Back in 2014, I went on a 1 month-long trip to Guatemala with my family. This trip really changed my views on life and on the meaning of happiness in general. To relate to my financial path, seeing and learning this culture helped me realize how it is possible to live on a lower budget while living a fulfilling, happy, life. Their culture and beliefs were an eye-opener and a true pleasure to discover.
Experiences over things
The main takeaway from my travels was to value experiences over materialistic things. This has its limitations but for most things, the total happiness derived from an experience will be greater and last longer than from materialistic things. Of course, this statement has certain limitations, I am sure that a minimum-wage earner would prefer having a roof over his head than spending on travels but as long as all our basic needs are covered, this holds.
For my example, let’s use a new study from Princeton University’s Woodrow Wilson School that states that happiness increases with higher wages up to about $75,000 a year (TIME). I have experienced the same results when saving 50% of my income, the extra happiness that spending more could bring me is minimal since I can still live a plentiful life on half of what I make. With this in mind, we can now compare common middle-class expenses such as spending $20,000 on a brand new car versus spending $10,000 on a used car and spending the extra $10,000 on an amazing trip with your family. The new knowledge, memories, and bonding you will get from a family trip will greatly outlast the new car smell that will wear off after a few months. Vacations and travels are a great source of experiences but there is plenty of activities you can do locally like sports, shows, museums, foods.
It is also important to discover the things that can bring great experiences in life. For example, buying a camera, a new bike, or new skis are materialistic purchases but can provide great experiences. You should especially focus on your hobbies and plan them in your budget even if they might be expensive. You can always find great stuff on Craigslist or Kijiji at a fraction of the original price.
It does not take much to be happy in life
Traveling to lower-income countries really opened my eyes on the relativity of standard of living. Some might think it is impossible to be happy without having 350+ channels on your TV but do you think everyone in the world needs HBO to be happy? I don’t. Your happiness level is something you can control.
We went hiking up the mountains of Guatemala and saw farmers work in the mountains, on a terrain so steep that we found challenging after a single day. They were working with the land that was available to them, every day, all year long. The conditions are less than perfect. Yet, those farmers are only earning an average annual income of $1,619 US dollars (World Bank) and they seemed happier than some stressed-out Americans making that amount per week!
As Maslow’s Hierarchy of Needs states that your physiological needs such as food, clothing, shelter are the most important. The second tier is safety; this includes insurance, utilities, and so on. Anything after those can be reduced, cut, or accepted as guilt-free spending. Once you attain this mindset and choose your luxuries, you will enjoy them even more. In terms of happiness, I think that one can choose to be happy in life once his needs are covered and anything above a livable wage will not change happiness levels much.
Nominal GDP Per Capital. Source: U.N. World Happiness Report
National Happiness Rankings according to respondents. Source: The Washington Post
Above is an overlay of the world’s nominal GDP per capita followed by the world’s happiness rankings (U.N. World Happiness Report) (The Washington Post). Looking at both overlays, it is interesting to see how lower happiness levels seem to correlate with nominal GDP under $6,000 per capita.
Coming back to my concept that happiness level will not be greatly affected once basic needs are met, we can see that most of the Americas are happy even if there are income discrepancies. In ranking, the US ranks 17th of the 156 ranked countries, behind Mexico (16) and Panama (15) even if the US comes ahead in GDP and average income.
Happiness also correlates to things like life expectancy and GDP per capita, though perhaps not quite how you’d expect. While longer lives and more money do correlate to national happiness, they’re not nearly as important as social support, which researchers define as “having someone to count on in times of trouble.” The report also found that perceptions of corruption and generosity (the latter measured by donations to charity in the past month) are better indicators than GDP per capita. – The Washington Post
I can relate to this quote, “having someone to count on in times of trouble.” is a great factor in happiness levels and I can see this on my path to financial independence. Having an emergency fund and building a strong nest egg brings great security to my finances and that makes me happy. I can sleep at night knowing that the bills will be paid and that I will not lose my house if I lose my job.
In Guatemala, we stayed a week with hosting families to learn Spanish. It was an immersion program where you would get Spanish lessons every day from 9 a.m. to 4 p.m. and then stayed with a host family every night for a week. You were given a room and meals throughout your day by your host family as part of the school’s package. What I liked about this program is that it was from a non-profit that gave back a lot back to the community. They do projects in the region to help the farmers, children, and families in need. It is nice to know that the host families would get fair compensation for their work and hospitality.
Living with the locals helps you learn their culture and really see how they live their daily lives. As a guest, we did not choose which family we stayed with nor did they have enough room for all of us with one single host family. My sister, for example, was placed in little bungalow/shack with a tiny room. She was served a variation of rice and beans every day.
Me, on the other hand, was placed with my mom and my other sister in a large, two-storey house where three of us had a whole floor as living quarters. We were served different meals every day and even had hot water showers!
Typical Guatemalan Multi-Generational Houses
It was still clear that my host family was struggling, the house was slowly breaking down since its construction in 1954 and they could not afford to maintain it. They had inherited it from their grandfather who was a wealthy dentist back in the 50s. However, the outside of the house still looked clean and the grass well trimmed. They ate very simple meals but always had enough.
Comparing the two host families from the outside, one might think they lived completely different lifestyles, one was struggling while the other was well off. However, getting to know these families, it was clear that they were both on tight budgets and both still living happy lives. Once you realize that at least 80% of humankind lives on less than $10 a day and experience it for yourself in your travels, you will change your views on consumption.
Most of the world’s private consumption is consumed by the wealthier countries but do we really need all this stuff? The world’s richest 20% consume over 76% of the world’s private consumption and, for the most part, we waste it! All that stuff that we accumulate, throw away and buy again makes you think about the real priorities in life.
To come back to my travels, I was fortunate enough to stay with the local community and learn their culture and way of life. Contributing and helping in that community was a great way to give back a little to the world.
We are lucky to live where we live and always remember that happiness it not about money but is about your choices. I will continue to talk about my travels in future posts, stay tuned. Be happy, Xyz.