Arthur Brooks, Author, Build the Life You Want, joined TheStreet to discuss the relationship between money and happiness.
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00:00 Arthur, I want to start with this idea of intersectionality.
00:04 From your vantage point, where does the intersectionality of the drive for wealth
00:12 and the drive for happiness intersect?
00:17 Well, the problem is not often enough.
00:19 Biology tells us, Mother Nature tells us, that if we get these worldly rewards,
00:23 then we're going to be happy.
00:25 But it's kind of a trick.
00:26 Mother Nature really only has two goals for us,
00:28 which is to survive and pass on our genes.
00:31 She doesn't care if we're happy.
00:32 We want to be happy, so we think,
00:34 "Look, if I follow these drives to be more successful as a person,
00:37 then I'm going to be happier."
00:39 And those drives really take the place in money and power and pleasure
00:43 and fame or the admiration of other people.
00:45 And then we become frustrated. Why?
00:47 Because we get, I guess, more competitive in the mating pool, I suppose,
00:50 but that's not going to lead us to happiness.
00:52 So I spend a lot of my time helping people understand that happiness is their business
00:56 and they have to make choices that don't always feel very natural
00:59 if they're going to get more of it.
01:00 So what are those choices?
01:01 Because we're all trying to find that balance between being happy
01:06 but also having wealth.
01:08 Yeah, I know, for sure.
01:09 And there's nothing wrong with money. On the contrary.
01:11 I mean, I'm a big capitalist. I believe in the free enterprise system.
01:14 But the wealth and money, the financial resources that we have,
01:17 that's an intermediary goal.
01:20 That's something that we want on the way to getting the things that we actually want to do.
01:23 In other words, it's important to think about why do you want money?
01:26 Well, because more is better. Wrong.
01:28 Why do you want money?
01:29 People need to actually answer that particular question.
01:32 What do you want to do that's good in the world?
01:34 One of the ways to think about this is to not just have a goal of having more
01:38 but wanting less.
01:40 You know, wanting less of the things that actually won't bring real satisfaction.
01:44 One of the ways that I talk about this with people is that we have this drive to buy stuff.
01:49 You know, if I get that watch, if I get that suit, if I get that boat, if I get that house,
01:53 then I'm finally going to be happy.
01:54 You kind of know that's not true.
01:56 You know that's not true, but there are ways that you can actually spend money
01:59 and the why of your money can take this form that's better for your happiness.
02:03 For example, buying experiences with people that you love.
02:06 That's reliable for bringing happiness.
02:08 Buying time and spending it with people that you love.
02:11 Giving your money to causes that you love.
02:13 And saving your money.
02:15 All those things actually do bring reliable happiness.
02:17 Those are the ways to buy happiness.
02:19 So how do we rewire ourself?
02:22 Because we all say money can't buy you happiness, but somebody else might say,
02:26 "Well, at least I'll have fun on the way of trying to figure it out."
02:29 Yeah, yeah. And the truth of the matter is that people do figure that out.
02:32 And the people who say money doesn't buy happiness, they tend to have a lot of money.
02:36 And you say, "Well, let me figure that one out on my own. Let me try that on my own."
02:39 And you have to do that by making some errors and ideally by not having too much regret.
02:44 One of the ways that I counsel people to do it who are working very hard,
02:47 they get a lot of satisfaction from their work and they're very financially successful.
02:50 You and I probably have the same friends, as a matter of fact.
02:53 I have to urge them to fight their biological tendencies to fill their house with stuff.
02:59 Buy that second boat. It will not bring the satisfaction that you seek.
03:03 But rather to spend the resources to have the experiences with the people that they love.
03:07 People, they think that things are permanent and experiences are temporary.
03:12 It's exactly the reverse psychologically.
03:14 Experiences reside in your mind and heart forever.
03:17 And it's the things that kind of fade away.
03:19 And I have to help people rewire themselves by making decisions that don't always feel natural,
03:24 but are always satisfying when they learn how to make them.
03:26 So is there a role for financial security in the pursuit of happiness?
03:32 There absolutely is. Why?
03:34 Because financial security per se makes it possible for you to avoid a lot of the sources of unhappiness.
03:39 And this is one of the mistakes that we often make.
03:41 We think if I get more financial security, I'll be happier.
03:43 No, you'll be less unhappy.
03:45 And the problem is that it doesn't take that much to be financially secure.
03:49 I mean, it takes more than a few bucks.
03:51 But the whole point is that when you are able to avoid normal sources of stress,
03:55 like paying your rent, taking care of your kids, that kind of security,
03:58 it avoids tons of unhappiness in your life.
04:01 Then you can actually focus on the things that really matter to you,
04:04 like spending time with those kids that you're trying to get financial viability to support more reliably.
04:09 For a lot of Americans, financial issues are very, very stressful.
04:15 Yes.
04:16 So in terms of your expertise, what advice do you have in terms of how to deal with that financial stress and have peace of mind?
04:28 Yeah. The number one thing that I'll talk about is the mistake that people make.
04:32 Because the biggest source of stress that people make is not that there's not enough money,
04:35 but they make mistakes with their money, actually, you find.
04:38 The number one mistake people make is that they borrow money for consumption.
04:42 Never borrow money to consume.
04:44 Now, OK, you don't have enough money, you'd actually need to put groceries on your credit card.
04:47 I get it. But that's not what we're talking about.
04:50 The normal sources of avoidable stress that people have is that they want to consume,
04:53 they want to buy something, they want some stuff in their life,
04:56 and they don't have the means to pay for it yet, so they go into debt for it.
04:59 They buy a car that's twice as expensive as the car that they really could afford because it's a nicer car.
05:03 I'll pay it off. $600 a month for five years. Who cares?
05:06 No, no, no, no, no, no. One year in, that car's got dents,
05:09 and you've got four years left on the payments on that car.
05:12 That's the number one predictor of how your finances can drive down your happiness,
05:17 is borrowing for your own consumption.
05:19 Credit card debt is horrible for your happiness.
05:22 You find that car debt is a big problem for your happiness.
05:25 Student debt, eh, it can kind of go either way because it's sort of like an investment,
05:29 but people have a tendency to go to institutions that are more expensive than they should
05:34 because they can borrow the money. Wrong reason to go to a particular school.
05:37 The only kind of debt that can actually raise your happiness is a mortgage,
05:42 because that's actually better than paying rent because you're getting a little bit of that money into the bank
05:46 and making progress in the future.
05:48 Progress brings happiness. Borrowing for consumption is the opposite of progress.
05:53 So I take it that you might think this new industry of buy now, pay later
05:57 is actually going to cause us some pain later on.
06:00 It's horrible. It's horrible.
06:01 And what you found is during the Great Recession, for example, that credit card debt went way down.
06:05 And now credit card debt is really high again.
06:07 And this is one of the things that's putting downward pressure on American happiness.
06:10 The number one thing you can teach your kids is that it's going to shackle you to be taking out,
06:15 you know, be paying interest on your credit card.
06:18 Don't do that. If you can't afford it now, and it's a discretionary expense,
06:23 I'm not talking about food, it's a discretionary expense, don't buy it now.
06:27 You'll be much happier as a result.
06:29 And so what are some of the common myths that you come across
06:34 when you're dealing with this topic of money and happiness?
06:39 The number one is that, you know, people talk about money and happiness.
06:43 It's actually really money is more related to unhappiness than it is to happiness.
06:47 And money really can lower your unhappiness,
06:49 which is one of the most important things that we can do as a society,
06:52 is to make sure that people have access to the basic services
06:55 so we can get rid of these normal worries that they have.
06:58 That's really important.
06:59 The second thing is that they notice in their lives, a lot of young people, for example,
07:03 when they make money for the first time, that they feel better.
07:05 And so the result is they chase that feeling for the rest of their lives.
07:08 Like, I don't know, I made $20,000 a year and I was really under a lot of pressure,
07:12 and then I made $40,000 and I felt better.
07:14 So therefore, if I go to $200,000 to $400,000, I'm going to feel the same.
07:18 And it doesn't work that way because you're not eliminating the sources of unhappiness
07:21 in the same way that you were when you were at lower income levels.
07:24 So we talked about two industries already, buy now, pay later.
07:27 We talked about the credit card industry, social media, right?
07:31 Envy is a big topic in your book.
07:34 How do we deal with, I guess it's the consumption that's driven by
07:40 when we see people on Instagram, we want to be like them, we want what they have.
07:45 We think it's going to make us happy.
07:47 The reason we think that's going to make us happy is not because of the thing,
07:50 but because of what it represents.
07:52 We are a hierarchical kin-based species.
07:54 Human beings are.
07:55 We come from these kin-based groups where you know who the alpha is,
07:58 you know who the rank order of these people are.
08:01 And how do you know that somebody is higher order among your kin, in your tribe?
08:06 The answer is they have more stuff.
08:08 They have more access to resources.
08:09 So therefore, if we can demonstrate that we have more resources that we need,
08:13 we're saying that we're higher in the hierarchy and that's really pleasurable,
08:17 or so it seems.
08:19 Now, the reason that that's become a lot more of an issue in people's lives
08:22 is because social media has made it possible for us to consume an impression of people
08:27 we would never have access to before.
08:29 I can look at famous movie stars and say, "Wow, look at the life that they're leading.
08:34 That shows that they're important.
08:35 That shows that they're high in the hierarchy.
08:37 I want that, so how am I going to get it?
08:39 By having enough money to do that.
08:40 I don't have it right now.
08:41 I'm going to go borrow.
08:43 Then I'll be happy."
08:44 It's not true.
08:45 It's a trick is what's happening for us.
08:47 And so you've got to protect yourself by saying, "Look, this medium,
08:50 it's taking over my brain.
08:52 It's leading me to have false assumptions and wrongful expectations."
08:55 But aren't we hardwired that way?
08:58 I mean, if you think of back in the day, if you saw another caveman or cavewoman
09:03 with more, you wanted more.
09:04 I mean, isn't that what war has almost been all about?
09:07 Wanting more, seeing what somebody else hasn't wanted it?
09:10 That's evolution.
09:11 So how do we undo that?
09:12 Well, we're not hardwired.
09:13 We're softwired.
09:14 And the truth is that we have free will as well.
09:17 That's one of the reasons that I teach happiness at Harvard
09:19 because when you have the knowledge, you can change your habits.
09:21 You can say, "Oh, oh, I'm doing that thing again.
09:24 I'm doing that crazy thing again.
09:26 I'm comparing myself to other people because it's the thing I saw on social media."
09:29 And as soon as you realize that, then you're free.
09:32 You really free yourself.
09:33 Knowledge is power for people when they understand these natural evolved tendencies.
09:39 It's softwiring, not hardwiring, and knowledge will get you around that softwiring.
09:43 So speaking of knowledge, let's wrap it up here.
09:46 What is your advice in pursuing well-being and your financial well-being,
09:57 your emotional well-being and your financial well-being?
09:59 So financial well-being has a lot to do with being circumspect about your resources,
10:03 making sure that you're not going into debt, making smart choices,
10:07 deferring your gratification, all the stuff that you talk about,
10:09 that we've learned about, et cetera, et cetera.
10:12 The more important thing to be thinking about to not forego, to not skimp on ever is love.
10:18 That's what the human heart really, really wants.
10:21 And a lot of people are thinking, "You know, if I have the money to buy the stuff,
10:24 then I'm going to get more love."
10:25 Why? Because people are going to be attracted to me and they're really, really going to love me.
10:29 How many people have I talked to? I can't tell you.
10:31 They're like, "How is my spouse going to love me?
10:33 I don't know if I bring in a big gazelle."
10:35 And how do you bring in a big gazelle here in the New York Stock Exchange?
10:38 Your portfolio does really well.
10:40 I spent all my time thinking about that.
10:42 But what you really want at the end of the day is her love.
10:45 That's what you really want.
10:46 So go for her love as opposed to actually trying to this intermediate, weird,
10:50 kind of caveman case that's taking you back 250,000 years under the Pleistocene.
10:55 Do what really matters. Pay attention to her. Cultivate that relationship.
11:00 Why don't you, instead of spending the 14th hour at the office,
11:03 why don't you go home and have dinner together and read to her on the sofa tonight?
11:08 Boy, you're going to get the love you really want there.
11:10 Then we have Arthur Brooks, the romantic.
11:13 Arthur Brooks, he is the writer of Build the Life You Want.
11:17 Thank you for joining us.
11:18 Thank you.
11:19 [end]