[ad_1] Andrew Hallam’s story is the stuff of personal-finance legend. Through a combination of frugal living and prudent investing, he amassed a millionaire-dollar fortune by the age of 36, while working as a schoolteacher. In 2011, he published Millionaire Teacher: The Nine Rules of Wealth You Should Have Learned in School, a guide to achieving financial independence. A decade later, the book (updated in 2017) is still a go-to guide for financial literacy. Today, Hallam is living what many of us would consider “the dream.” He and his wife, Pele, have been “globally nomadic” for eight years and counting, enjoying active adventures and occasionally popping back to Canada’s west coast to visit family. Hallam is now the author of four personal finance books, including his newest, Balance: How to Invest and Spend for Happiness, Health, and Wealth. I caught up with him in Panama City (virtually, that is) to talk about his enlightened guide to both money and life. You’ve been thinking about life satisfaction for many years. In Balance, you explain that having money helps—up to a point. What’s the relationship between money and life satisfaction? Economics professor Richard Easterlin did studies on life satisfaction relative to income. What he found was that if you don’t have enough money to feed yourself and have decent shelter, then money would increase life satisfaction. But once you have a little bit more than the national median, in any given country, there’s no increase in life satisfaction from more income. A Purdue-based study I referenced in the book found that beyond a certain point, life satisfaction actually drops. In North America, that point is about $160,000 a year. The theory is that people who earn a lot of money, by and large, have high-responsibility jobs with high-stress commitments, so they drop the ball in other areas, like health, sleep or relationships. Often, we get tunnel vision. We start thinking that having more income and material things increases our lifestyle, but they don’t. There’s so much evidence suggesting that the best things in life are not things. Besides having enough money, the other three pillars you list for a balanced and successful life are: maintaining strong relationships, maximizing our mental and physical health and living with a sense of purpose. You share lots of research that supports this holistic approach. Did anything surprise you? What surprised me was one of the impetuses for writing this book. I was doing a lot of travelling and speaking engagements, and because of that I met people with such diverse, contrasting lifestyles: people with really high incomes, and people living simple lives in their RVs, working digitally, raising families. I remember thinking about where laughter was most prevalent. To be non-material seems very freeing. Those people seem to laugh more easily. They have a twinkle in their eye. They’re a lot less stressed. We’ve become a highly materialistic culture, and that’s bad for the environment and bad for our pocketbooks. And when you meet these people who have turned their backs on that, who have decided they’re going to prioritize experiences, life, simplicity and relationships, there’s a freedom I noticed with those people. It made me realize that, wow, people don’t necessarily need as much money as they think they do. “Stuff is like a short-term sugar rush, and then we’re left with the bill. But if we spend money on an experience, then we build memories.” People often buy things because it makes them feel good. This effect doesn’t last, but we do it anyway. Why’s it so hard to opt out of the “culture of upgrades,” as you call it? It’s a lack of awareness that material acquisitions don’t fulfill us. If you ask someone, “Why do you want to buy that?” they say, “I deserve it.” So, I ask, “Why do you deserve it?” If you continue to ask why, you’ll find that ultimately, everybody thinks these things will increase their life satisfaction. The irony is that all the research suggests it doesn’t enhance lifestyle at all. Most people who have more things are no happier than they were before they had them. Recognizing that is such an important step. Once people do, they spend less. They’re able to invest more money for their future. They can spend on experiences instead of things. And they’re able to give more, in terms of charitable donations and helping others out. These are the things that enhance life satisfaction. Once people get that, it becomes a real turning point. But it’s hard to get that through to people because it’s not mainstream. We’re bombarded with advertisements. We’re surrounded by our neighbours who are purchasing things because they say they deserve it. It’s just never-ending. In the book, you suggest this test to determine if a purchase is worth making: Ask yourself if it creates an experience you wouldn’t otherwise have. It’s such a good way of assessing things. I’m not saying, “Don’t buy anything.” The point is to be super-honest with yourself. A lot of people don’t do a cost-benefit analysis. Let’s say it’s a vacation cabin—if it’s a big part of your life, and it brings people together, that’s awesome. Buy it if you’re really going to spend a lot of time there. But if you’re just going for two or three weeks a year, it’s a waste of money. In this case, it would be better to rent it instead. During the pandemic, a lot of us have gotten pricey indulgences that we likely wouldn’t have bought were it not for lockdowns and social distancing. What do you make of these “pandemic purchases”? We should make pandemic purchases that enhance experiences instead of just collecting stuff. Stuff is like a short-term sugar rush, and then we’re left with the bill. But if we spend money on an experience, then we build memories. Especially if an experience has an element of pro-social giving, where we’re giving to help somebody else out. That builds a memory
