Success Is The Best Revenge

Success Is The Best Revenge

Has someone ever wronged you? Once upon a time, your enemy would have received severe punishment. That was centuries ago. We’re more civilized these days, but that doesn’t mean we are any less angry and emotionally upset.

You may lose a job unfairly, a significant client taken away, bullied at work, your partner stole assets, or your spouse is sleeping with your best friend. When someone causes you harm, it is natural to have an emotional reaction: rage,  anger, and the desire for revenge. However, revenge will never make you better and hurt your chances at your success and happiness. Instead, success is the best revenge.

What Is Revenge?

The definition of revenge is an act or instance of retaliating to get even. Media captivates us with revenge stories like in Stephen King’s Carrie about a bullied teenager who takes brutal, vengeful action in this horror story. (It’s a great movie, by the way.)

Some believe revenge is justice but that is vigilante thinking. Thinking about exacting revenge is a human response but it offers little in the way of satisfaction.  

Is that a worthwhile use of your time, energy, and productivity? Wouldn’t it be better if you are a success despite it all? Rather than retaliate, consider this as a temporary setback and not a barrier. Refocus on the task on hand. Reestablish trust in yourself and your mission.

In reality, there are more failures per success tale because of the efforts it takes. People love stories about winners but don’t know how many failures there were beforehand.

Revenge reinforces negativity. Confucius said, “Before you embark on a journey of revenge, dig two graves.” Instead, visualize your success. These events that conjure revenge images in your head are never as catastrophic in hindsight. Let them provide you with invaluable lessons. Failure is so much a part of achieving your goals. Being successful too early in life robs you of that needed defeat.

Michael Jordan’s Rejection

Who hasn’t felt misjudged, mistreated, attacked, or socially rejected in life or in their jobs? There are tons of talented people top in their field today but were passed over or fired. Their stories are notable. The great  Michael Jordan faced rejection by his high school basketball team, which made him fight harder to succeed.

Jordan is widely considered one of the greatest athletes of all time. That’s not all. He is among the most marketed sports figures for endorsements and has found prosperity in the business world. He has a mindset geared to success and has an estimated net worth of over $2.1 billion in 2020 according to Forbes.

Why Success Is The Best Revenge

Success is very different for each of us. For some, it is becoming prosperous, and for others, it is finding security and peace. Understand what you want to achieve and go for it.


Revenge can be an excellent motivator.  Let others who hurt you see you dust yourself and thrive. The early stages of success are so sweet. It fuels our enthusiasm to continue to work hard towards our goals. Winston Churchill said, “Success is not final, failure is not fatal: it is the courage to continue that counts.”

Resilience, hard work, and perseverance are traits need to achieve your goals. Worthwhile goals motivate us towards fulfillment. You should waste no time or energy to deter you from accomplishing what you want. Find meaning in the project you are working on and visualize the success of completing your work. 

Rechannel Your Energy

Anger and hurt take our energy away. You want the person who caused you pain to have their comeuppance. Don’t think about what they deserve, rather focus your energy on what you will gain from this experience. Concentrate on your eventual win.

Rechanneling your negative emotions to positivity allows you to see the light at the end of the tunnel. Stay on your life’s journey you set out to accomplish. There is always something or someone who is there to derail your trip. Put yourself back on the road to success. Letting go of anger and angst is success in itself.

Ignore the naysayers who will try to convince you that you are working too hard, ignoring people who love you, and money isn’t everything, and so forth. Some may mean well, but others are trying to undermine your efforts by planting doubt. Don’t let anyone stall your growth and progress. If you are working purposefully towards your goals, then prove the cynics wrong.

Abundance Mindset

Our attitudes can help or hurt us, and we have the power to adopt a more favorable mindset. A person with a scarcity mindset blames the world for their mistakes and cannot accept failure. The scarcity mentality hinders the person’s ability to make decisions, believing the grass is always greener somewhere else.

In contrast, those who have an abundance mindset have a positive outlook and see limitless opportunities. They embrace change, meet challenges more efficiently, and can handle decisions better with more optimism. For them, experiencing failure are lessons they learned on their way to success. You can choose the abundance mindset by letting positivity reign.

Keep A Positive Perspective

There is no better place to learn about the need to have a  positive perspective than from  Dr. William  Hemreich’s 1991 study about Holocaust survivors.  Roughly 140,000 European Holocaust survivors came to the US after World War II. They faced significant psychological problems suffered from hiding, being in captivity, physical and emotional harm, and losing the vast majority of their families at the hands of the Nazis.

Against all odds, many were successful despite turmoil in their lives. Elie Wiesel argued that though their past was terrible, it became the basis of the future. Rather than seeking revenge, they focused on building their families and living socially. They lived remarkably stable lives with higher birth and lower divorce rates than American Jews. They held jobs and earned a higher income, on average.

Dr. Helmreich found the survivors to have determinism and great perseverance to prevail over hardship. He discovered that human beings have tremendous capacities for strength and regeneration. This mindset enabled them to prosper and move forward from terrible experiences. As I have told readers in past articles, my mom, a Holocaust survivor, exhibited all the group’s resilience.

Traits of A Successful Person


Passion and Purpose

Finding passion in what you do makes it easier for you to be successful. Understand where your interests are, and they usually will point in the direction of your career. You need to identify your purpose in life, so you know how you are defining your success. Is it creativity, making money, becoming famous, or helping others less fortunate? There are so many choices but pick what is best for you. 

Passion and purpose are distinct. You may have many passions but your life’s purpose is long-term, may be multifaceted, and helps drive you forward.  You want to earn a good living and enjoy time with your family. Sometimes, you may face conflicts between these two purposes, especially when you have to work long hours to earn a higher income, bonuses, and promotions to accomplish goals such as retiring early.


Being self-disciplined at work is an essential ingredient to being a valuable employee. It means working hard is simply the minimum. You need to accomplish goals in efficient and effective ways.

It may involve taking risks and not necessarily cutting corners. Perseverance, resilience, and grit are scientifically proven behaviors held by those who are successful. Avoid procrastination and other bad habits that will detract from your abilities and reputation.

Embrace Learning

The most successful people–Oprah, Warren Buffett, Bill Gates, Sheryl Sandberg, and Mark Cuban– read hundreds of pages daily and enjoy learning. The constantly changing landscape calls on you to learn and develop new skills in many fields. Employers have pointed to the lack of education in essential soft skills like interpersonal communications, collaboration, initiative, and problem-solving, to name a few.

What successful people have in common is that they never believe they know enough. As lifelong learners by choice, they have failed many times but learn from their experiences.

Accept Failure To Have Greater Success

Set reasonable goals and establish strategies to execute your plan. Sometimes you will face obstacles and have to make trade-offs. After feeling the thrill of success, we may meet tests to make changes in our professional lives. We don’t like to admit to defeat and internally fight the need to modify plans. Sometimes we will have to accept the failure to move on.

Many successful people have trouble with doing this. It is difficult to admit you were wrong, wasted time, and money. As an inventor, Thomas Edison made 1,000 unsuccessful attempts at inventing the light bulb. When a reporter asked, “How did it feel to fail 1,000 times?” Edison replied, “I didn’t fail 1,000 times. The lightbulb was an invention with 1,000 steps.”

After the lightbulb, Edison went on to have more failures such as electrifying the country in competition with George Westinghouse and Nikola Tesla. Westinghouse won in a fascinating story, “The Last Days of Night.” However, to this day, Edison is known for his great successes. 

Steve Jobs Faced Adversity And Was Successful

In Steve Jobs’ Commencement Speech at Stanford University in 2005, he spoke of his challenges in life. After six months, he dropped out of Reed College, and Apple, the company he started, fired him.

Steve Jobs said,

“I didn’t know then, but it turned out that getting fired from Apple was the best thing that could have ever happened to me. The heaviness of being successful was replaced by the lightness of being a beginner again, less sure about everything. It freed me to enter one of the most creative periods of my life.”

A few years later, Jobs went back to run Apple. In 2007, the company under Jobs created the iPhone, the first successful smartphone, spurring an insane amount of productivity for the company in his last years, leaving a successful legacy. Rather than take revenge on those at the company that caused his dismissal, he set his sights on success, both Apple, the company he loved, and his own.

 As Frank Sinatra once said, “The best revenge is massive success.”


12 Ways To Make College More Affordable (Or Even Free)

12 Ways To Make College More Affordable (Or Even Free)

Affording a college degree is complex, with costs rising for decades. Yet, having a college education remains a meaningful way to reach success. We will point to ways to make college more affordable and even virtually free. Planning early as parents and your students to save, actively budget, research college costs, and seek financial aid are practical steps.

The Price Of A College Education

According to the latest Trends In College Pricing, the College Board average annual tuition, fees, before room and board charges published prices for 2020-2021 are:

 $37,650 for Private four-year colleges;

$10,560 for public four-year in-state colleges;

$27,020 for public four-year out-of-state colleges, and

$3,770 for public two-year (Community College. in-district.

College prices and accompanying costs have outpaced inflation since the 1980s and have jumped nearly eight times faster than wage growth. This rise is a concern for me as a mom of teens and as a college professor. My son is a rising senior in high school so I am in your camp.

I am a first-generation American and the first in my family to go to college. Like many, my parents raised me on the belief that a college education is essential for advancement. It is still true today despite many paths to success.

In the Sallie Mae 2020 National Study of college students, there were differences in how parents and students paid for college. Proportionately, more parents (44%) contributed to the college costs than the 31% in the previous year. This higher percentage offset the lower (8%) contribution from students’ from their income and savings.

This differential may be largely due to the COVID impact on high school students not working during 2020 when they earn some income.

The share of the cost of college in 2019-2020 changed from the prior year:

  • 44% covered by parent income and savings.
  • 8% from parent borrowing.
  • 8%  contributed by student income and savings.
  • 13% from student borrowing.
  • 25% covered by scholarships and grants.
  • 1% were gifts from friends and family.


The Need For Family Planning For College

Planning helps families get ready for college decisions. According to the Sallie Mae Survey, more families planned early in their children’s lives for their college future than the previous year.

The top three ways families planned to pay for college were: 

  •  Save for college.
  •  Research college costs and financial aid.
  • Actively budgeted.

Getting prepared for higher education also includes taking Advanced Placement courses, enrolling in community college, and learning more skills or practicing their talent.

Benefits of Preparation

By getting ready, families had access to resources to understand their purchase options. They often borrowed less, received slightly more financial aid by way of grants and scholarships than non-planners.

For these reasons, we believe that being prepared as early as possible may help you and your student afford the best college possible.

12 Ways To Make College More Affordable (Or Even Free):


Early Funding of your Child’s Education:

The first step is to save early for your child. The different plans below are not mutually exclusive. As always, check with your tax professional as to the respective tax implications.

1. 529 College Savings Plans

Your children’s financial future may begin as early as their birth. Establish an account once you have a social security number for your child in their name or initial in the parent’s name. You can change the beneficiaries later on.

The more you begin saving early, the more you may benefit from compound growth using tax-deferred dollars. As a result of setting aside funds well before your child’s needs, the less you will need to borrow later on. Federal student loans impose limits. However, they are the more affordable borrowing source, as compared to private loans. If your child’s education is a priority, as I am sure it is or will be, your best bet is to adopt a saving strategy.

A 529 plan is a college savings plan that offers tax-free earnings growth and tax-free withdrawals as long as you use these funds for qualified expenses. Just about every state has its own 529 plan. You may open an account across state borders. Each state’s plan varies, so check which works for you.

529 College Savings Plans 

Originally begun to save for college only, may now use these plans for tuition at primary and secondary private or parochial schools or qualified expenses at public schools. They retain their benefits. The Tax Reform Act in 2017 expanded 529’s ability up to $10,000 per year.

Under the Act, the $10,000 withdrawals per year are federally tax-free. State tax treatment of these withdrawals differs from state to state but is tax-free if used for qualified educational expenses. This benefit is not allowed in several states like New York at this time.

So check with your state’s taxing authority or state 529 plan administrator. For example, Connecticut’s 529 plan allows you to withdraw tax-free for up to $10,000 per child to be used for private school tuition. There are no maximum caps on investments per year. 

Investment Choices

Parents can typically choose among a range of investment portfolio options. They may include Vanguard mutual funds, exchange-traded funds (ETFs), static or fixed allocation fund portfolios, and age-based portfolios called target-date portfolios. Which fund you choose depends on your appetite for control and risk. You can make changes between the funds based on your children’s age or the target date portfolios, shifting from more aggressive growth rates to more conservative rates as your child ages.

 I’d like to offer some advice from our experience. Don’t set it and forget it. Whether you choose target-date funds or something else, make sure to periodically review your accounts to ensure it is growing the way you intend it for your college-bound kids. We made some changes to spur more aggressive funds than we picked at first. 

College students can use the amounts for any eligible higher education, not just four-year colleges or universities, including vocational and trade schools, community colleges, and graduate schools.

The 529 plans typically do not have income or age limits. An older person can use it for school later on. I used some of my funds for law school.

2. Coverdell Education Savings Account (ESAs)

These accounts are similar to 529 plans offering tax-free investment growth. You also can use tax-free withdrawals for qualified education costs. Like 529 plans, the invested amounts are not limited to college and can be used not only for K-12 tuition but also for expenses, including books. At one time, Coverdell ESAs were the only tax-advantaged way.

Unlike 529 plans, Coverdell ESAs have limits to $2,000 annual contributions per beneficiary as of 2020. Grandparents can set up their account for the same beneficiary with a $2,000 limit for each beneficiary account.

A Coverdell investment option is self-directed, allowing you more specific options like 529 investment track options.

Limits For ESAs

Coverdell ESAs have age and income limits. A beneficiary must use the funds by age 30 unless the beneficiary is a special needs person. If your adjusted gross income is between $190,000-$220,000 as a married couple or $95,000-$110,000 as a single taxpayer, you cannot contribute any longer.

While Coverdell ESAs give you greater investment flexibility than 529 plans, the imposition of limits has caused some to consider rolling their Coverdell ESAs into 529 plans.

3. Custodial accounts: Uniform Gifts to Minors Act (UGMA) or Uniform Transfers Minor Act (UTMA)

Parents can set up custodial accounts for each child under the age of 14 years and managed by the parent until the child turns the age of majority, typically age 18 years, unless stated otherwise. Investments in these accounts are not limited.

For children below 18 in the 2020 tax year, the first $1,100 of unearned income from the investment is tax-free to the child, after which the next $1,100 is taxed at the child’s tax rate, then income above the $2,200 is taxed at the parents’ (usually higher) tax rate. Once your child turns 18, this money belongs to them. They will be paying taxes at their rate.

Couples jointly filing can contribute up to $26,000 annually for each child, or $13,000 if an individual sets up an account. Anyone can set up a custodial account, including grandparents, aunts, and uncles.

Once the child has access to the account based on their age of majority, it is their asset. Parents may use the invested money for anything that child wants, including frivolous things that, unfortunately, the parents have little power to reclaim that asset.

These types of accounts are typically for supplemental spending for college and not likely to go to tuition.

4. Traditional IRAs And Roth IRAs

You can use traditional IRAs, regularly used for tax-deferred retirement savings. Usually, you would incur a 10% penalty for withdrawals before 59.5 years. You also would have to pay income taxes on the amount withdrawn.

There would be an exception if an individual wanted to use this account for qualified college expenses for themselves, a child, or a grandchild. In this case, there would be no penalties for early withdrawals. You would have to pay income taxes.

You don’t have the same 10% penalty for withdrawal from the Roth IRA. You have more freedom with the Roth IRA in this regard.

Tap Retirement Savings As Last Resort

Frankly, parents should never tap their retirement accounts for college tuition unless you set up these retirement accounts for their young children. Since you cannot borrow for retirement, but you can do so for college, parents or children would be better off taking out a loan for college. I provide it as an option, but I would consider other ways first.

5. Invest in Discount bonds

You can save for college costs by investing in deep discount corporate, US government (Treasury), or municipal deep discount bonds. These bonds are often referred to as zero-coupon bonds because their owners are not collecting coupons twice a year.

These bonds come in maturities of one year-40 year and do not pay semi-annual dividends like regular bonds. Furthermore, the IRS requires that you pay tax on the interest portion annually.

Tax Implications Vary

Check with your tax professional about the possible tax implications for individual securities. Federal and state tax treatments of zero municipal coupon bonds are different. Munis are known for federal tax exemption and sometimes state and local taxes as well.

On the other hand, there is no tax exemption for holders of corporate bonds.  Treasury bonds are usually tax-exempt by state and local authorities.

If safety is a priority, Treasury bonds have triple AAA ratings, so they are virtually risk-free while ratings of municipal bonds and corporate bonds vary.

You can redeem the bonds at the total or par value upon their maturity. Parents can use the proceeds of these bonds for college costs.

Deep discount bonds are not just used to save for college tuition, but their long-term nature is suitable for planning for your children’s non-tuition college needs as all.

6. Series EE Savings Bonds

The federal government sells Savings Bonds for half their value or $5,000 for maturity denominations of up to $10,000.

Like treasury bonds, they are safe based on their triple-A rating.

Usually, savings bonds are taxed at the federal level and tax-exempt on state and local levels. Still, if you are using these savings bonds for college tuition expenses, they are typically tax-exempt at the federal level 


7. Earn College Credit In High School

Want to earn some college credits early at little cost? The Advanced Placement program offers college-level courses and exams that you can take in high school. The exam is $95, which may save up to $3,000 for a three-credit course. It is a great way to save time and money in college if you can earn credits depending on your score.

There are 38 AP courses in a variety of disciplines. Having AP credits with a good score on your high school transcript is a massive plus for colleges considering your application.

Check Your School Policies On AP Credits

Be aware that some colleges and universities may require a score of 4 or 5. The maximum score on an AP is a 5. The exams are in May. I know because my kids are more stressed than usual!

  Among the top colleges, 86% restrict the use of AP credits. Paul Weinstein, director of Johns Hopkins University’s graduate program, assessed policies of the top 153 colleges and universities in a 2016 study.  A few colleges do not accept AP credits.

You should review your school policies on acceptance of your credits. If your choice school doesn’t accept your credits, you still got a birdseye view of future college exams.

8. Grants and Scholarships

If you borrow money for college, federal loans are far more attractive but have loan limits by year, with the freshman year maximum loan the lowest at $5,500 rising to $12,500. Interest rates on federal loans have dropped for the first time in three years based on May’s ten year treasury yields. 

To obtain a federal loan, grants or scholarships, you need to fill out the Free Application for Federal Student Aid or  FAFSA  for each academic year. The new 2020-2021 FAFSA form is about to be made available here. If not early, make sure you file it on time, as some states’ awards are on a “first-come, first-served” basis. Check your state’s practice as they differ.

Fill Out FAFSA Please

FAFSA determines whether you are eligible for need-based federal financial aid for college. It also may help you with getting scholarships, grants, and work-study programs for your student. See our family guide on how to save for college.

It is always a pain to fill out applications. However, since FAFSA will help you get more affordable federal loans to supplement your income and savings contribution, go for it. It takes time to fill out the papers and get the supporting documents together, but it is worth it if you get some financial help. Be super organized ahead of time!

Federal Gift Aid

Federal Grant and scholarship programs account for funding 31% of the average family’s needs in 2018- 2019. This percentage was above 28% of college costs last year. These dollars are “gift aid” money for college, meaning it is not a loan you need to pay back.  Almost all federal grant programs are needed-based. See the list of grants here.

The federal scholarship programs are merit-based, received from schools, outside organizations, or businesses. Parents can find information as to how to apply here. Sallie Mae’s survey of 2018-2019 showed higher dollar contributions of $8,580 for those families making more than $100,000. Another place to look for scholarship opportunities is Fastweb.

Federal Work Study

In addition to the “free aid” you can get through the federal government, federal work study programs pay at least the federal minimum wage and are on-off campus. These programs are need-based, so check out their website here.

State Gift Aid Programs

You can look at state programs for additional loans, grants, and scholarship opportunities to supplement what you are getting through the federal programs.

Take a look at the different programs by the state for possible loan/grant/scholarship opportunities here. You can look for merit-based scholarships by the college if your college is on this list. Some colleges have supportive loan programs for those families that are need-based as the 25 colleges on this list, including Harvard, do

Doug Hewitt, the co-author of Free College Resource Book, has said that there are more scholarships available for you within your home state than nationally.

9. Student Education Tax Credits

There are two major tax credits available to offset the costs of higher education. The American Opportunity Tax Credit is the most valuable of the two (the other is Life Learning Credit with a $2,000). It only applies to the first four years of post-secondary education (university, college, vocational, non-profit, or profit).

You may claim up to $2,500 per eligible student per year under the American Opportunity Tax Credit. Credits cover 100% of the first $2,500 of qualified tuition.  If the credit brings the amount of tax you owe to zero, you can have up to 40% of the remaining amount (that is, $1,000) refunded to you. There are credits for qualified education expenses of 100% up to the first $2,000 for each student and 25% of the next $2,000.

10. Colleges With Free Tuition

Several colleges offer free tuition though you will likely have to pay room, board, and living expenses. Some of these colleges may require work on campus or service after graduation to earn free tuition.

Accredited colleges with free tuition have been growing, and include:

Alice Lloyd College (KY)

Barclay College (KS)

Berea College (KY)

College of the Ozarks (MO)

Deep Springs College (CA)

St. Louis Christian College (MO)

Webb Institute (NY)

William E. Macaulay Honors College At CUNY (NY)

Williamson Free School of Mechanical Trades (PA)

US Military Academies

These colleges are a way of giving service back to your country:

US Coast Guard Academy (New London, CT)

US Military Academy (West Point, NY)

US Naval Academy (Annapolis, Md)

US Merchant Marine Academy (Kings Point, NY)

Some colleges have made their courses available online for free but may include a relatively small fee:

iTunes (Stanford University)

Open Educational Resources (OER) Commons

Open Yale University (Yale)

School of Public Health (Johns Hopkins University)

11. Go To Community College Or Public Four Year In-State College

There are many reasons to go to community college. Affordability is high on the list for that reason. Tuition and fees for two-year in-state colleges were $3,770 in 2020-2021. That is a fraction of annual costs for four-year public colleges. A full-time student will likely receive more than enough grant aid and federal tax benefits to cover this tuition and fees. If a student chooses to live on campus, those expenses will be out of pocket.

Most of my students live at home and plan to go away from home for the latter 60 credits of college. I teach diverse community college students with business majors. They are often immigrant or first-generation students at community college. Many finish their four-year degrees while working full-time, and some have children.

The pros of going to community college tend to outweigh the cons for many students. Please see our extensive article on the benefits of going to community college here.

Some great public four-year in-state colleges provide excellent value (See Value School listings in US News & World Report). They combine strong academics with lower tuition costs than private colleges.

True Story About My Hiring Preferences

I went to public colleges (CUNY) for both my BA and MBA. When I was Managing Director at my investment bank, I hired “the best and the brightest.” When my human resources employees came with stacks of resumes, all the Ivy Schools were on top. My preferences were always public colleges, given my background.

I constantly reminded HR to give me the CUNY resumes first. Then the rest could be public colleges across the country. The early days of most investment banking firms on Wall Street were filled with public college graduates if they even went to college. I am referring to Lehman Brothers, Goldman Sachs, Salomon Brothers, and others.

Here is our conversation:

HR: “I got the resumes you wanted. We think these are stellar candidates.”

Linda: “Great, thank you. Did you get any from Baruch College (a CUNY Business School)?

HR: “We think this a better group. Most are Harvard, some Yale and Princeton, and other top schools. I didn’t look for Baruch. Why do you want students from there?

Linda: I earned my MBA from there. It is a great business school—many international students. I also like paying back to students who want investment banking or equity research. Give the Ivys to some of the other analysts. OK?”

HR: “But, then you won’t get the best! They told me they only wanted to hire from top schools. You better talk to my boss.”

The funny thing was that all three of my senior management, including my head of Equity, came from public colleges and were brilliant leaders.  I finally did get my way!

12. Certain Majors Are In Demand By Employers

Certain majors are in such strong demand that employers may consider picking up some of your tuition in return for your promise to work at their firms or entities for a certain period. While there may be a shift in desirable majors, there appears to be a strong call for those students in math, science, business, nursing, teaching, and social work. Build up your soft skills–interactive communication, collaboration, problem-solving are in significant demand.

If you go to college while working full-time, many employers pay up to 100% of the tuition as a significant perk to attract those with evidence of a strong work ethic. A bit of advice: don’t pick your major solely based on your employer picking up the tab. That said, if you have an interest in that course of study, go for it!

Good luck to all of you in the coming year. I am in the trenches with you as my son is a rising Senior.

Final Thoughts

Financing a college education is complex, and most students have to borrow some money. Repayment of student loans can be an albatross for many years. If they have taken loans for school, the monthly costs for college grads delay them from making their life plans. Many postpone getting their place to live, getting married, having children, buying a car and home because of their ongoing loans.

Planning ahead of time may help you (i.e., parents/students) avoid getting overburdened by debt. Strategize how to get savings ahead of time or while in school.

Once in college, students tend to budget better than after they get their first job. Be creative about saving money even in college when you are living on a limited amount of money. My college students often inspire me with tips they share in class, and so I sometimes collect this information as we do here.

Thank you for reading this! Please feel free to visit The Cents of Money for more articles like this and personal finance topics. Subscribe for our free weekly newsletter and other freebies

 If you graduate with student loans, read our piece on paying back your student loans faster. It may involve some sacrifice when you are young to better financially position you and your family in the future.

Are you applying to college this fall or next year? What steps have you already taken to help you in seeking your college? We would like to hear from you!









































Money Lessons My Mom Taught Me

Money Lessons My Mom Taught Me

My mom was hugely influential in teaching me my first money lessons and instilling good financial habits at an early age. The underpinnings of her knowledge and encouragement were invaluable and still are to this day.

Coming from a prosperous family, she learned about hardship at an early age. Separated from her family, they perished at the hands of the Nazis. With $5 in her pocket from the US government, she made her way to the states in her early twenties.

Optimism In Her Future In America

She had lived in the Lodz Ghetto, forced labor camp, and then transferred to a refugee camp for the better part of eight years. Due to a back injury from being severely beaten, she spent a year in a hospital. Devastated from her experiences and losing her entire family, my mom was optimistic about her future in America. She wanted to able to take care of herself despite being destitute.

Mom never finished high school, but she knew at least three languages, was highly praised as a manager of Barton’s Candy, and started up two successful retail businesses. Unbeknownst to my father, or anyone for that matter, she left over a million dollars when she passed away. She worked tirelessly, obsessively saved, and invested her money.

Some of her teachings were extreme, and she was pretty quirky at times. In many ways, my mom was a trailblazer when it came to money. She believed women should be financially independent, have their own bank accounts, and invest their savings. I am forever grateful for all that she taught me, especially her money lessons that were priceless.

Valuable Money Lessons

Although she was not academically educated, she was incredibly savvy and read many books to learn. My children never met my mother, but fortunately, she passed on these valuable lessons to me so I can share them with my children.

Be Resourceful

Anyone who comes off a boat with few dollars must be resourceful and encouraged to be so. We had to make do in our modest household, but we never felt deprived in those years growing up.

Secondhand television sets, used cars, old bicycles were ours without apologies. Learning to borrow things like library books was fun to do. Relying on creativity, imagination, and having a persistent nature are traits that benefited me in my career as an equity analyst and professor now.

Needs Vs. Wants

Growing up, we knew about buying only necessities while everything was luxuries we couldn’t afford. For me, a Spalding to play to catch with my younger brother could be justified since both of us would play with it. However, we had to get a used ball that didn’t bounce very high. She did not allow us to pay a quarter for a can of Coke which had no redeeming value, preferring the money better spent on a quart of milk.

My kids, now in their teens, are living in different circumstances than I did. However, that doesn’t mean they should become spendthrifts. On the contrary, I reinforce the difference between needs from wants as an essential lesson.

Emergency Savings

Mom was an obsessive-saver from the beginning of her newfound life in America.  Settling in the Bronx, she first worked in sewing factories before being eyed by someone who needed a salesperson at Barton’s. There, she learned to speak English and the language of business, learning bookkeeping, managing inventory and sales. She shared an apartment with a friend and became a manager for Barton’s in the Bronx stores.

At first, skeptical of banks, she became comfortable about having her savings and checking accounts, visiting the bank to make deposits. Eventually, she married my Dad and had my brother and me. Savings were her mantra, and setting aside money for potential unknowns she said was always lurking around the corner. Hence, our family emergency fund was born.

Spend Less Than You Earn To Grow Savings

My mother taught me how important it was to save what you earn and not spend it freely. Your money has many jobs to do, starting with paying your bills on time and taking care of your needs. When there is money left over, it is savings for emergencies or your future needs. 

Saving money was only the first step to making more money. By putting it into the bank, you can expand your money through compounding. My mom opened a roll of pennies to explain how you can earn interest on interest. When I had learned the lesson, she took back the pennies to make more significant coins like nickels.

She opened up a bank account for me when I was about six years old. As I accompanied my mother to the bank, where she deposited money from the business, she often would introduce me to the bank officers. The bank had gorgeous Art Deco architecture, and Mom would tell me she felt rich putting her money in this particular bank.

Have Your Own Bank Accounts And Be Financially Independent

Mom kept her financial accounts separate from my Dad, except for joint accounts for the retail businesses. Like my Mom, I have always had my financial accounts different from Craig. Mom encouraged me not to disclose my earnings and investments to anyone, especially my husband. On the latter, I have always been open to Craig, more so than he has been with me, as I share in this post on financial infidelity.

My mother hid some of her money from my father. He played cards with friends weekly for entertainment and low stakes. Dad was a gambler before they were married. To a great extent, I believe that the practice of hiding money was due to her early experience when her family lost everything during the war.

Her encouragement was to have separate bank and investment accounts from a spouse so that I would never need anyone’s help monetarily. Mom went through substantial hardship, building a new life before meeting my dad. She was firmly responsible for her financial independence and was not letting go of her success. As a result, she wanted me to have my own goals to achieve in life and carve my own independence.

Being Frugal, Not Cheap

My mother was proudly frugal, not cheap, as she often discussed their differences. She scorned those who were cheap and focused on buying the lowest-priced items that often reflected the lowest quality. To her, frugality or thriftiness, a word she used more often, was a value proposition to weigh quality and affordability. 

She was happier buying things for other people and us than for herself. Occasionally, I would recognize a new bag or an outfit and compliment her. Instead of mom seeming happy about her purchase, she would pivot to how great a price she paid. Sometimes her expression sounded more like remorse. Her sadness at being the sole Holocaust survivor of her family overwhelmed her with guilt, especially those few times she treated herself better.

The Dangers of Credit Cards

My parents never had credit cards or accepted them in their two retail businesses. Instead, they relied on cash and checking accounts. Neither parent was big on borrowing money for cars or their business. I believe they took a short-term loan for the initial inventory for the first hardware store.

When it came to credit cards, Mom was adamant about their dangers of promoting overspending for things you don’t need. To this day, I use credit cards carefully by paying my balances in full every month. Although Mom is no longer with us, I think she sends spiritual vibes with approval when I pay with cash and checking accounts.

Never Buy Impulsively

My mother’s favorite words, “Do you need it?!” That was driven into my brain even after I no longer was living at home. The message was to buy quality to have it for a longer time but buy it at a lower and preferably bargain price.

Whenever she took me shopping, there was a lesson to share with me. We would go to many stores no longer around now (e.g., Alexander’s, Ohrbach’s, Loehman’s), and she tells me to feel the material and look at the price. It was often exhausting, with little to show for the day. The big treat for me was going to the counter at Chock Full of Nuts and sharing a cream cheese sandwich on raisin bread with her.

To this day, I am rarely impulsive and can overly research what I need to buy. On the other hand, Craig can be excessively impulsive and overspend, an issue that I often write about and can send mixed messages to our kids, especially when they were younger.

Investing Was Her Passion

My mother and a group of her friends began investing in stocks and bonds, much to my father’s dismay. He worried that she didn’t know what she was doing and was not encouraging her even if it was just dabbling. I was proud of my mother but never realized how interested she was in the stock market, knowing her daughter was working for a brokerage firm.

At one point, I found out that she had a retail broker, Michael, at my firm (Drexel Burnham Lambert), where I was a telecom analyst. One day, he approached me, telling me he was buying  ATT shares on a call I had made. I was baffled as I realized my mother wanted me to meet him and share her “secret of investing.”

About 15 years later, I learned that she had quite an investment portfolio of largely blue-chip stocks, various bonds, and some money markets. According to her broker, she called most of the shots in her portfolio and amazed him with her investment prowess.

Negotiation Skills

You would not want to be on the other side of the bargaining table with my mother. Everything is up for negotiation, and she is going to work to get what she wants. My parents dragged my brother and me to these “Gift Shows” to visit showrooms filled with household goods and gifts that they would buy for their housewares store. When my Mom had made her selections, and it was down to volumes and prices, my Dad would suddenly disappear.

As the buyer for the business, my mother was well-liked but somewhat feared for her negotiation skills. She taught me that you need to value yourself first before engaging with the salespeople who had wiggle room in their price points, and she tried to find the lowest levels possible. Often successful, she would buy more as her business grew and remembered who had treated her well.

Negotiating is an essential skill, especially for women, whether for your business or getting better compensation. I wished I had my mom’s bargaining smarts. It did not come as naturally for me as for my mother. However, my 16-year-old daughter is advocating for herself in a way that would have made her grandmother very proud.

Money Isn’t Everything

When you don’t have money to pay your bills and basic living expenses, money is everything. Mom never wanted money to be our only priority and thought the obsession with money was a danger in society. My mother always recited my grandmother’s favorite saying, “Poor or rich, money is good to have.” Money has its purpose, but it has its limitations.

Our family encouraged us to focus on what we value, besides money. Value like time, energy, health, family, friends, community, work, ethics, and love of learning have their worth. As financial scandals became more commonplace in the investment world, she worried that I was working too hard and not spending enough time with family. Hence, money isn’t everything.

The Importance of Education

For someone who didn’t finish high school, academic education was a significant priority in our home. I received my MBA in accounting and finance (and went to law school after my Mom passed away), and my brother, Mark, became a doctor, something my mother wanted for him from the day he was born.

However, she stressed lifelong learning through reading and picking up new skills. We all were avid readers in our home growing up, and that continued in our respective homes. Education was an excellent equalizer in society. Mom believed educated people would be welcome everywhere.

Being Grateful And Generous

Her family owned the largest bakery in the city where she grew up. As a result, my mother was a great baker in her own right. As gratitude to many people who helped along the way and neighbors, she often baked elaborate cakes and cookies. My mom always made more food and invited others who had were worse off to join us for meals on holidays and other occasions.

When buying presents, she was generous to a fault, seeking the best quality for others. Then she would be less price-conscious because giving to others was more important to her.

Final Thoughts

Moms are so influential as our first and most respected teachers. Through hardship and strive, they share their experiences that instill in us lessons they want us to learn. I remember my first money lessons, which shaped my financial habits to this day.

My mom was not always right, especially when hiding her investments from my dad. She passed us the best she had to give my brother and me. In turn, I am sharing my knowledge with my children, knowing that they will have their own experiences with finances. What we all want to do is to impart the best of what we know as parents.

Thank you for reading! Come visit us at The Cents of Money and subscribe to get our weekly newsletter for free.

What has your Mom taught you that you wish to share? We would love to hear from you!




Personal Finance Lessons From The Richest Man In Babylon

Personal Finance Lessons From The Richest Man In Babylon

A Timeless Classic On The Basics of Money

Personal finance lessons are all around us in our everyday lives. Every day we handle money without thinking about the consequences of making poor decisions. However, we may not grasp our own financial mistakes. We can learn better financial habits from The Richest Man in Babylon by George S. Clason, among my all-time favorites. This book can help anyone avoid financial blunders, create wealth and build a financially secure future. I recommend this easy-to-absorb book to my business students and my children.

Richest Man lays out the central tenets of good money management through ancient Babylonian parables told by charming characters, notably Arkad, the richest man in Babylon himself. Millions of readers have read it. Clason gave it out initially as separate pamphlets to banks and insurance companies for their customers. Then it was published in 1926 before the Great Depression and has remained an inspirational classic.

The author uses endearing parables as personal finance lessons to build wealth. The book structures key money themes within “The Seven Cures” and  “Five Laws of Gold.” Among the oldest civilizations, Babylonians were resourceful, wise, enterprising with a judicial nature. They were clever financiers and traders who invented money as a means of exchange.

Women Did Not Make Money Decisions In Babylon

All of the major characters are men. That is appropriate as women didn’t manage money then. Women could not apply for credit cards in their name until the Equal Credit Opportunity Act in 1974!  Clason wrote when women had finally etched out a win with women finally getting the right to vote in 1920. Fortunately, we are now seeing women gain financial independence.

The Babylonians, enlightened about money and other things, but gender equality was not on their list. That said, don’t let the gender bias hold you back from this good read. Just recast it into contemporary times when women are often better with money!

10 Money Lessons From “Ancient Times” For Today:


1. Pay Yourself First By Saving 10% of Your Annual Earnings


Start thy purse by fattening

“ Pay yourself first

“Pay yourself first” may have been Clason’s term. It means you should put away 10% of every paycheck into savings.  Allocate your savings to an emergency fund amounting to at least six months of coverage for basic essential expenses.  Unforeseen events are unpredictable and undesirable so plan ahead.

Once establishing this fund, use some of your savings stashes to invest your money in retirement and taxable investment accounts. Putting away some money may be difficult at first, depending on your spending habits.

2. Spend Within Your Means


Control thy expenditures.”

To set aside money for saving and investing, you may need to cut some costs. To control your expenses, assess your budget for your basic living needs. These are predictable monthly fixed costs such as mortgage payments or rent, property taxes, utilities, car loans, typical grocery bills, credit card payments, and other monthly expenses. Remember, these costs are for our needs rather than for our wants and desires.

As our income grows, we often increase our so-called “essential costs,” leading to lifestyle inflation. While we are allowed the occasional latte and extravagant dinners, we need to keep our spending in check. You shouldn’t deprive yourself of everything. However, fulfilling every desire is no longer a special treat.

Don’t fall into the trap of spending your raise soon after you have received it. It is tempting to buy something special upon getting a raise and bonus after a year of working hard. However, remember that your pay hike is pretax and shrinks on an after-tax basis. If you need some things, make a list of what you believe is essential if you had some extra cash.

Be reasonable about satisfying your every want. For example, that 10% raise on your $80,000 salary may not significantly help you to buy that luxury car (or chariot in ancient times), you have been eyeing. A rise in earnings may not fully accommodate every gratification we seek.

3. Make Your Investments Work For You Long Term To Accumulate Wealth


“Make thy gold multiply.”

Saving and investing your money as early as possible enables you to benefit from compound interest through the years. Compounding is a magical way of earning interest on the principal invested and the cumulative effect of earning interest on that interest. Compounding works to your advantage when it is your invested money.

On the other hand, compounding works against you when you borrow long-term like for your home.

Arkad explained how this magic works: “As they labored for, so their children also labored and their children’s children until great was the income from their combined efforts.

4. Pitfalls of Investment Is Overconfidence


Guard thy treasures from loss.”

Investments are often fraught with dangers, especially for beginners. Not every investment bears fruit. Learn about the risks of investing, whether in the stock market or investing in a new business. Consult those with training and more experience in that field. Arkad tells of his folly when he entrusted a bricklayer to buy jewels for him and returned with glass.

While you can’t prevent every loss or mistake, there are ways to minimize your risks. When investing, you should diversify your portfolio and implement asset allocation depending on your age and life cycle. As your wealth increases, consult a financial adviser who may enhance your abilities to address and confront many financial, tax, and legal issues.

5. Owning Your Primary Home Is A Good Investment


Make of thy dwelling a profitable investment.

Buying your own home versus renting is a widespread debate. Clason via Arkad advocates in favor of owning your home. From the 1920s and well past the post-World War II period, buying your home was an essential part of the American Dream.

Is it still part of the American Dream today?  US homeownership rose from 45.6% in 1920 to 66.2% in 2000. Ownership of your home has since retreated to 64.1% in June 2019 despite low mortgage rates. North Dakota is the state with the highest ownership ever recorded at 80% and was in 1900!

Higher Homeownership Rates For Millennials

With reduced mortgage rates, homeownership rates have improved recently. Millennials made up a higher (47.9%) proportion of US homeownership in 2020, up from 40% three years ago. These levels are far above where Millennials were during the Great Recession when they were crippled with student debt and had difficult work prospects.

There are many benefits to owning your home rather than paying rent in particular parts of the country. Don’t think of renting as throwing away money. It is more of a personal choice for many people. You should weigh the costs of owning your home (downpayment, monthly loan, insurance, taxes, and maintenance), against rising rents, lack of control over your home, and renter’s insurance.


Housing Appreciation Rates

When renting, consider the benefit of having savings for investments or retirement rather than its use as a down payment. Investing this money could be a significant plus. In the best years for the housing market (1976-2005), real price appreciation averaged 2.2% annually. This modest appreciation would compare to the long-term stock appreciation of 8% annually if you were to put your savings into the stock market.

Of course, there are many reasons to buy a primary home, such as gardening, more space, and decorating rather than as a good investment.   However, investment returns may be a significant factor if you are on the fence between buying or renting your home.


6. Retirement Savings And Insurance


“ behooves a man to make preparation for a suitable income in the days to come, when he is no longer young, and to make preparations for his family should he be no longer with them to comfort and support them.

Although the American Express Company started offering private pensions in 1875, it wasn’t until the 1920s  that many American industries offered private pensions.. State governments established pensions for employees in 1911, followed by federal pension plans. Social Security income did not yet exist at the time Clason’s book was published.

Today, fewer people (4%) can count on the traditionally defined benefit pension plans if they work in the private sector. Participation through pensions is down significantly from 60% in the 1980s. The responsibility of saving for retirement falls on us. About half of Americans 55 or older have not put away any retirement savings. Roughly 22% have less than $5,000 in savings earmarked for retirement.

Don’t make this mistake. Saving for retirement is investing with deferred tax benefits. The earlier you save, the more you will benefit from compound growth. If offered, make sure to participate in your employer’s 401K plan, especially if they offer a matching contribution. Don’t throw away free money from your company. 

The IRS sets caps on the maximum annual amount you may contribute to your 401K plan. Your contribution is on a pretax basis. You defer your taxes until you withdraw money. You will be able to direct these funds into an investment vehicle of your choice.

How 401K Matching Works

Many companies offer their employees access to 401K plans. Most employers provide a contribution match (partial or dollar-for-dollar) based on the employee’s contribution.

A typical example is a partial match provided by employers. The match means they will contribute 50% of what you put in, up to 6% of your salary. Some companies will give the more desirable dollar-for-dollar matches where your employers will put in what you do.

An Example

Let’s say you make $80,000 per year, and you contribute $4,800 annually based on a 6% cap in your plan. If your employer provides dollar-for-dollar matching, they would be contributing or compensating you with another $4,800. Consider this as a gift from your company. Why wouldn’t you make your contribution to earn your company’s match?

Check your plan at work as to what your employer offers. You want to get the maximum amount from your company to meet the cap of 6% or whatever the percentage is that they will contribute up to.   That is free money for those employees that participate.

Roth IRAs

Separately, you should also fund a tax-advantaged Roth IRA on your own. You can direct your money into several different mutual funds. This Contribution is made with your after-tax income up to the maximum amount.  Roth IRAs work differently than traditional IRAs as you are contributing after-tax dollars. The benefit of the Roth IRA is that you have already paid the taxes. You will not be paying taxes when withdrawing and can do so without penalties.

As Arkad insists, you need to provide a suitable income an older age to continue enjoying your life.

“…no man can afford not to insure a treasure for his old age and the protection of his family, no matter how prosperous his business and his investments may be.”

Insurance Is Needed Protect Your Family, Income And Your Assets


We cannot afford to be without adequate protection.

Insurance planning is one way to protect your family in the event of your passing. Your company benefit package may provide life insurance. However, it is usually a smaller amount than you need. You should make sure to have enough coverage for essential living payments and future costs like college tuition.

Besides life insurance, there are other insurance types you need to protect your assets, income, and family. There are 8 types of insurance to consider: car, home, renters, health, disability, long term care and an umbrella policy.

7. Invest In Yourself


“Increase thy ability to earn”

After you earn your college degree, real learning has just begun. You should leverage any skill-building or training opportunities to increase your earnings if offered at your workplace.

I remember being at an employee orientation with others shortly after I graduated college. The head of human resources at the investment bank provided us with a list of investment workshops (in different kinds of financial securities) she recommended we take over the next 6-12 months.

Being a bit of a learning nerd, I was excited by the opportunity to educate myself about unfamiliar areas. Someone behind me kept groaning as they described the workshops, and finally saying: “I didn’t take this job to go back to school!” Needless to say, the groaner didn’t stay long and not by his choice.

Use Every Opportunity To Gain More Skills

There are rewards for Increased skills at your job. “The more wisdom we know, the more we may earn.” Grow your skills in your 20s and beyond to make yourself a more valuable employee, or better job. You may want to start your own company. Learning should be a life long goal.

8. Invest In What You Know Or Seek Smart Advice


“Gold slippeth away from the man who invests it in businesses or purposes with which he is not familiar or which are not approved by those skilled in its keep.”

Arkad tells a Babylonian tradition that sons of wealthy parents must earn the right to inherit the estate of the parents. Arkad gave his son two things his parents denied him. First, he gave his son a bag of gold and a clay tablet carved with the five laws of gold. He told his son to come back in 10 years and give his father an account of how he did. If worthy, he would inherit the estate.

Ten years later, his son came back to tell his father he handled the gold poorly and lost it all. He had gotten involved with horse racing and wagering with deceitful men. His son admitted he knew nothing of horses, a business he was unfamiliar with. These men defrauded him.

The son sought employment but had no practical training. He then turned to the clay tablets, which contained financial wisdom and provided him a road to wealth.

Lost The Gold, Gained The Wisdom

Essentially, his son followed Arkad’s wisdom which provided greater value than that of the bag of gold.  As a result, he multiplied his earnings by putting 10% of his earnings into savings, spending less than he earned.

He also learned how to make savvy investments from  knowledgeable financial advisors, avoiding the scams he had experienced before.

Arkad was impressed with the multiple of bags of gold returned to him, and he provided his son with the inheritance upon Arkad’s passing.

9. A Lesson In Borrowing and Lending From The Gold Lender

Mathon, the gold lender, is approached by Rodan, the spearmaker, who earned a fortune of fifty gold pieces. Rodan’s sister wants him to lend his money to her husband because he cannot seem to make enough earnings on his own. Mathon provides counsel to Rodan based on his largely successful lending experience.

Can the loan be well made if the borrower cannot pay?

Mathon shares the ways he makes loans if the borrower can demonstrate:

  • possessions like property or jewels with greater value than the loan that can be collateral;
  • they are a wise trader or purpose of money is wise;
  • the capacity to earn enough to pay back the debt, and
  • there is a guarantor to pay back the loan if the borrower is unable.

Mathon will not make a loan to a borrower who is:

  • indiscreet with investments;
  • will take shortcuts to make money; or
  • poor (or lazy) workers.

In the end, Rodan made his decision not to lend money to his sister’s husband. He believes his brother-in-law to be not only envious but also lazy. Rodan knows from experience that his sister’s husband is a spendthrift and will use the money on unnecessary things and will not repay him.

Ill fortune pursues every man who thinks more of borrowing than of repaying.”


10. Budget Rule:  10/70/20

The clay tablets of Babylon provided a budgeting plan of 10/70/20 with earnings allocated as follows:

  • 10% goes for savings for future investments.
  • 70%  should go for necessary expenses, notably to provide for home, clothes, and food.
  •  20% will be for paying off debt.

The above percentages provided by Clason differ from Elizabeth Warren’s popular budget rule of 50/20/30 or spending 50% for your needs, 30% for your wants, and 20% allocated to savings.

While the Babylonian budget rule may seem to be antiquated, budgeting any kind that works for you is the best way to control your spending. Overspending leads to having to borrow and carrying too much debt. Whatever plan can you choose and stick to is good so long as you spend within your means and don’t over burden yourself with debt too challenging to payoff.

Final Thoughts

Arkad, as the richest man in Babylon, passes on his financial knowledge to generations of readers, which wisdom remains excellent advice to those wanting to create and grow wealth to this day. His stories and that of others in the book are classic, easy to grasp and implement. The rules may differ but remain entirely relevant today. Whatever way it is easiest to learn personal finance, take those first steps through tales of old or contemporary means.

If you like classics like The Richest Man in Babylon, check out the personal finance lessons from these classic gems.

Have you a favorite personal finance book or story you would like to share? There are many good ways to learn better financial habits. What works for you can work for others. We would appreciate any thoughts you want to share!










Yes, Money Can Buy Happiness

Yes, Money Can Buy Happiness

“Money is of no value; it cannot spend itself. All depends on the skill of the spender.”

Ralph Waldo Emerson


“Whoever said money can’t buy happiness simply  didn’t know where to go shopping.”

Gertrude Stein


Money Can Buy Happiness

Wealth can buy happiness, according to supporting evidence. However, it is up to you as well.

That is good news! I grew up with the notion that an excess of money may lead to feeling miserable. However, wealth alone is not a guarantee of a happy life. It can help you with your goals, make relationships more accessible, and allow you to be satisfied. Money can buy happiness when you can gain financial security for peace of mind. That is the icing on the cake.

Money Can Buy Happiness In Several Ways:


#1 Earning $75,000 A Year May Make You Happy

A classic study by Princeton University researchers Angus Deaton and Daniel Kahneman found a $75,000 salary to be an optimum level for two types of happiness: day-to-day emotional mood and more profound life satisfaction.

Their work studied 450,000 Americans polled over two years by Gallup and Healthways. The study asked respondents about their satisfaction, income, and adversities like lower income, divorce, and health issues. The more that income fell below the $75,000 benchmark, the unhappier people felt. However, those who made more than that amount did not report a more significant amount of happiness.

Another study at Purdue University and the University of Virginia found $95,000 to be an excellent salary for life evaluation or satisfaction and $60,000-$75,000 associated with emotional well-being.

Lifestyle Inflation

Researcher Andrew Jebb found that earnings above the ideal threshold coincided with a lower level of happiness. This result suggests the more you make, the more you tend to spend, leading to lifestyle inflation.

Jebb pointed to a degree of happiness through the fulfillment of both basic needs and increasing material needs. Evaluations tend to be more influenced by people comparing themselves to other people. There is an old adage, “Keeping Up With The Jones” used for increased spending.

More recently, Matthew A. Killingsworth’s 2021 study disputed the relevance of making more than the threshold of  $75,000 income did not lead to greater happiness. Killingsworth’s research suggested that “higher incomes are associated with both feeling better day-to-day and being more satisfied with life overall.”

I can assure you that earning $75,000 or $100,000 in NYC and living on your own would make your heart sing. For that matter, when someone earns half a million but has $550,000 in hard-to-reduce costs, they are not going to be a happy camper. That person may have a spending problem in need of fixing.

#2 You May Not Be Spending Your Money The Right Way


Consumers can realize more happiness if they spend their money according to core principles recommended by psychologists Elizabeth Dunn, Daniel Gilbert, and Timothy D. Wilson work in the Journal of Consumer Psychology.

Dunn and her colleagues have been proponents of the relationship between money and happiness. Following these tenets may add more satisfaction for consumers:

Buy More Experiences

For some of us, spending money on a new dress, a purse, gadgets, or other material goods makes us feel good. The question is, what produces longer-lasting benefits: material possessions or experiential purchases?

An experience can be a walk on the beach, an exotic or family vacation. True, not all experiences are good. The benefit of a great experience may allow for revisiting those happy memory years. When my children were younger, we often picked pumpkins at a farm, had apple cider, and visited the animals that roamed around. We all remember the fun we had. I’m sure we bought our kids souvenir t-shirts, lanterns, and hats, but they never used the purchases.

Giving to Others

Ever feel a high from helping someone in need? I have, and I am sure I am not alone.

The smallest gesture can mean so much to another that we are sometimes embarrassed that we didn’t act sooner. Making donations to your favorite charities feels good. Slipping a small bill to someone on the street provides us with an even greater satisfaction because it is an intimate form of giving.

This example is “prosocial spending.”  There is a positive impact on our social relationships when we practice this type of giving. Give a book to a friend you enjoyed or a tasty treat can improve your bond with that person.

Treat Yourself To Small Pleasures As Antidote To Hedonic Buys

When we make small purchases, we are treating ourselves with relatively inexpensive pleasures. Happiness is closely associated with the frequency of these treats. As financial resources are relatively finite, we are better off making smaller purchases.

Dunn and her colleagues point to the lesser likelihood of adapting to this more secondary and more limited spending. On the other hand, we adapt more quickly to the more expensive purchases if habitual. These are “hedonic buys,”  consumed for luxury purposes.

Let’s say you buy high-end specialty coffee drinks like cardamom lattes at $9 a pop daily from Starbucks ‘ Reserve Roastery. Over a short period, you may get accustomed to this rather expensive habit, and it is no longer unique.

When we buy showy sportscars or a bigger house, it may be consistent with our spending habits. We may not even enjoy these consistent expensive purchases as much because we are so used to these luxury goods. As mentioned earlier, this is classic lifestyle inflation, with more spending “required” to feed your happiness.

Extended Warranties Are “Overpriced” Insurance

Extended warranties can be a waste of money for consumers. From appliances to electronics, extended warranties may cost up to 50% of the product cost. On the other hand, retailers enjoy higher margins for this kind of insurance. I try to avoid those heavy-handed sales pitches we receive at the counter by saying I am in a hurry.

Extended warranties are often unnecessary. Consumer Reports recommends that you research the manufacturer’s initial warranty, which usually covers the product for at least 90 days. For most products, that is enough.

Pay Now, Consume Later

In our credit card-oriented society, we are conditioned to spending consumption and pay our bills later. We get immediate gratification from our purchase which doesn’t last as long as our card balances. Delaying gratification may sometimes allow us to feel the pleasure longer.

When booking a vacation, pay for it in advance rather than purchase it on your credit card. Your enjoyment may last longer.

Think About What You’re Not Thinking About: Remember The Details

We often focus on the best qualities of a purchase. By doing that, we minimize or ignore other features that may be critical. I know I have experienced this in some of our most significant purchases, only to regret it later.

Let’s say you want to buy a vacation home. You may be drawn to a cottage for its location and its charm, ignoring some of its downsides. Having a limited budget for your second home, you need to understand potential costs. Buying this cottage may require a lot of updating inside and outside of the building. Had you considered those costs, it may have helped you to negotiate the price down.

Related Post: How To Overcome Biases In Financial Situations

Beware Of Comparison Shopping

We are told to comparison shop to spend more consciously, but there may be a downside. Searching for a particular product available through different brands, we may use several websites like BizRate and The sites may help us compare them. Retailers know comparison shoppers are ideal audiences for promotions because they have high intent to purchase.

The authors say these sites may offer comparisons based on available options rather than the attributes buyers seek. They may be purposely distracting you from what you are explicitly buying.. Don’t let them throw you off your game!

Follow The Herd Instead Of Your Head

You should read available reviews and pick movies, reading, and restaurants based on better customer ratings. By paying close attention to the happiness of others, you may better glean what you prefer. Be aware of what makes you happy.

I have found some reviews can be helpful through artificial intelligence, though, at times, they are faulty. Netflix recommends the next film we should watch. However, after I watched a murder mystery, Netflix suggested I watch Chitty Chitty Bang Bang. Hmmm.

#3  Buy What Fits Your Personality And You Will Be Happy

Spending increased our happiness when the purchases were for goods and services that match our personalities.

This ambitious 2016 study by Cambridge University psychologist Sandra Matz and others reviewed thousands of bank transaction records of customer purchases across categories. They studied Big Five personality traits: Openness to Experience, Conscientiousness, Extraversion, Agreeableness, and Neuroticism.

The study proved that money could buy happiness if spent according to the proper psychological fit. Our personalities influence our spending for experiential purchases, material goods, or to buy for others.

Our psychological fit matters. We look for similar traits when we choose our friends or colleagues, so we match up with each other. It also plays into how we each spend money individually according to our psychological makeup.

#4 Trade-Offs Between Time And Money

The relationship between time and money is well known. An old proverb, “time is money,” equates the two variables. However, we put different values on time and money. Time is a limited resource, but we don’t treat it as such and waste time often. Whether it refers to 24 hours per day or a lifetime, time is finite, and money may regenerate.

Saving money versus saving time was the theme of the Harvard Business School 2017 study by Ashley V. Whillans. Rising incomes around the globe have often come with stresses of time. 

Buying Some Time

This study set out to examine how to reduce stressful feelings of time scarcity. The growth of the sharing economy has made time-saving services for household chores increasingly available. Participants allocated discretionary income at $80-$99 per month to buy time-saving benefits such as meal delivery, house cleaning, and lawn services.

Their study found that people realized greater life satisfaction when linked to spending money for these time-savers by reducing stress.

Marital Bliss

In a 2018 Harvard Business School study led by Whillans, over 4,000 cohabitating adults (i.e., committed adults) extended the above research. Disagreements about household chores are a primary source of relationship conflict. 30% of the respondents cited disagreements over household chores as the number one reason for divorce.

They found that time-saving purchases promoted relationship satisfaction based on bought “marital bliss.”

There is a Chinese proverb:

“If you want happiness for an hour, take a nap. If you want happiness for a day, go fishing. If you want happiness for a year, inherit a fortune. If you want happiness for a lifetime, help someone else.”

#5  Money Can Buy Happiness. Find Financial Security:

  • Spend less than you earn.
  • Don’t spend to impress others.
  • Create an emergency fund for times of unforeseen circumstances.
  • Minimize debt by paying your credit card balances in full.
  • Reduce spending when you cannot pay balances fully.
  • Automate bill payments to timely pay your bills and regularly contribute to your retirement plan.
  • Save diligently and deploy into retirement and investment accounts.
  • Invest early with diversification to minimizes risk, using long-term strategies.
  • Money isn’t everything.


Final Thoughts

Various studies consider the relationship between money and happiness on our well-being. Indeed, if you can meet your basic needs and find financial stability, you should be happier than someone who cannot. The world has many unhappy millionaires and billionaires because money cannot solve problems like disappointments, health challenges, or broken relationships. Money can buy happiness!

My grandmother always said, “Poor or rich, money is good to have.” Managing your money well can’t hurt.

Related Posts:

Why You Need An Emergency Fund (And How To Invest It)

10 Ways To Better Manage Your Spending


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What makes you happy? How does money affect your satisfaction levels? Do you use time-saving services to smooth stress levels?














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