If your goal is to become rich, it can be accomplished fairly easily by making sound financial decisions over a long period of time. But not everyone wants to be rich. I’ve always viewed the ultimate goal in life as achieving and maintaining happiness. Happiness is a relative term because it depends on the person. Can money make a person happy? Most definitely. If that is what the person desires, then yes. If a person wants a family or the luxury of going shopping every weekend, then they should look to have those in their life if it makes them happy.
I tend to focus on ways to save and invest money, and the consequences and outcomes of different actions on the wealth of a person because I enjoy the challenge of gathering wealth. It makes me happy. However, I also love playing basketball, going to eat with my friends, and seeing my family. I have purchased a $50 basketball to play with because I play so much, I eat at nice sushi places with my friends because it is always fun, and I visit my family during holidays because there is nothing more important to me in life than seeing them. All of these things contribute to making me happy. All of these things also cost money, but I would rather be happy than save money in these situations.
Of course you could look at the Mr. Market way of viewing things. Would I not buy the basketball if someone paid me $1,367.27 when I turn 65? That is the opportunity cost of not investing the $50 for 40 years at an 8% return. My answer is a resounding No. Sometimes it is not so clear cut though and decisions can be hard to make. I have always felt that if you can’t decide between saving money and doing something that will make you happy then definitely do the thing that will make you happy. I didn’t know if I wanted to go to Atlanta for New Years last year with my friends because they wanted to stay at expensive hotels and go to expensive bars at night. I wasn’t sure it was worth it, but I told myself that the memories would be awesome. Turns out I had a blast, and I don’t regret going at all. It has been shown that people prefer experiences over assets in a study. This means if you can’t decide between buying a nice painting and going to Europe for a week, you are more likely to enjoy Europe for a week. Memories are priceless after all.
My friends ask me for financial advice all the time especially my med school friends since a lot of them have debt to pay off. They also ask me for advice in relationships, scheduling, etc… I always tell them “do what makes you happy”, and I try to approach all decisions in life that way.