was wasting my time (all 7 yrs of it). I dont feel like I did the wrong thing but sometimes the old “I want to buy something to make me feel better” feeling pops up. But now instead of giving in, I realize I simply dont have the extra $$ to do it anyhow. But now the nagging question for me is, “Where did all the money go?” from when I was making $58K…

  63. Wren says:

    @Kami – We’ve just done about the same thing here. My husband received notice late last year that he was being laid off end of February. Over the three month period before that event, we went through our spending and budget and slashed everywhere we needed. Now, with him unemployed, we live off danish private unemployment insurance (far better than US unemployment coverage, though perhaps there is private insurance for that there as well, IDK) and what I receive as a student. We are doing just fine, all bills are covered and we have a little left over for saving or whatever. What we wonder now is… where the heck did all the extra money go, from when he was working and receiving his full wage? I really have no idea, but we aren’t suffering one bit from his current status. I think we’ll maintain this level of spending even when he gets another position, and we’ll be even further ahead then.

    There are some good things about a bit more governmental oversight… longer notices before layoffs, ability to have insurance (gov’t yes, but ins. nonetheless), and knowing that losing our little home is not such a worry as a few of my friends in the States would be facing in such a position.

  64. Connie says:

    Where are you getting health insurance that cheaply? Health insurance costs are one of our main expenses. We are farmers, our ages are 63 and 64, we live in Iowa and pay $1,775 per month with the major health insurer in our state. We have a $45 co-pay and each of us has a $1300 deductible. It is a HUGE portion of our income and the cost makes us realize why so many people go without health insurance; we know some of them personally. That kind of financial outlay forces us to live simply whether we want to or not.

  65. Kevin says:

    @CouponArtist (#5):

    “Until you realize that stuff is never ever going to change your life or improve your circumstances or make you a happier person, it is hard to recognize that money doesn’t matter.”

    But what if that stuff DOES make you a happier person? I’m going to leave work at 4:00 today, take the bus home to my 4-bedroom, 2600 sq. ft. house where I’ll crack open a cold beer, turn on my 46″ LCD TV and either watch some HD TV programs on my PVR, or pop in a Blu-Ray. When my wife gets home, we’ll make a homecooked meal, enjoy it over a bottle of wine, and basically do whatever we want with our Friday night, like we do every week.

    Now, I’m not sure exactly which part of that story makes me “happy,” – it could be a combination of several factors – but it’s really irrelevant. The end result is, I’m enormously content with my life, and I think a lot of that has to do with the lifestyle we’re able to lead. Of course, we’re frugal in areas that aren’t important to us (I take the bus instead of buying a second car, and we rarely go out for dinner, preferring instead to cook for ourselves), but we spend in areas that enrich our lives, like the big house and the top-notch home entertainment system.

    I guess my point is, saying “money doesn’t matter” is baloney. Money matters a great deal. The reason so many people believe they’d be happier if they had more money is because THEY WOULD BE.

  66. MKL says:

    Many years ago, I realized that there was something I wanted to do and be there for, and that was to be a Scout Leader to my son and his friends. Coupled with a downturn in the tech industry (at a time when I was making close to $100K/yr.) and a drying up of jobs that paid that level, I opted to “downsize my job” for one that could guarantee that I could be the Scout leader to my son and be available to him and to my wife and daughters. While I’d be a liar if I said I didn’t miss having the extra money, when all was said and done, much of that money at the time was going into 401K, stock purchase plan, and to paying tithing to my church (in other words, before taxes, 35% of my money I never realistically touched). This experienced made me realzie that I could “live on a lot less”, though I’d have to sacrifice some saving and investment if that happened. Right now I earn a middle 5 figure income, and I support a family of five with that as the sole wage earner. It’s not always easy, but I can honestly say that I am not wanting for anything, and that “we have sufficient for our needs”. What’s more, I have the freedom to be there for my kids and the things that matter to them, including help to plan for my son’s Eagle Scout Court of Honor at the end of this month :).

  67. Katie says:

    AnnJo, where are you finding this plans? Do they offer reasonable premiums for people with preexisting conditions? do tell!

  68. Sharon says:

    AnnJo, I want to thank you for taking the risks to fight sex discrimination. You, and the many others who did so, are my heroes.

  69. AnnJo says:

    Sharon, You’re welcome, but also, it was my privilege. It seems there are always new battles to be fought for freedom.

  70. AnnJo says:


    Federal law limits insurance plans to individual states, so what is available to me may not be to you.

    Mine is an individual plan through Regence (used to be Blue Shield). I’ve had coverage through Regence and its predecessor organizations for 31 years and have loved every minute of it.

    Pre-existing conditions may require a waiting period for coverage, unless you’re switching from another plan, or may result in a refusal of coverage altogether – I don’t know. Personally I hope they are allowed to refuse some. Here’s why:

    NO plan should offer “reasonable premiums” for people with preexisting conditions who wait until they need coverage before buying it.

    The whole point of insurance is for people to pool funds to protect against future risks that will hit some but not all of those covered. In other words, it’s predictable that someone will be hit, but it’s not predictable who will be hit.

    Example: Ten people get together and calculate that statistically, one of them will have a stroke, but they don’t know which of them it will be. So they agree to kick in premiums enough to pay for stroke treatment for whomever is the unlucky one. That’s insurance.

    A plan that pays for pre-existing conditions is like an eleventh person coming along AFTER his stroke, and saying to the first ten, “Hey, you folks have been paying in your premiums to cover one stroke. I’ve never paid into your pool, but I just had a stroke, you’ve got a pot of money to pay for a stroke, and now I want in on your arrangement.”

    It would be the same as trying to buy homeowner’s insurance while the firefighters are fighting your house fire, or buying collision insurance while the tow truck driver is picking up the pieces of your car after a wreck. A very good deal for you if you could get it, but socially a disaster.

    And there, in a nutshell, is why health insurance premiums have skyrocketed. Government has loaded on mandates for non-insurance-type events – pre-existing conditions, birth control, annual check-ups, well-baby check-ups, etc., etc., etc. All good things to have, but not unpredictable. The result, much like our current bail-outs, is to reward irresponsibility and punish responsibility.

    If we were allowed to have true health insurance (protection against unforseeable events), it wouldn’t be that expensive.

  71. JR Moreau says:

    The challenge to find a balance is really what life is all about. I strive to live in an area that doesn’t require a family or individual to make a boat load of money to buy the essentials and have a semi-interesting life. Obviously, some people have higher expenses than others, and some of those expenses are unavoidable or not quickly overcame. But, being conscious of how you live and how you plan your future and making it happen with less is a satisfying endeavor.

  72. tightwadfan says:

    The $40,000 was definitely true for me but I jumped from making $31,000 to $43,000 so I have a gap in data. But with $43000 I had enough income to cover my expenses easily, save for retirement and emergency fund, treat myself occasionally, pay all my taxes, and still have money left over each month. For the first time I experienced peace of mind. I gradually worked up to a little over $60,000 and my happiness was about the same.

    My jump over $40,000 was almost 10 years ago, though, so I wonder if this number still holds. And I imagine it would vary depending on the cost of living in your area. I also had really good health insurance coverage from my job and I had no kids so I was on the single plan, much cheaper. The family plan that my father has with his job eats up a lot of his income.

  73. tightwadfan says:

    AnnJo, your objections make no sense. What if a person with a pre-existing condition has health insurance from her job but wants to go self-employed? That person didn’t wait until she had a stroke to look for health insurance, just individual coverage, but she would still be denied coverage or made to pay unaffordable rates. So she is limited to working for others for reasons that have nothing to do with the work she does.

    The other problem for people with pre-existing conditions is that they may get coverage but when it comes time to renew the insurance company drops them. The search for insurance can consume a lot of their time and resources.

    OF COURSE health insurance would be cheaper if the insurance company could limit their pool to only healthy people. That is what insurance companies try to do all the time. The evil government has to mandate that insurance companies cover certain care because the companies have been increasing profits by denying coverage to those with pre-existing conditions and by denying requested care when they can get away with it.

    I am lucky to have been born with good health but I have friends and family who were not so blessed. My insurance costs have been ridiculously low and my experience very easy compared to theirs. It is just plain wrong. I would be happy to pay higher costs if it would lower others’ and ensure everyone would get coverage.

  74. AnnJo says:

    Thank you for giving my comment some thought. I’ll try to answer your points.

    You won’t get any argument from me that linking health insurance to employment was a very bad thing. See my comment #47. And some government regulation to make portability better would be a good thing.

    As for being canceled when you get sick, all the health insurance plans I’ve seen include what is called a “guaranteed renewable” clause that prevents that for as long as the plan continues. The biggest problem there is that the constantly changing regulatory climate often kills off plans. In my State of Washington, there is a strong possibility that new laws will decimate the private market, forcing everyone into a state-controlled plan, including people like me who are very happy with our private plans.

    Do you actually have any evidence that insurance companies have been “increasing profits” the way you claim or are you just assuming it? Many insurance plans, like mine, are offered by non-profits. And for-profit insurance companies are no more profitable on average, and possibly less so, than most American business.

    If you think your insurance costs have been so low you feel moral outrage and you are willing to pay higher costs, why don’t you? Your local hospital undoubtedly has a charitable giving program you can donate to, in whatever amount you think is right. I’m always amused by the people who say they would be happy to pay higher costs or higher taxes, as if there were some law preventing them from writing a check for whatever they think is right. What they usually mean, and forgive me if I’m wrong, what I think YOU mean, is that you think I should pay higher costs to satisfy YOUR ideas of what I should pay, rather than my own.

    I don’t want to ensure that everyone gets “coverage.” There are perfectly rational reasons why some people may choose to gamble on going uninsured. There are people like Bill Gates who can easily afford to self-insure. There are immigrants who who come here from places that HAVE government-provided health care but don’t like it.

    We already pay through our taxes for the health care of the indigent, the incarcerated, the elderly, and most children, even for those who can afford to pay for their own care. I see no reason to mess up a system that works very well for me and most of the country, to replace it with a system that works poorly for all of us.

    Just remember, with government-run health care, the people who will manage your health care will be the same ones who managed Katrina response, got us into Vietnam, Panama, Somalia, Bosnia and Iraq, supervised Fannie Mae and Freddie Mac, do photo-op flyovers of New York City scaring people half to death, force your granny to take her shoes off to get on a plane, and run the Washington D.C. school system.

    Personally, I’d like to see some evidence of competence before I put my life in their hands. But it looks like most people are willing to take that gamble, so I’ll be dragged along too. Not happily, obviously.

  75. Daron says:

    I make well in excess of $40,000 a year, but we live on about $40,000 before taxes. It’s all we need, and makes retirement planning much easier. Much less and happiness would be more strained (should we set the A/C temperature higher for less run-time and lower bills, or enjoy the cool?), with the higher income we just find we don’t need it.

  76. Great post. When I was diagnosed with cancer in 2006, I decided my priorities had changed. I was tired of working lots of hours, being stressed out all the time and not seeing enough of my husband. When I finished my treatment, I did not return to work. I started my own business. In 2008, I started teaching part-time at a local college which has always been a dream of mine and I started my blog. Do I miss the money? Sometimes when I see how much debt we have from my illness but we are snowballing it away at a great pace. What I don’t miss: The stress of working too many hours during tax season, the strain all those hours put on my marriage and the lack of me time. I wouldn’t change things for all the money in the world. I love my life.

  77. Goodies “escalation” is why many people don’t get ahead financially . . .

  78. almost there says:

    Great post. I started reading and responding prior to my retirement last year, hence the name. My wife continued to work full time but decided this month to give up a 60K/year job(working in a cancer clinic dives home the realization that life is short, enjoy each day). We will both be retired at 50. As YMOYL readers we realize that we will have enough income to be pay our bills for our needs and budget for the wants. It seems our whole marriage we have based what we do on family (parents/siblings) and have decided that we are not going to live our lives anymore based on them. Of course we are told that we are crazy not to seek employment that one should work until SS age. When my dad passes we will try to help my mother but won’t go to work to support her. She made her choice in life as did our siblings. We want time for us.

  79. Career changer says:

    I am changing careers at age 34. I have been doing sales for over 12 years now and have always hated it. The potential for big paychecks has always been there, but I just never could find the interest or motivation to be at the top because I honestly hated my jobs. Did I have the talent and the ability to be the best? You bet. Did I intrinsically value that? Nope.

    This has taught me that money isn’t everything. Why put so much time and energy from my life into something I don’t enjoy? I am starting school full-time this fall to get into Graphic Design. Sure, the median salary is a little above that $40K level and the potential goes into the six-figures with experience and higher titles.

    Many of my friends have the house, kids, mortgage, debt, etc and are chained to their careers they dislike. I do not have any of that and feel incredibly lucky to be able to start over and do what I WANT to do. Is my lifestyle going to change for a while? Yep. Going to be a tough couple years that I wasn’t ready to do at age 20 because I was chasing money instead of happiness.

  80. Janette says:

    Left teaching to work as a consultant. Made double the salary. Left consulting to return to teaching. Saving $14,000 more than I did when I was making more!
    And yes- we are MUCH happier!

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