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Happıness
&
Money
•

Happıness
A GUIDE
TO LIVING
THE GOOD LIFE
LAURA ROWLEY
J
OHN
W
ILEY
& S
ONS
, I
NC
.
&
Money
•
Copyright © 2005 by Laura Rowley. All rights reserved.

ISBN 0-471-71404-6 (cloth)
1. Finance, Personal. I. Title.
HG179.R693 2005
332.024—dc22
2004027092
Printed in the United States of America.
10987654321
To my parents, Eugene and Jane Rowley

CONTENTS
Acknowledgments ix
Introduction xi
1 Wealth and Values 1
2 Identifying Your Values: Family,
Community, Personality 21
3 What Do You Believe about Money? 42
4 How Money Relates to Your Happiness 58
5 Managing Spending and Banishing Debt 81
6 How to Save 105
7 Get Your Retirement Plan in Gear 129
8 Fear, Greed, and Money Mistakes 167
9 Money Milestones 181
10 The Final Word on Money, Values, and Happiness 207
Notes 215
Resources 225
Index 231
vii

ix
ACKNOWLEDGMENTS

Rowley, who taught me everything I know about money and values.
Finally, thanks to Jim, Anne, Charlotte, and Holly Hilker, for your
steadfast love and support throughout the course of this project, and for
reminding me every day where true wealth lies.
xi
INTRODUCTION
I
was once asked to give advice to a reader of Self magazine who I will
call Mia. Mia is in her mid-20s, working for a social service agency in
a major city, earning $42,000 a year. Her ultimate financial goal is to be
a millionaire. “I want to live the way I want to live and never worry
about making ends meet,” she says. Mia isn’t thrilled with her job; she
hopes to quit and start a public relations firm. She has a busy social life,
dining out three to four times a week at $75 a pop. She attends parties
and premieres that demand a designer wardrobe at a cost of about $500
a month. Asked to name her most important investment, Mia describes
a $540 Louis Vuitton handbag. She is maxed out on 13 credit cards, on
which she carries an $8,000 balance. She owes another $28,000 in stu-
dent loans, but hasn’t started paying them back. She has no savings and
doesn’t contribute to her firm’s retirement savings plan. “I always feel a
little panicky that I’m not going to be able to pay my bills and have
money to live,” she says.
Obviously, Mia needed an extreme financial makeover. There was a
gigantic disconnect between her goals—becoming a millionaire, start-
ing her own business—and the decisions she made about money. But
ironically, I have met other women through the Self column who didn’t
struggle with debt, had some savings, education, and good jobs—and
felt every bit as anxious as Mia. For some women, money is a like a guy
who can’t commit—it shows up with flowers, wine, and dinner reserva-
tions, but disappears at the mere mention of long-term goals. For oth-

column for Self and teach a university course called “Contemporary
Moral Values.” Those experiences culminated in what is hopefully a
very different kind of personal finance book. Most money guides oper-
ate under the assumption that if you have enough information and take
action, you can build wealth and be happy. But that leap from wealth to
happiness is neither easy nor obvious. I believe that you first have to de-
fine what “the rich life” means to you, what ideas, activities, and rela-
tionships you value, and what you’re striving for personally—then use
money to build that life. Too often it works the other way around:
Someone chooses a particular career to get money, and then lets money
define what she does, what she values, who she is, and what her life
looks like. Or, like Mia, someone creates a life that’s unsustainable and
results in massive debt, because there is no rational connection between
the goals and the money. That connection is essential. I occasionally get
e-mails from readers that say, “I have $1,000 to invest. What should I
do with it?” My response is always: What is the money for? What do
you value? As my wise old instructor Ted Peterson would ask, “What’s
the meaning of life?”
This book offers a road map to wealth with practical financial tools
and positive strategies for creating “the good life” in a personally mean-
ingful way. It looks at how to identify our authentic values and over-
come unconscious beliefs and personality traits that frustrate our efforts
to manage money in a healthy manner. It also explores decades of re-
search into behavioral economics—uncovering how to be happy with
whatever you have, while you move toward your larger financial goals.
It offers the stories of real women who talk about their money tri-
umphs, failures, and lessons. Because so many of those lessons are so
personal, the women I interviewed for this book did not want their full
names disclosed; some allowed me to use their real names and last ini-
tials; others asked that a pseudonym be used. But they are all real peo-

•A woman is more likely to work a minimum wage job than a
man, and three times more likely to work a part-time job, accord-
ing to the U.S. Department of Labor.
This book will give you both the knowledge and power to change
your relationship with money and grab hold of your financial destiny.
Personal finance is both a science and an art. It’s about numbers, but
more importantly, it’s about how those numbers fit into your real life,
how they help you achieve a fulfilled life. I hope this book inspires you
to seek genuine happiness, with money as your partner.
xiv
INTRODUCTION
1
1
W
EALTH AND
V
ALUES
J
ulie D., 29, calls herself “a hippie at heart.” The Florida teacher just
bought her first house: a 1960s cement bungalow painted periwinkle
blue, a shade inspired by the nearby Gulf of Mexico.
The charming three-bedroom home boasts a nicely landscaped yard,
tiled patio, and a small pond with a fountain. New homebuyers like
Julie typically spend $6,500 on furnishings and improvements in the
first year of ownership, statistics say.
But Julie isn’t the typical new homebuyer. Instead of shopping, she
“dumpster dives.”
“Every Thursday night, the town lets you put anything at the end of
your street,” Julie says with enthusiasm. “People throw away good stuff
and it’s free! We got wrought iron chairs and tables for the patio, little

peers with a lot of student loans. If I had loans, there’s no way I could
have taken the jobs that led me to where I am now. I started in film as a
researcher, at $10 an hour with no benefits.”
While their incomes are miles apart, Marilyn N. and Julie D. have
much in common. They have discovered the secret to financial happi-
ness: aligning their money and values. What does this mean? They are
clear on what is most meaningful to them, and focus their money
around it. The way they earn, save, and spend is in sync with what’s
W
EALTH AND
V
ALUES
3
most important in their lives. Managing their money makes them feel
“good,” “smart,” and “empowered.” They consciously prioritize their
money goals: They know what they want their money to do, and more
importantly, understand how to manage it so it maximizes their happi-
ness. They have defined “the good life” in a way that’s authentic to
them, and use money to realize a personal vision.
Back in the 1990s, I worked as a producer at CNN business news,
and went to seminary at night. Few of my business journalist friends
understood why I was studying theology. Few of my peers in the
master’s program (most of them ministers in training) understood why
I was interested in Wall Street. I lived in a dualistic world, covering
the financial markets by day and biblical Greek by night. I was fasci-
nated by both, and still am: Today, I write a money column for Self
magazine and teach a university course called “Contemporary Moral
Values.”
Here’s what I have learned about money and meaning: You can’t sep-
arate them. Think about the definition of cash itself: It’s an entity that

you mean what you say and take action that achieves what you desire.
You’ll be able to fully engage your finances because you’ll know how to
put your money where your heart is. Your money will reflect your en-
ergy, imagination, and passion. This book also explains the findings of
three decades of research into money and happiness, and helps you fig-
ure out how to be more satisfied with whatever you have, while you
move toward your long-term goals.
The aim of this book is to help you create your own definition of
wealth based on what you truly value. The first few chapters offer tools
to uncover the source of your values—family, community, and personal-
ity—and explain how experiences and character come together to create
a larger belief system about money. Once you identify unconscious be-
liefs that control how you view and use money, you have the power to
change them and better align your finances and values. Later chapters
tackle the nitty-gritty of getting out of debt, spending, saving, and in-
vesting, with a special look at money and relationships and what to do
when you achieve certain financial milestones. The goal is to connect
these financial concepts to real life, so the book is built on the experi-
ences of women like you—stories about their money choices, how
money has shaped their lives, and how they have used money to facili-
tate their genuine happiness.
How Wealthy Are You?
Let’s start with an assessment of your wealth. Do you consider yourself
rich, poor, or somewhere in between? Use the following wealth assess-
ment to get some perspective on where you stand:
W
EALTH AND
V
ALUES
5

26. I pay off my credit cards in full every month
(or don’t use credit cards at all).
27. The credit card debt I carry is less than $1,000.
28. I own a car.
29. I save money for retirement.
30. I own my home (with or without a mortgage).
31. My home is worth more than $169,900.
32. I have no student loans.
33. I have meaningful relationships.
6 MONEY AND HAPPINESS
Yes No
34. I have opportunities to express and develop my
skills and talents.
35. I have the ability to strive for my goals.
36. I like my work.
37. My day is filled with meaningful activity.
38. I have enough time to enjoy my life outside
of work.
39. I notice and appreciate small daily pleasures.
40. I feel in control of my life.
41. I have a strong sense of self-respect.
42. I participate in the life of my community.
43. My life has a spiritual dimension.
Scoring the Wealth Assessment
The assessment is based on a broad definition of wealth, including ma-
terial needs and comforts (questions 1 through 5), health (questions 6
through 10), education (11 through 16), and assets and liabilities (ques-
tions 17 through 32). Finally, questions 33 through 43 list intangible
values that create a rich life—from the quality of relationships to the
ability to control your destiny and develop as a human being. We’ll get

Worldwide, more than 9.7 million people were refugees
from their home countries in 2003 because of persecution re-
lated to race, religion, nationality, political opinion, or mem-
bership in a particular social group.
6
4. I can comfortably spend more than $2 a day. In 2003, more than 2.7
billion people lived on less than $2 day, about 43 percent of the
world’s population.
7
5. I am employed, or supported by someone who is. About 6 percent of
Americans were unemployed in 2004.
8
Part 2: Health
6. I exercise regularly. Just 40 percent of Americans do the regular
physical activity recommended by the U.S. Surgeon General
(30 minutes of brisk walking a day). One-quarter of all U.S.
adults are not active at all.
9
7. I get at least 8 hours of sleep a night. Only 37 percent of Americans
get the recommended eight hours of sleep needed for good
health, safety, and optimum performance.
10
8. I have health insurance. Almost 45 million people—about 15
percent of U.S. population—were uninsured in 2003.
11
9. My children have access to basic medical care if they need it. More
than 10 million children die each year in the developing world,
the vast majority from causes that could be prevented by good
care, nutrition, and medical treatment.
12

Part 4: Assets and Liabilities
18. My household income is at least $43,300. This is the median in-
come in the United States. Half of incomes are above this mark,
half are below. Nearly 36 million people—about 12.5 percent
of the population—lived in poverty in 2003. The poverty level
is defined as annual income of $18,810 for a family of four;
$14,680 for a family of three; $12,015 for a family of two; and
$9,393 for individuals.
16
19. My household income is at least $50,000. 57 percent of Americans
earn $50,000 or more. A survey by researchers at the Centers for
Disease Control and Prevention found Americans with incomes
of more than $50,000 reported fewer days of feeling “sad, blue,
or depressed” than those who earned less.
17
20. My household income is above $75,000. Some 28 percent of Amer-
icans earn more than $75,000.
21. My household income is above $100,000. 15 percent of Americans
earn $100,000 or more.
22. My household income is above $150,000. Just 4.6 percent of U.S.
households earn more than $150,000.
W
EALTH AND
V
ALUES
9
23. I have a checking account. About 87 percent of U.S. families have
a checking account.
18
24. I put money into savings in 2003. About 59 percent of Americans

26
Scoring
Parts 1 through 4 of the wealth assessment cover food, shelter, work,
health, education, and assets/debt. Based on your answers to questions 1
through 32, here is where your scores ranks:
30+ points Tremendous wealth
20–29 points High wealth
10–19 points Moderate wealth
5–9 points Living paycheck to paycheck
0–4 Living in material poverty