The happiest people I’ve ever met lived in a place called Cañas. As a family we visited this small town in Costa Rica last year and fell in love with its charm and sense of community. Everyone made us feel welcome. They even smiled politely while listening to my terrible Spanish.
I spent the two-hour drive from Cañas to Monteverde Cloud Forest questioning what made the place feel so content. Everybody seemed to have a similar level of wealth, which I suspect had something to do with it. The beautifully painted houses were simple in construction and similar in size.
Something that sets us Brits apart from Costa Ricans is our constant desire for growth. This desire for more is partly driven by necessity. Thanks to inflation, we always need a little growth. We can’t stand still because inflation would send us backwards.
I believe comparison plays a role too, whether we’re comparing ourselves to friends, neighbours, colleagues or everyone we know. If you feel like you’re constantly scrambling to do better, live better, and be better, this article is for you.
Growth ≠ wellbeing
In ‘Economic Possibilities for our Grandchildren’ written in 1930, John Maynard Keynes speculated that by the year 2030, capital investment and technological progress would create a society so rich that people would work as little as fifteen hours a week, devoting the rest of their time to ‘non-economic purposes’.
Almost 100 years on, Keynes’ predictions are yet to materialise, but the constant desire for growth is still being challenged by mainstream economists today. As Abhijit Banerjee and Esther Duflo point out in ‘Good Economics for Hard Times’, a larger GDP doesn’t necessarily equate to a rise in human wellbeing — especially if it’s not distributed equally.
I’d argue that even those who benefit from economic growth are, in their own way, victims of it too. I often speak to economic ‘winners’ who are unhappy, unsatisfied and even unhealthy. Why? It’s largely down to the constant need for more.
Comparison is the thief of joy
In ‘Uncomfortably Off’, Mitchell and González Hernando interview the managers and professionals who make up Britain’s top 10% of income earners.
In case you’re wondering: If you earned more than £58,300 in the 2019-20 tax year, you’d find yourself in the top 10% of earners according to Uncomfortably Off. If you earned £81,000 a year or more, you’d be in the top 8% and if you earned £180,000 or more, you’d be in the top 1%. Surprising, huh? You might not feel that well off.
Uncomfortably Off’s authors explain: “The top 10% aspire to a lifestyle that is increasingly beyond them. While from the outside they are living the dream, in reality, they are beset by anxiety. Life to them is a hamster wheel of constant struggle to keep the high-paying jobs that allow them to service their mortgages and keep up with expectations.”
Lifestyle inflation and the rising cost of living is only half of the problem. On top of that, your frame of reference is most likely skewed. Surrounded by people with higher incomes and more lavish lifestyles than your own, it’s only natural if you feel pressure to grow.
You could be a CFO with a net worth of £2m, comparing yourself to a CEO with £20m. Even those who come from humble beginnings can quickly forget how the majority of people live.
If this sounds familiar, you might appreciate this blog post from last year: How to stop comparing yourself to others financially.
How much is enough?
There’s nothing wrong with wanting to do better each year, whether you want to increase your pension contributions, start a new business, or run an ultramarathon. But there’s one question we should all ask ourselves: How much is enough? It’s a topic I’ve touched on a few times on the Barnaby Cecil blog.
Here lies one of the many benefits of a financial plan. A financial plan helps you establish how much wealth you actually need in future. It also offers checkpoints along the way.
Let’s say you need a retirement fund of £2 million to continue funding your current lifestyle. Together, we can calculate how much you need to save to achieve that level. Once your savings and investments are automated, you don’t need to worry. You can focus on actually living your life.
What happens if you’re a decade or less from retirement and you don’t have enough? Well, it’s better to know this sooner rather than later so we can make a plan. You may be surprised to learn just how many tricks I have up my sleeve to tackle this particular dilemma.
There’s more to working with a financial planner than simply having someone to crunch numbers and recommend tax-efficient accounts to open, though. I teach my clients to choose their life and design it for themselves, rather than letting more be their master. Our existence needs to reflect who we are, what we value, and who we want to be. Focusing too heavily on external influences will only lead to discontentment.
How much do we need? I ask myself this question a lot. I live in London and life is expensive, so my financial needs will likely be higher than someone in Costa Rica. But I always try to remember those beaming faces in Cañas. They had a lot less than me and yet they were the happiest people I’ve ever met.