Who Actually Feels Satisfied About Finances... Does MMM Help?

[BicycleB]

I'm guessing that our MMM habit of comparing progress on life goals and thrift skills, not just earnings or consumption, gives us a happiness edge separate from mere money in the bank. The article below suggests that comparison is a two-edged sword, but money in the bank helps. Any thoughts?

https://www.theatlantic.com/family/archive/2019/07/who-feels-rich/594439/

Happily loafing at the moment. My friends at this point are mostly partial slackers with incomes ranging from 20k to 60k. I'm low on the income scale in my circle, but high on money in the bank, relatively.

Another comparison group is neighborhood volunteers. I have a long record of some involvement in neighborhood groups, which I recently renewed. There, again I am low on income; perfectly ordinary in security; mostly valued for caring and contribution, not money. The comparison is safe, but the connection is valuable. To be fair, my neighborhood also includes people whose incomes are also still lower than mine, including some homeless and/or mentally ill, but they do not usually involve themselves in groups that I know. I feel like I'm in a fair middle, and happy because I am safe and have the opportunity to contribute without stress.

Are you happy with your finances? Does comparison help or hurt in this? Who do you compare to? Does MMM help or hurt?

[jlcnuke]

I think that the majority of people participating here aren't comparing themselves to others usually. We've broken that habit and instead focus on what makes us happy regardless of what others are doing/having.

I'm not better than my co-workers for saving much more than most, and I'm not worse than them either. I simply have different priorities in life. When I'm retired in my late 40's and almost all of my friends/coworkers are still looking at 15-30 years of working before they can afford to do so, I still won't be better than them or worse than them. I'll simply have made different choices in life. I know people with more money than I have and people with less, and I don't compare myself to any of them since we're all leading different lives. Never make your happiness contingent on how you think you compare to someone else. Find what makes you happy instead and try to maximize the amount of those things in your life and you can enjoy life whether you make $15k/year or $15k/month.

[2sk22]

Nice article - this point stood out for me:

Germano said that in her experience, “the people who feel the best about their financial situation … are people who are fully aware of what their financial situation is.” Full awareness includes a thorough accounting of where the money goes

I've always kept very careful track of my household's spending but I had only a rough idea of our overall financial picture. Our goal has always been to save as much as possible but we haven't been actively managing our investments - all index funds on auto-pilot. The last time I had calculated our net worth was in 2015.

Inspired by reading "Your money or your life", I finally put together a complete balance sheet of our finances. I can still recall the moment a few months ago when I finally came to the realization that we were "ok" - especially in the context of our expenditure levels. This realization has had a profound impact on my happiness - for the better.

[Parizade]

I think that the majority of people participating here aren't comparing themselves to others usually. We've broken that habit and instead focus on what makes us happy regardless of what others are doing/having.

I agree. The only comparison I care about is happiness, and the only reason I care is because if I see someone who is happier in their life than I am i want to know why so I can get more happiness too. It is certainly not connected to money or material possessions or even relationships as far as I can tell. I know people who have more money, nicer things, more friends liking their posts on facebook, etc., but then they confide in me that they need valium to get through the night and antidepressants to get through their day.

My life is lean and frugal, but I experience real joy every day and I am very satisfied. More money won't improve on that.

[SwordGuy]

Do I compare our situation with others?  Yes and no.

I compare to learn.  If someone is getting good results in one area and we aren't, I want to know how they are doing it.  That way we can get better.

As far as comparing myself against other Americans, that serves little purpose.   If you've avoided major debt, saved a bit, and aren't upside down on your house, you're almost certainly doing better than most Americans.  If you're in that group, it's kind of like an Olympic track athlete comparing themselves to a comatose quadriplegic.     Don't believe me?   Check out https://personalfinancedata.com/networth-percentile-calculator/  But your numbers in and bracket your age by a few years either way.   It doesn't take much for an American to get ahead of most Americans.

[use2betrix]

I like to compare myself to others in the savings groups.. “race to $250k, $500k, etc.”

It’s not in a bad way or jealous way, but it’s just friendly fun and everyone is there to cheer on each other. I don’t see a lot of bitterness from income or savings from probably 90%-95% of this board. Lots of encouragement.

While I’m near the top of the board in terms of income and monthly savings, my spending is also much worse. While I don’t have a “jealous envy” for those who can be happy spending so much less, I do have a strong admiration for so many of them. I look for things that they do, that I believe can help me.

I continue feeling better and better the further along I get. I felt great hitting a $0 net worth. Then I sure felt awesome hitting $250k.. I’ll be hitting $500k soon and every day I think about where I’m at now, continues to feel better. I have a long ways to go, but dang it sure is coming along.

I would personally be a fraction of where I’m at now without MMM. Not even close.

[remizidae]

Do I compare our situation with others?  Yes and no.

I compare to learn.  If someone is getting good results in one area and we aren't, I want to know how they are doing it.  That way we can get better.

As far as comparing myself against other Americans, that serves little purpose.   If you've avoided major debt, saved a bit, and aren't upside down on your house, you're almost certainly doing better than most Americans.  If you're in that group, it's kind of like an Olympic track athlete comparing themselves to a comatose quadriplegic.     Don't believe me?   Check out https://personalfinancedata.com/networth-percentile-calculator/  But your numbers in and bracket your age by a few years either way.   It doesn't take much for an American to get ahead of most Americans.

Sadly many of us out here have student loans. Not easy to avoid those!  I’m around the 15th percentile, but hopefully the comparison will look a lot better as that debt pays off in a high income.

[Basenji]

Germano said that in her experience, “the people who feel the best about their financial situation … are people who are fully aware of what their financial situation is.” Full awareness includes a thorough accounting of where the money goes

Inspired by reading "Your money or your life", I finally put together a complete balance sheet of our finances. I can still recall the moment a few months ago when I finally came to the realization that we were "ok" - especially in the context of our expenditure levels. This realization has had a profound impact on my happiness - for the better.

Yep and yep. Really understanding our situation helped me feel secure. AND things I learned about money on MMM and this forum really cemented that. Many people never learn how to manage their finances and fumble in the dark for most of their lives.

Comparing finances is like comparing marriages. One may be able to see the major purchases other people make, but you can't see their bank balances or spending patterns. Unless you know all the details (and you probably don't) it's impossible to really compare. Yes, having savings (investments, retirement, assets, whatnot) may help one feel contented. But there are some people (I've read stories on this forum) who will never feel secure no matter how much money they have. Therefore, the issue isn't money per se, but being able to see one's personal "enough."

[SwordGuy]

Do I compare our situation with others?  Yes and no.

I compare to learn.  If someone is getting good results in one area and we aren't, I want to know how they are doing it.  That way we can get better.

As far as comparing myself against other Americans, that serves little purpose.   If you've avoided major debt, saved a bit, and aren't upside down on your house, you're almost certainly doing better than most Americans.  If you're in that group, it's kind of like an Olympic track athlete comparing themselves to a comatose quadriplegic.     Don't believe me?   Check out https://personalfinancedata.com/networth-percentile-calculator/  But your numbers in and bracket your age by a few years either way.   It doesn't take much for an American to get ahead of most Americans.

Sadly many of us out here have student loans. Not easy to avoid those!  I’m around the 15th percentile, but hopefully the comparison will look a lot better as that debt pays off in a high income.

I'm assuming you've got a plan for how much debt to pay off and how much to add to your investments each year for the next 5 years.  (Revisited every year or when big changes in income or expense happen, of course.)

So, put those numbers into that website and see how you'll compare in a year or two or five.

If you're knocking out that debt and upping your savings at a good clip, I think you'll be surprised at the difference in your percentile ranking. 

Example:
For someone in the 30-35 age group, the 10th percentile is at - $20,430.00.

20th percentile is at -$80.00.

30th percentile is at $5,102.00.

40th percentile is at $14,980.00.

50th percentile is at $28,400.00.

60th percentile is at $55,000.00.

Someone with an expected annual net worth increase of $20K would go from 10th to 20th percentile in a year, to 40th percentile in a second year, and almost be at 60th percentile by the end of year 3.

And we know that once we make the transition from negative to positive, we get even faster progress, plus raises help out.

You can also count on most Americans to remain consumer suckers and spend most of their money.

[Zikoris]

I think I've felt satisfied about finances ever since I could see some actual progress, which was pretty early on. That was never really an issue.

In my experience, the easiest way to not fall down the comparisons rabbit hole is to just have super bizarre goals and lifestyle preferences, such that you don't know anybody on the same track that you can compare to. I find that I don't end up comparing myself to people who are on different tracks, only people who want the same things as me, which is basically nobody. Though I'll admit I do get a little jelly when I'm on a ferry and see a particularly cool island cottage from the decks. But I don't take ferries very often, luckily.

[A Fella from Stella]

Yes and no on satisfaction.

For example, I'll knock off a chunk of debt this weekend when a paycheck comes in, and I know that I'm finally on a good path that will lead to being out of debt.

Comparing to others happens, but in a good way. Where I work just about everyone is making 2x what I do, and I'm at the pay ceiling for my position. So I look at these people and it's just so obvious their lives are different from mine. While I'm the way to FIRE, and they definitely are not, they're maxing out their contributions while I'm working to get out of debt.

They'll work until they're 65 or die (per their own admission), but in the meantime they're on the golf course while I walk at the track. They take their kids to Europe while we go camping.

[Villanelle]

I'd say I feel very satisfied.  Unlike most people 'round these parts, I am not at all in to the numbers.  I don't track much of anything.  (I have a spreadsheet with our AA and I update it a couple times a year so I can tweak future investments as a means of gradual rebalancing.)  We don't have a budget.  I don't know our savings rate. 

But I know we are putting away a significant amount. DH will work for at least 4 more years (for reasons partly outside of $).  We know that his pension will be enough for what we'd consider medium-FIRE.  As it turns out, I may already be retired, though if that's the case it was somewhat accidental.  I quit to be an overseas trailing spouse, that lasted nearly a decade, and now I may just not go back to either full-time work, or work at all. 

I suppose if I compare, it is just to a general "most people" and I know we are miles ahead of that average American who has almost no savings (and no pension), so I suppose that does make me feel "better".  (In this case, "better" means "more secure" and the "more" isn't "than them".  It just that it serves as a sort of confirmation that yes, we really are on a path likely to lead to most of the goals we have in mind.)  If I look around at most of the people in our lives, we are also probably better off (have more savings and lower expenses) than most of them, though many of them have a higher household income.

[Greystache]

I don't compare myself to others as much as I compare what I did to what was, in hindsight, optimal. For example, when I retired four and a half years ago, I chose to make my asset allocation more conservative. With perfect hindsight, I can see that I would have done better if I had not changed my asset allocation. Yes, it bothers me a little bit that I did not play the game as well as I might have, but at the same time, I sleep well at night and my net worth is still higher now than when I retired. I try to use this as a learning opportunity and not get too concerned about what might have been.

[2Birds1Stone]

"comparison is a thief of joy" - someone smarter than I

It's very easy to compare yourself to others, in many aspects of life. Instead, I try to compare myself to myself. How am I doing with various goals compared to the goal posts I have set for myself. In that regard, I'm incredibly happy with my finances. If you told 25 year old me, that I would be a half millionaire at age 32, I would not have believed you. Then I can look at some of the VP's, CEO's, and professional athletes who are <32 with net worth's in the multi millions, and wonder why I squandered my 20's away.

Are those people who are wealthier any happier? Or do they just have rich people problems?

In my career I work with primarily very high earners. Within my company folks make $200-500k/yr, and most of the people I interface with on the customer side are in the $300-$1M/yr bucket. They complain about, and have just as many (if not more problems) than those who earn a fraction of what they do.

At the end of the day, your gratitude and mindset will dictate your happiness....not the dollars in the bank or the number of digits on your paycheck*

*unless you're poor, then life can improve dramatically by improving your economic situation

[SwordGuy]

Example:
For someone in the 30-35 age group, the 10th percentile is at - $20,430.00.

20th percentile is at -$80.00.

30th percentile is at $5,102.00.

To put this in perspective, if all you own is the clothes you are wearing, you have no debt other than the $10.00 your buddy loaned you to buy food yesterday, you have a higher net worth than over 20% of the households in the US.


Now, I'll not argue that someone who has $10,000 cash in the bank and owes $10,080 is worse off.   But still, it's a really low bar to get a high percentile net worth.

If someone has big debts and low-to-medium income it may take some years to clear up that mess.  But then progress can be made very rapidly.   The lesson to teach young folks is don't get into massive student loan debt unless ABSOLUTELY necessary.

[Step37]

Comparing finances is like comparing marriages. One may be able to see the major purchases other people make, but you can't see their bank balances or spending patterns. Unless you know all the details (and you probably don't) it's impossible to really compare. Yes, having savings (investments, retirement, assets, whatnot) may help one feel contented. But there are some people (I've read stories on this forum) who will never feel secure no matter how much money they have. Therefore, the issue isn't money per se, but being able to see one's personal "enough."

YES! Finding my “enough” has revolutionized my life. I was on my way, and finding the MMM site solidified everything and gave me a framework. It’s hard not to compare; however, it’s generally out of curiosity. I don’t feel envious of those who have “more,” because I have enough. It’s so freeing.

[FiveSigmas]

Nice article - this point stood out for me:

Germano said that in her experience, “the people who feel the best about their financial situation … are people who are fully aware of what their financial situation is.” Full awareness includes a thorough accounting of where the money goes

I've always kept very careful track of my household's spending but I had only a rough idea of our overall financial picture. Our goal has always been to save as much as possible but we haven't been actively managing our investments - all index funds on auto-pilot. The last time I had calculated our net worth was in 2015.

Inspired by reading "Your money or your life", I finally put together a complete balance sheet of our finances. I can still recall the moment a few months ago when I finally came to the realization that we were "ok" - especially in the context of our expenditure levels. This realization has had a profound impact on my happiness - for the better.

I agree with 2sk22. Knowledge is power (especially when it comes to anxiety), and there’s nothing like having a full and complete tally of a year or more’s expenses laid out in front you. It takes diligence over time to build it, but it’s worth it.

[Rosy]

Are you happy with your finances? Does comparison help or hurt in this? Who do you compare to? Does MMM help or hurt?

Are you happy with your finances? Yes and No.
- Yes, I've just reached the last milestone, the end game is Jan 2020.
- No, not quite yet.
I'm at the point where I have to say, this is as good as it gets and it is good enough:).

Does comparison help or hurt in this?
That depends entirely on my mood and who I'm comparing myself to - if at all.
I've been busy with fixing my own financial life.
In the end, it doesn't matter what someone else has, they are not paying my bills or sending me on vacation.

Who do you compare to?
Family - friends. Mostly only to those who have more than I do, which, as the article states only leads to dissatisfaction.
But then again - without dissatisfaction - we wouldn't be spurred on to do better, right?

Does MMM help or hurt?
Hanging out on this forum helped a great deal. I would have achieved some of my goals anyway,
but I wouldn't have changed my perspective and reached for more.

[debittogether]

I have more saved than I ever have but I feel awful about it because I'm still so far behind.  Honestly I was happier when I didn't know better and I bought things that brought me happiness.

[DadJokes]

I hate that I made a lot of mistakes in the past, but I'm very happy with the direction in which we are currently moving. I don't really compare myself to others, though I do like to look to others (in this forum and in similar communities) to get ideas on how to improve our finances (and other areas of our lives as well).

If not for MMM, I'd probably still be on the Dave Ramsey plan, which would see me working in my current career until I was 60. It's better than what most people do, but I'm in a much better position now.

[BuddyXL]

I think coming here has definitely helped me.  Otherwise I would just spend money and would still believe I have to work until a certain age dictated by society until I retire.

The flip side is I *do* compare and get frustrated when I see what others have done and I am so far behind.  And not in a bad "jealous" way as much as in a "why didn't that work for me?"  But going through a divorce after a long term marriage can really mess up your finances beyond your control.

[Candace]

I'm satisfied, but I can improve. That will make me more satisfied.

MMM definitely helps. I have learned SO MUCH here. I can't emphasize that enough. I have learned practical and useful things here I wouldn't have learned anywhwere else. Probably.

Moreover, coming here makes me *want* to improve.

The forum has also helped me ask more of myself in certain areas, like cutting expenses in a way that made sense for me.

I don't think we compare ourselves to each other here. The "race" threads are more like cheering sections for people at similar points in their journeys, rather than competitive places. If anyone is comparing themselves to others here and finding themselves wanting, hopefully they can realize we all have our own journeys and no one else can walk in our shoes, insert third trope here.

[Villanelle]

One more thing I didn't mention, but that tremendously helped with my satisfaction over finances was understanding the 4% rule.  Intuitively, I knew that basing how much I needed to retire on income made no sense.  But I didn't have anything to replace that with.  Would $3 million be "enough"?  $5m?  Did I need $7m or $10m?  I didn't know, and it felt scary and confusing.  Now I realize that even for a fat--ney, downright obese!--FIRE, all of those numbers are more than necessary.  That's helped calm a lot of my anxieties because before understanding that, I knew we needed a great deal of money, but I had no idea how to even come close to guessing that number so it felt like I was saving without any benchmarks to know if I was getting close or making real progress. 

[happy]

I feel content with my finances and my lifestyle. I didn't fit in with my peers for a long time, for a variety of reasons, and so charted my own course. So even prior to MMM I learnt it was not helpful to try to keep up with the Jones'.

I've happily engaged with comparison with regard to frugality and net worth growth. I even used CPI corrected figures from MMMs "zero to hero" post to benchmark against at one point.  None of this has reduced my happiness though, it was more a case of seeing what was possible and trying to improve myself.

[Buffaloski Boris]

(1)Are you happy with your finances? (2)Does comparison help or hurt in this? (3) Who do you compare to? (4) Does MMM help or hurt?

Answers: (1) no. But I never will be. I had some rough financial times as a kid and that’s affected my entire financial outlook. I’m happier than I would be if I weren’t fiscally conservative.

(2) &(3) It doesn’t have much impact as I typically compare our finances to what we’ve done. Said another way the fact that John Doe is a millionaire is pretty much irrelevant to me. I’m glad for him but it doesn’t much affect me. I care about our finances.

(4) generally a help and I’ve learned a lot here. I disagree with a few things that tend to be taken at as orthodoxy such as the 4% wish and “VTSAX and forget it”! as a strategy. But by and large it’s a good resource that I’m thankful for the MMM forums.

[Warlord1986]

I was a chuckle head and majored in Communication, then later went into government. I try really, really hard not to compare myself to others, income-wise. Especially not on this board. I’m considering ways to increase my income though, and some of y’all have been really nice about giving advice.

Without a doubt I would not be where I am today without MMM and this forum. Instead of having a little bit in savings and still be in that awful job, I have a lot of savings, I spent this Monday out on the lake, on a SUP board, and I have a part time job that pays the bills and literally lets me read as part of the job. That makes me a very happy Viking warlord.

[bitingbutterfly]

I do because it led me to map out a plan for my money over the course of my life. I find my mind calms down when I have a plan for things, money included. What lead me to MMM was me sitting down one day, calculating out how much money I would have in the bank if I saved every single penny from that day to age 65 (assuming no wage increases). I had a panic because it wasn't even close to what I thought would be enough. I didn't know about investing or compound interest at the time. All I knew was I couldn't stand sitting at a desk for 35+ year. I went down the rabbit hole and found MMM.

I also feel impatient knowing more about how to keep my finances in check. I see my whackload of student loans from law school get reduced little by little every paycheck, but I just want to see those gone forever, immediately. I also regret some of my choices from my 20s...

[DeniseNJ]

I mostly compare myself to where I used to be.  Compared to my old self I'm doing great!

[Spitfire]

Are you happy with your finances? I am happy, I feel I have a good balance of doing things I enjoy without breaking the bank. I feel very secure having savings and investments, I think that takes quite a bit of stress away.

Does comparison help or hurt in this? I don't compare myself to others. I do enjoy reading about other people's journeys with the hope of learning something. Some are always looking for opportunities to increase income, some have great ways of cutting expenses, some do both.

Does MMM help or hurt? MMM helped me by introducing the FIRE concept and index fund investing to me. I had already been a moderate saver before MMM, but index investing will help grow that savings tremendously. I also did not enjoy my job before MMM, and I still don't, but saving towards FIRE (or FU money with part time work) gives me a more positive outlook. 

[Just Joe]

As others have said: comparison as a tool to learn better methods and strategies to manage and grow money. We also benefited from learning what is realistic based on incomes and expenses as discussed here.

We don't lose any sleep over anyone's successes as compared to my family's success. We have used your successes to encourage ourselves. See - it can be done. Its not all doom and gloom.

If anything its been very interesting to see how far some people have gotten with the strategies discussed here when these people have incomes closer to the median incomes of our country. The underdog success stories.

All these self-histories and strategies shared have given DW and I perspective b/c in real life we witness some examples of extreme outcomes. People with good incomes that perpetually struggle. People who never think ahead, etc. To me it seems that more people need not struggle financially if they take a thoughtful approach and do self-study as we collectively have done here in the forums. Increase their financial efficiency.

I feel satisfaction b/c I feel like an fiscally informed adult finally. As a twenty something and older I perpetually had more money questions than answers. No personal strategy. No idea what was "normal" or possible. Not many people around who could or would discuss finances openly and objectively. Finally the internet delivered this forum and most of those questions (call them theories perhaps) have been satiated. Now DW and I can give our kids a little more education than we had early in our teens and adulthood. We can aim them at this forum if their questions are beyond us after they are established adults.