On July 18, there was a Sunday Times Invest article titled “Fewer high income earners feel very happy: IPS study”. A survey of 2,000 respondents by the Institute of Policy Studies (IPS) showed that higher incomes is not a guarantee of more happiness. In fact, the higher income groups have the lowest proportion who said “they felt very happy most of the time”.
For those earning $7,000 and more, only 22 percent said they are very happy. In contrast, the percentage went up to 30 percent for people making under $1,500. The reverse is true. Compared with lower income groups, there are more respondents in higher income groups said they are not happy.
Why higher incomes and bigger houses can’t make us happier
Despite Singapore’s relatively bigger success in containing Covid-19 last year compared with western countries, we only rank 32nd on the list according to the World Happiness Report 2021.
We have few Covid-19 deaths, low resident unemployment rate, higher incomes reported by Census 2020, and the world’s second highest home ownership rate. Why are we still not happy?
I first asked this question in my old blog post “Is property the reason why Singapore is not among the happiest countries in the world?”. I also touched on the topic in my new book Behind The Scenes of The Property Market.
Reason #1: We are stuck in a miserable rat race
In my book, I mentioned the fact the a society’s happiness is unrelated to its wealth, but rather how big the gap between the haves and have-nots. We are truly satisfied with life only if we are able to fare better when compared with the people around us.
You may be comfortable staying in a 4-room flat. But your colleague has already upgraded to a condominium, and your boss is staying in a landed property. You invite your college friends for a housewarming in your new cluster house, only to find that one of them just bought a bungalow. Our fragile pleasure subsides the moment we know others are doing better than us.
Our income and the size of our home are less relevant than how they compare to others’. Because we are often under the pressure to keep up with the Joneses. Many top bankers, senior managers, C-level executives, and high-salaried professionals are already very rich in the eyes of ordinary salarymen. But they still want more money. Why? Because they suspect the other guy has more.
Competitive people, who often have selfish instincts, are good at making money.
Perhaps all we can say in the end is that having more money can make you happier, but happiness isn’t guaranteed.– Claudia Hammond, Mind Over Money
Reason #2: Happiness is irrelevant after a certain salary point
A Princeton University study found that the statement “the higher our income, the happier we are” is valid only up to the salary of US$75,000 (around S$100,000) a year. Beyond this, money is no longer an issue in everyday life. From now on, there is no longer any relationship between income and happiness.
I try to recall last time when my annual salary first hit $100,000 or $200,000 and above. Was I happier or sadder at each stage? Higher income did come with longer work hours and more responsibilities. But the stress didn’t only cause by more work that came with a bigger job title, but also came from more family responsibilities at a different life stage.
Even so, I agree that higher income fails to make a person happier after a certain point. Beyond certain salary point, happiness and satisfaction in life has nothing to do with income.
The Invest editor explained why other studies also show that high income earners can be unhappy:
1) They need to maintain the high life with private home and car loans, plus other bills to pay.
2) They have higher tendency to overspend with easy credit in order to fund their lifestyles.
3) High salaries come with greater responsibilities at work and more office politics.
So once we’ve earned as much money as we can actually enjoy, we quit working and enjoy it, right? Wrong. People in wealthy countries generally work long and hard to earn more money than they can ever derive pleasure from.
– Daniel Gilbert, Stumbling on Happiness
Reason #3: People with different incomes don’t feel the same for a happy experience
In her book Mind Over Money, Claudia Hammond emphasized the fact that those with higher incomes and higher savings have less pleasure from the same experience than people with lower incomes. Daniel Gilbert called this “experience stretching hypothesis” in his book Stumbling on Happiness. His study found that one experience can make a person feel 10/10 happy while the other person may only feel 5/10 happy.
The lower income group in the IPS study includes retirees. They no longer suffer from any stress at work, worry of outstanding loans to pay, or anxiety over their children’s education. So we can imagine that they are happier and more satisfied with life. But on the other hand, they may need to deal with fading health, social isolation, as well as lack of income, social status and sense of purpose.
I agree with the Invest editor that the happiest people do not always have everything. They just make the best of what they have.
The World Happiness Report 2021 told us that physical distancing or self-isolation under Covid-19 is a significant challenge for people’s social connections which are vital for happiness. Positive features of a person’s life that can help include gratitude, grit, prior connections, volunteering, taking exercise, and having a pet. Negative features are prior mental illness, a sense of uncertainty, and a lack of proper digital connections.
3 ways to make us happy regardless of our income
On a separate note, a person’s income can be irrelevant to his or her success. There is one important thing I learned from my property investment journey: Income and net worth are two different things. One’s income can have nothing to do with one’s wealth.
A person may be earning a high salary, but he may have a low or negative net worth. Don’t forget that successful investors and businessmen do not need to survive on a paycheck. Best still, when they are investing for the long-term, they are not considered as “traders”. They are not liable to pay any capital gain tax on their profit, unlike salarymen who must pay their income tax.
Allow me to end this post by quoting from my book Behind The Scenes of The Property Market three ways that can make us happy again.
1. Shift out of that scarcity mindset
One way of avoiding falling into the “kiasu” trap is to shift away from the scarcity mindset to the abundance mindset.
Why do we often have a strong sense of insecurity or anxiety? Because deep inside we are fragile, broken or incomplete. We may have grown up. But we lack the maturity, confidence and wisdom to face the outside world. That is why we frequently feel threatened by other’s achievement, unvalidated media predictions, disruptive new trends, or imaginative possible mishaps. Those who lack independent thinking are desperate for acceptance, directions and reassurance.
Have faith in ourselves and our loved ones. Learn to let go and let life take its course.
2. Stop comparing and start living
The person who is really judging us and competing against us is ourselves. We live for ourselves, not for others. Drop the bad habit of benchmarking ourselves against others, and our happiness is no longer relative to others’ achievement.
Stop “entertaining” the world. There is nothing like “there is only one way to succeed and to be happy” in this society. If we live every day for the acceptance and compliments of others, we are merely living other people’s life rather than our own. Success in our life and career is defined by our ability to do what we love doing and serve whoever is close to our heart, and we do it well. It has nothing to do with money, social status, or what others think.
Live the way we can find passion. Because leading a life consistent with our values is the greatest predictor of happiness.
3. Take a Zen approach to money
If one is serious about living life to the fullest, spending all the time making money is meaningless. Similarly, we feel empty if our life is only going after luxuries, power or fame.
The material world can give us comfort and luxury. But it cannot give us happiness and peace of mind in the heart. The road to unhappiness is paved with the pursuit of things that matter little. So stop attaching our sense of security to only money. We have more freedom and options than we know. Always place personal growth and fulfilment above material goods and financial success. And soon, we will discover the freedom that comes with not worrying about money.
If you need advice on property matters or residential properties in Singapore, you can check out my personal consultation service.
My new book Behind The Scenes of The Property Market is now available for preview and order online. You can also check out my online courses.
Hi Vina. Trust you are keeping well. I am almost done with reading your second book “Behind the scenes of the Property Market”. Of course I’ve read your No Bs first book a few years back as well.
I must say ithey are both very good books . The latter one, it’s Not just about properties but a lot about life in general and our rat race and our mindset. Gave me plenty of food for thought still.
When I read your first book, I felt, this lady really knows what she’s talking about and she based it on a lot of facts and figures. What you said and wrote from years back we’re really in line with what I’ve been seeing and the numbers I had read, since 2008. (all fact checked not based on Media); my personal beliefs I’d say. I’ve been a fan ever since. Together with “his lordship” Mr. Ku Swee Yong, both of you are my idols.
Thank you and God bless !
Gemö
Thank you for reading my books! I am very happy that you enjoy reading them. Besides crunching the hard numbers, I find that learning and understanding about life and human nature can help me to be a better property investor.
It is a big honor to be associated with Mr Ku. He is definitely the best in the field. I have learned a lot from him too.
SG Happiness Movement (SHM) anyone? Since government not likely to own it, why not have this set up modelled after our very own uniquely SG Kindness Movement?
Hahaha. Everybody is responsible for their own happiness. We can start with ourselves first (by following the positive features found by the World Happiness Report). Only when we are mentally healthy and truly happy we can inspire and help our loved ones and our communities.
Thanks for your thoughtful post.
Sadly, most people are oblivious to the rat race trap – work hard, upgrade property, work harder to pay debt and on and on – that they think this is the only game in town.
You pointed rightly that wealth is more than just money. I am not saying money is not important, it is. But it only a means to an end. Myself included, sometimes we lost sight of what is important – time, freedom, health, family and friends.
Unfortunately, I think it will get worse. The developed world central banks’ financial repression of interest rates, the potential structural inflation (transitory?) and our calibrated system to maximise efficiency and productivity, it is difficult to even slow down. For the higher income group, the lack of basic financial literary is concerning.
Somehow it reminds me of the movie “Matrix”.
I can only speak from my personal experience. Last time when I still had loans and bills to pay, I had no choice but to join the rat race. It was only after my first pot of gold from property investment that I could slowly shift to work and projects that I enjoy doing. Now I understand physical health and mental wellbeing should always be our priorities above money. Without these two things, we can’t possibly enjoy what we have, including loving family, good friends, successful career and all our treasured possessions.
Great article. Comparison is the thief of joy!
Hoping to see your analysis of the Pasir Ris 8 situation and increasing resale HDB prices 🙂
Thanks! Yes, I’m working on it. It’s too long and I’m dividing the two topics into two separate blog posts.