How much money you need to be happy is a deeply personal question. We all have different lifestyles, different dreams, and different things that make us happy.
So how can you figure out what you actually need to live your happiest, most fulfilled life? How can we go from dreaming to actually making it happen?
Sometimes our dreams feel so big and so far away that we haven’t actually spent much time thinking about what we truly actually want.
We just stay stuck in “I can’t” instead.
So take some time to reflect. Go sit in nature, or find a quiet moment with a coffee. Do free writing and just dream about what you truly want. Do this more than once, and actually give yourself time to think about it.
Then, turn that big dream into something tangible. What is it that you actually want? What would be amazing-to-have? How much does that cost? What would it cost to save up for it or have it on a daily basis?
Something like a trip might cost less than you think. There could be creative ways to pay for it or make it happen.
Don’t be afraid to test out things you want to see if they are actually important to you.
In my early twenties, I had a dream of becoming a digital nomad, traveling around the world with my laptop under my arm and exploring new places every month. Before I committed to all the work to make that happen, I decided to test it out – and I am glad I did!
My husband and I went to Europe for a month. It turns out we are homebodies. It was fun, but we actually are OK with longer vacations instead of changing our entire lives to become digital nomads.
That’s no longer a dream where I’m saying “I can’t.” It turns out I don’t even want it.
Is there a way you can take your big dream and try a smaller version of it? Then you’ll have confirmation that your crazy, life changing dream is actually the right path for you.
Know what you are living on now.
A critical step in understanding how much you actually need is to understand your current expenses.
I love budgeting apps like You Need A Budget (YNAB) and Mint as a place to get started. Tracking will allow you to really get a sense of where your money is going.
You can also go through and make your best guess based on your past credit card statements and bank statements. Export the data as a CSV and add it all up in Excel! I recommend getting a picture of what you need in a typical month and a typical year. Annual expenses like travel, property tax, or even your annual Costco membership are the things that are easy to forget, but they add up.
Do some serious soul-searching.
Okay, maybe this isn’t as complicated as soul-searching. But you do need to reflect on what you are currently spending money on. Does any of it feel like a waste of money? What is no longer offering you value? What are your must-haves? Put it all into categories! These are the ones I like to use:
Essentials: This category are your basic necessities and necessary payments that you wouldn’t want to or can’t part with. Think mortgage, health insurance, utilities, car payments, loan payments.
Must-Haves: These are your costs of products or services that might not make or break your housing situation, but you want to have a happy, fulfilled life. Maybe it’s your gym membership, your child’s preschool tuition at the school near your house, or maybe you really need that WWE subscription you’ve had for 10 years and dearly love.
Like-to-Haves: These are the costs of products and services that you really enjoy, but don’t quite make the cut as a must-have. For me, this would be something like Netflix, museum memberships, and fresh-cut flowers.
Amazing-to-Haves: These are the products and services you know you’d absolutely love to have if you made all the money you could imagine. Second home? A nicer car? Designer clothes?
Put your common and recurring expenses in each category. Then think about the things you aren’t currently spending money on, but you would love to, and add those to each category.
This helps you understand your money habits, and lets you really pick and choose where your personal values align with how you want to manage your money.
How much does that actually add up to? How can you move things around so you are actually getting the most happiness for each dollar spent?
Is the Extra Work Worth It?
If it’s more than what you are currently making, what would it take to earn more to make your dream life happen? There’s no shame in wanting to earn more to be able to spend more.
However, this isn’t a trivial question. Is the extra work actually worth it?
If you’ve already satisfied a bunch of your needs and wants, do you actually want to hustle to get those extras? Maybe working less, getting extra sleep, and spending more time at home would actually be more satisfying than buying another gadget.
It seems like a simple question, but it can actually be super powerful to realize that you don’t have to keep pushing yourself for more.
Make It An Experiment
Sometimes it helps to throw everything out and try to be as frugal as you possibly can.
What’s the minimum version of something you would find acceptable? Think of it as an experiment. Then know that if you really miss something, you can always add it back in.
At some point in my early twenties, I tried to cut out all coffee shops. It turns out I really missed having a vanilla latte and just sitting there brainstorming, reading, and dreaming in a different setting with the background chatter of people.
Now, ten years later, I do mostly drink my coffee at home. Getting out for a morning like that means giving up a morning of playing in the park with my toddler. Instead, I drink my coffee on the couch and have a moment before my toddler wakes up. It used to be valuable to me and it was worth it, but my life changed, and now it isn’t.
Knowing you miss something is the easiest way to know it’s truly a priority. But also give yourself the freedom to add something back in instead of shaming yourself to cut to the bone forever.
Understanding your “enough.”
Once you’ve assessed, reassessed, and really taken stock of what you want and what you need, you’ll have more clarity about how much you need to live your happy life. I also found that doing these experiments makes me feel grateful for the life I have now, even while I still pursue some of my like-to-haves, love-to-haves and amazing-to-haves.
I don’t often feel like “I can’t” or that options are impossible to reach. And when that little feeling of ‘Is this enough?’ pops in my head, I have all of these wonderful memories and life experience to draw back on to remind me of what my enough and joyful life actually looks like.