The New York couple in this CNBC article feels stress about their finances and “average” lifestyle, despite a household earning of $500,000 per year. Living in New York is certainly more expensive than in many other parts of the country, but does their financial stress stem from their circumstances or their choices?
In Vicki Robin’s book “Your Money or Your Life”, she explains that the financial component to happiness isn’t based on income level because we allow lifestyle creep to continually demand more and more of our earnings. The stress from that demand erodes happiness. Most survey respondents rate their happiness between 2.6 – 2.8 (out of 5) regardless of income level and assert they would need 50-100% more than what they currently have to achieve happiness. Most of us can look at this couple’s snapshot and easily find areas we’d “sacrifice” in order to widen the earning and spending gap in order to save more for emergencies and for retirement.
The hard part is looking at our own situation through the eyes of someone less fortunate than us to identify the areas we could be spending less, without sacrificing an enjoyable life, in order to be better prepared for the future.
