How Much Money is a Lot of Money?

I wish I had more money.

I’m not sure how many times I’ve had this thought. Maybe from time to time, something similar has entered your mind.

No matter how much money I have, “a lot of money” always seems to mean “a lot more.”

Is there some objective standard out there that constitutes a good amount of money that I’ll be content to achieve? Or will the horizon always recede as I chase it?

The Hedonic Treadmill

There’s a profound truth about human psychology that simultaneously provides us with good and bad news: You can get used to almost anything.

If tragedy befalls you, this is extremely good news. Although it seems like there is no way you can pick up the pieces and move on, the odds are that you will. Plenty of people have before you.

Ironically, this fact of life only becomes bad news in the context of prosperity.

If you experience a “life-changing” improvement in your financial circumstances, you will indeed enjoy a boost in your mood an happiness levels. For a little while at least.

You can buy a beautiful new home, but soon you’ll get used to your beautiful new home the same way you were used to your tint apartment.

You can buy a shiny new car, but soon you’ll be bored with it (and before long it won’t be very new or shiny).

Maybe you used to look forward to being able to enjoy the rare nice dinner out. Now you can afford lots of nice dinners out. It’s no longer a special treat.

I’m not saying that you should hope for tragedy instead of prosperity. I am saying that because you are more resilient than you realize, neither prosperity nor tragedy will have as much of a long-term impact as you think.

The hedonic treadmill means the goalposts are always shifting.


As far as I can tell, the first step in escaping the hedonic treadmill is to start practicing gratitude.

You are one of the luckiest people that has ever lived.

If you were born in the last half of the 20th century or later in an industrialized nation, here are just a few of the benefits you enjoyed:

  • A lifetime of access to clean water and food
  • A guarantee that you wouldn’t starve
  • Climate controlled buildings
  • A sturdy dwelling
  • The ability to travel the world
  • You missed millennia of tribal warfare and futility
  • You missed both world wars
  • Slavery was ended generations before your birth
  • Access to contraception and family planning options
  • The ability to get a job, start a business, and invest in your financial future
  • Access to education (the fact that you’re reading this means you’re literate, which is a miracle)
  • Current 24/7 access to more entertainment than you have time to consume

It’s safe to say that if you are alive today your greatest curse is prosperity.

Here’s a serious question: If you’re not grateful for what you have, why would you expect to be grateful for what you get?


While I think it’s good to be grateful for what you have, that doesn’t mean you can’t want more. In fact, I think ambition can be healthy when channeled properly.

I think there are two keys to balancing the paradox of being grateful and ambitious:

Hunger for Personal Growth

It’s one thing to want to make more money. It’s another to want to become the kind of person who can add value in a free marketplace.

Most people want money to flaunt their status. I want money to prove to myself that I can earn it if I try.

Money and happiness are two of the most common goals out there. The secret is that they both make terrible goals but wonderful byproducts.

Loving the Journey More than the Destination

Here’s the hard truth: if all you care about is the mountaintop, the climb is going to be rough.

But if you learn to take pleasure in progress, if you learn to see obstacles as opportunities for growth, You’ll never want to stop climbing.

Freedom and a Margin of Safety

Money can do a lot of things, but its best uses (besides taking care of your basic needs) is to provide you with freedom and a margin of safety.


Freedom can mean the freedom to acquire the things you want. But the deeper form of freedom is gaining control over your time. When you have enough money, you no longer have to worry about earning more. No one can tell you where you have to be or what you have to be doing at a certain time. You control your time and your money takes care of your needs.

It’s not clear exactly how much money you need to be free for life, but a good rule of thumb is the 4% rule. This rule suggests that if you have a well-invested portfolio of 25x your annual spedning (i.e. your annual spending is equal to 4% of your portfolio), there’s a solid chance that your portfolio can last for decades. Maybe indefinitely.

A Margin of Safety

Life can be chaotic and unpredictable.

Having money is a good insurance against a lot of ills that might befall you. Here are a few situations where it helps to have money (and in some cases insurance):

  • An unexpected expense
  • Losing your job
  • The death of a spouse
  • The destruction of your property
  • Failing health

No matter what happens to you, your life will be easier if you have money to fall back on.

Putting it All Together

In one sense, figuring out how much money is a lot (for me) is a fool’s errand because the hedonic treadmill makes it a moving target.

A healthy dose of gratitude can remind me that I’m lucky to be alive and that I already have more money than most people who ever lived.

Ambition for more is okay, but needs some parameters. The growth and the journey are the real prizes.

Since the best use of money is to acquire freedom, maybe the best way to define “a lot of money” is not by the ability to buy shiny things, but the ability to control my time. The 4% rule is a helpful rule of thumb that can give a rough target to shoot for.

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