How to measure happiness? The definition of happiness is dependent on each person. For me, it is a matter of feeling. That feeling depends not only on how good I feel at the moment but also on how large the gap between my financial status and the living cost. I would like to quantify the happiness in financial term.

As long as the growth rate of number of things that I want in life is lower than the growth rate of my income, the longer I live, the more happy I am. If I can maintain a zero (or negative) growth rate for the number of things that I want while growing my income, well, it is only a matter of time to accumulate enough net worth to stop full time working and start full time living. Cool.

For instance, if you spent $ 10 k last year on things that you want and this year your total expense is also $ 10 k to fulfill your wants, then the yearly growth rate of your wants is zero. In this case, you don’t need to spend more to stay happy. Your “maintenance fee” or “cost of living” stays constant.

Having a zero or negative growth rate for your expense is quite relieving. Try imagine the opposite case where your cost of living is increasing faster than your income, your day to day living would be quite stressful and the longer you live and work, the more you need to work to cover the cost. It is not sustainable and quite hard to live happily with growing stress. In this case, you need to work harder, longer. Don’t you agree?

Another case would be that your living cost grows in proportion to your income growth. You keep upgrading your lifestyle with the increase of your income. This will generate a lot of “wastes” while you keep working. This is not a good use of your resource and the more you work the more you want. Your work is translated into waste (by throwing away usable stuffs due to upgrading) while unable to get ahead financially.

A simple way to measure financial happiness is via saving rate which is described here: Fundamental Equation of Personal Finance. The max score is while the min score can approach . If the income growth rate is higher than the living cost growth rate, then sooner or later, the saving rate will approach .

Wants vs Needs: How to live a happy life that costs less

As long as the income can cover the basic needs like food, shelter, transport and clothing, one should be able to live comfortably and happily. One could spend time doing meaningful things that cost little or nothing like drawing, writing articles, gardening, growing and cooking own foods, reading to upgrade knowledge, helping the communities, etc things that you like to do. Simple life can also be a happy life.

In the world of consumerism, everyone is surrounded and influenced by advertisement and marketing of corporations to spend money on the large amount of consumer products and services that in certain ways making the consumers dependent on the products and services. The consumers are no longer satisfied by simple and cheap solution.

For example, in order to exercise, they will spend money to buy a treadmill or pay expensive membership fees to a sport club, instead of simpler solution of walking or exercising in their neighborhood. People will pay more for a Starbucks coffee than having a “normal” coffee. People prefer to drive rather than live closer to their workplace or similar. People prefer to buy bigger house and fill it will stuffs that they rarely use. Thus, they need to work more to pay for their choices.

Human’s wants are relative. If one is used to having certain things, it becomes a need and it no longer brings happiness. Thus, he/she will keep looking for an upgrade to satisfy his/her new wants (new pair of shoes, larger TV, new phone, new car, new trips, …). So one need to keep working to pay for the upgrades. But since he/she is busy working, he/she could only afford to spend little time on the stuffs he/she bought and hence most of the time they are under utilized and wasted.

People also like outsourcing. Instead of spending time and raising their own kids, they send their kids to baby sitter while they work hard to pay for the baby sitting. Instead of doing housework themselves, they hire housemaids to do the cleaning and maintenance work while they work in the office to pay for the housemaids.

With the advance of technology, people are more busy than ever. Even though people now are more productive (we have computers, better technology, better transport systems, …), they still work 8 hours a day compared to 10, 20 or more years ago. People create work for themselves by wanting more.

If everyone is self-sufficient and not too dependent on products or services, then there will be less waste of resources. Everyone can become a producer, who generates his/her own needs (grow own foods, cook own foods, raise own kids, help community, …) making the world a world of abundance. However, if everyone is consuming unnecessarily in the world of consumerism, everyone lives in a world of scarcity.

Be more of a producer and less of a consumer, then your cost of living will reduce by consequence.

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Today, I want to wish myself happy second work anniversary! Yeah. Actually, I should do this 3 days ago since I first joined my current company on 16 of April 2 years ago in 2012. But since I don’t blog often, I blog it only today.

Happy anniversary.