What Role Does Money Play in Your Happiness?

Mo Gawdat is the Chief Business Officer for Google [X], a serial entrepreneur and author of “Solve for Happy: Engineer Your Path to Joy”

Mo has an impressive combined career of 27 years, starting at IBM Egypt as a Systems Engineer before moving to a sales role in the government sector. Venturing into the UAE, Mo joined NCR Abu Dhabi to cover the non-finance sector. He then became acquainted with the consumer goods industry as Regional Manager of BAT. At Microsoft, he assumed various roles over a span of seven and a half years, in his last role at Microsoft he headed the Communications Sector across Emerging Markets worldwide.

Favorite Success Quote

“The gravity of the battle means nothing to those at peace”

Key Points

1. The Equation for Happiness is Simple 

Happiness is not complicated.

While you might not come to this conclusion by scrolling through your social media feed, watching the latest advertisements, or even reading some of the more popular personal growth and self-help books, when you truly sit down and think objectively, you will realize that happiness is simple.

Despite marketer’s best attempts to prove otherwise, happiness isn’t contingent upon some wild, complex, equation.

In fact, the equation for happiness is almost too simple.

Happiness is equal to or greater than the events of your life minus the expectations you have for those events.

That’s it.

The equation isn’t “Happiness = Fancy Clothes + A 6-Figure Salary + An Italian Sports Car and a French Bikini Model”

It’s simply events – expectations. 

But what does this really mean?

At the most basic level, it means that your happiness in any given situation, and thus your happiness in life, is entirely dependent on the difference between what you expect from a situation and how that situation actually turns out.

So, for example, let’s say that the event in question is coming home to your wife after a long day of work.

Let’s look at how your expectations of the event will determine your happiness.

On one hand, your expectation might be that when you come home after a long day of work, your wife should be preparing dinner, opening you a cold beer, and wearing a sexy outfit that tells you she’s “in the mood”.

On the other, your expectation might simply be that your wife should be relaxing and unwinding after her long day of work and that the two of you should prepare dinner and unwind together.

While neither of these expectations are right or wrong, they can have a tremendous effect on your happiness and well being.

If you come home with the first set of expectations and your wife has already prepared dinner but left it in the oven and is now relaxing on the couch… You are going to be unhappy and angry because your expectations were not met.

However, if you come home to the exact same situation with the second set of expectations, you will not only be happy, but you will feel an abundance of love for your wife because she went above and beyond and exceeded your expectations.

So now, you might be wondering, “If the secret to happiness is to have lower expectations, shouldn’t I just stop expecting anything so that I will never be disappointed?”

Well, yes and no.

While eliminating your expectations would certainly make you happier in the short run, it proves detrimental to your well being and success in the long term.

If you have no expectations of yourself or others, then you will mistreat yourself and allow other people to walk all over you.

Therefore, the key to happiness is to first become conscious of your expectations and then consciously and intentionally craft a new set of expectations that serve you and your purpose in life.

2. We Are All Born Happy 

An often forgotten truth of life is that we were all born happy.

All of us.

We are born carefree and loving, without any hate, anger, or animosity in our hearts.

It is our society that teaches us to be unhappy, to compare ourselves to others, to hate our fellow man, and to be unfulfilled.

And once you become aware of this reality, it is your job to undo the programming that society has instilled into your brain.

Luckily, the process for “deprogramming” all of the crap in your brain is simple, however, this doesn’t mean it’s easy.

The best way to start is to pick up some sort of daily mindfulness practice whether it’s meditation, prayer, long walks in nature, or even just some sort of conscious movements like yoga or Tai Chi.

These practices allow you to detach yourself from the human experience and the brain’s programming and become more aware of how you or your “superconscious” are meant to function.

Let’s use the analogy of a new computer so that you can understand what I mean.

Whenever you get a new computer, everything runs smoothly. It functions exactly as it was designed, quickly opening applications, seamlessly running commands, and doing its job without a problem.

But over time, things start to slow down and problems start to arise.

You begin downloading new programs and applications, visiting questionable websites, and demanding more of your computer than the software and hardware were designed to handle.

And as you execute increasingly demanding operations, your computer starts to slow and malfunction and what once took 2 seconds now takes 2 minutes.

When this happens (and it almost always happen) the only way to restore its original performance is to return it to default settings and execute a complete factory reset.

In much the same way as a computer’s default setting is speed and efficiency, our brain’s default setting is happiness and contentment. But when we start installing (willingly or unwillingly) societal, religious, and familial expectations into our “operating system”, we start to get bogged down, and experience unhappiness.

And when this happens, the only way to return to our original state is a “Factory reset” which typically takes the form of meditation, affirmations, journaling, and other consciousness practices.

These practices are kind of like our brain’s “CTRL + ALT + DELETE” function and the more you can integrate them into your daily life, the smoother and faster you you will operate.

3. Your Emotional State is Determined by Your Thoughts, Not Events

One of the simplest, but most impactful, formulas that you can understand to achieve a happy life is this:

E + R = O

Or

Event + Response = Outcome

In other words, your emotional outcome (happy, sad, angry, loving) is not determined by the events in your life, but rather by your response to the events in your life.

For example, let’s say that you are going out to meet up with a friend.

You agreed to meet at the local coffee shop around 8 a.m., but when you show up he is nowhere to be found.

You order your drink, a few minutes go by, and your friend is still absent.

At this point, you can respond in one of two ways.

First, you can assume that your friend does not respect you, get angry, and allow his tardiness to dampen your mood.

Or, you can simply assume that your friend had some sort of extenuating circumstance that stopped him from showing up on time and reframe his lateness by saying, “Great! This gives me a few minutes to read that new book I bought“, resulting in a happier and more fulfilling morning.

In these two examples, the event was exactly the same, but by changing the response to the event, you achieved two wildly different outcomes.

When you understand the far reaching applications of this formula, your life will begin to change in ways that you could never expect.

Mastering your emotional response to any circumstance gives you power over the events in your life instead of allowing those events to have power over you.

And when your internal world remains unaffected by the chaos of the outside world, you will have true power in your life, business, and relationships.

4. Learn to Differentiate Between Incessant and Effective Thoughts

As it pertains to our happiness, there are only two kinds of thoughts.

Effective thoughts and incessant thoughts.

Effective thoughts are the thoughts that move the needle forward in your life, thoughts that solve problems, achieve goals, and give you a deeper understanding of your place in the cosmos.

Incessant thoughts are the negative thoughts that do nothing to improve the quality of your life or happiness even when they are true.

In the interview, Mo shared a powerful example detailing the difference between these two thoughts during a tragic situation.

At the age of 21 years old, Mo’s son Ali died on the operating table during a routine surgery that should have been quick and simple.

Shocked and in pain, Mo was overwhelmed with a wave of thoughts and feelings that can only be comprehended by people who have experienced a similar tragedy in his life.

Over the coming weeks and months, Mo was faced with a single, pervasive and incessant thought, “I will never get to hug my son Ali again.”

However, as he continued grieving for his son, he realized something. This thought would not bring Ali back, it would not change reality, and it would not benefit humanity.

So he made a very conscious decision to change his thinking.

Instead of thinking “I will never hug my son again”, he reframed the tragedy and said, “My son is dead, now it is my duty to remember his legacy by living my life as he would have wanted and impacting the world in honor of his memory.”

And while this new thought didn’t take away the pain of losing his child, it allowed him to cope with the loss and make sense of the heart break.

Each of us is faced with the same thoughts day in and day out.

Even if we haven’t lost a loved one, we are all faced with our own “Incessant thought demons” that seek to cripple us and hold us back from living a happy life.

Whether we are constantly thinking about a mistake that we regret, a relationship that we ruined, or an opportunity that we lost, we all have incessant loops of unhelpful thoughts playing in the back of our mind.

And the biggest problem with these thoughts is that 99% of the time… They are true!

But just because something is true, does not mean that it is advantageous.

For example, if you lost the woman of your dreams because you were too focused on your work and not focused on the relationship, you might be faced with the incessant thought “I will never have her in my life again”.

Chances are, this thought is true.

But does it serve you in any way!? No!

Instead, you can choose to reframe this thought by saying “I will never have this woman in my life again, so now it is my duty to learn from my mistakes and move forward so that I can find love once more… Only this time, I will make it work.”

The moment that you can learn to eradicate incessant thoughts and replace them with intentional and effective thoughts is the moment that your life will be irrevocably changed for the better.

5. Money Doesn’t Make You Happier… Unless

Countless studies have been conducted on the correlation between money and happiness, and what they found was rather interesting.

Money only affects your happiness up to a certain point.

If you are living below the poverty line, increasing your income to a stable and livable level will drastically improve your happiness. However, going from $100,000 a year to $100,000 a month will only have a marginal impact on your happiness and mental well being.

However, once you have passed roughly $7,000 a month, increasing your income will only result in a nominal increase in your happiness.

So, for example, if you go from $100,000 a year to $250,000 a year, your happiness will not increase by any appreciable amount.

If this is true, then why is it that so many rich people seem to live better and happier lives?

Because they give so much of their money away!

Studies have found that one of the only ways money can make you happier after you have passed the $70,000/year threshold is if you are giving more of your money to charitable causes, family, friends, and organizations that you support.

For example, if you earn an extra $20,000 bonus this year and then use it to put a down payment on a new sports car, your happiness will only increase marginally and temporarily.

However, if you took that same $20,000 and paid for a vacation with some of your closest friends, your happiness would increase dramatically and the effects would last much longer.

So yes, money is important for your happiness.

If you cannot afford to put food on the table, increasing your income is one of the quickest ways to increase your happiness.

But after your basic living expenses are covered, giving your wealth away and spending it on the people you care about is the only way to leverage your money to increase your happiness.

6. Life is a Video Game and Challenges Make the Game Fun 

Life is not fair, it is not perfect, and it is not easy.

But I’ll let you in on a little secret… That’s what makes life fun!

I want you to imagine that the new Call of Duty just came out, and after months of anxiously anticipating the game’s release, you take it home and start playing.

You go through the tutorial, launch the first level, and then get ready to kill some virtual bad guys.

But there’s a problem…

There are no bad guys to kill and no challenges to overcome.

Every level is simply a linear progression where you run from the beginning to the end as quickly as you can, avoiding all signs of danger or adversity.

Does that sound like a fun game? Probably not.

And guess what? Life is nothing more than a very intense and large scale video game.

So why in the world would you want it to be easy? Why would you want a challenge and problem free life?

Just think about it for a moment.

Imagine that I came to your house tomorrow and gave you an Olympic Gold Medal.

How would you feel?

If you are anything like me, you would probably think that the medal was pretty cool, but after a few minutes of looking at it, you would quickly feel disenchanted and bored because you did nothing to earn the medal.

You’d probably sell it or leave it in your sock drawer because it has no significance in your life.

But imagine that you have been training for the Olympics since you were 12 years old.

You worked every single day for the past ten years of your life, and when you finally had the opportunity, you competed and won.

How would that medal make you feel?

I would chance a guess that the medal would have more meaning and significance to you than darn near anything else that you owned.

Why?

Because you worked for it, you suffered for it, and you endured more pain than most people are willing to endure in order to call that medal your own.

In much the same way, we gain meaning in our lives by overcoming challenges, by enduring pain, and by beating adversity.

Life isn’t meant to be easy.

It’s meant to be a challenge.

A challenge that you enjoy and have fun with, yes. But a challenge nonetheless.

7. You Don’t Find Your Purpose… It Finds You

So many people in the modern world are concerned with finding their purpose.

But they fail to realize that you don’t find your purpose, your purpose finds you.

People don’t just wake up one day and say “Hmm, I know exactly what I am meant to do and how I am going to do it”.

Instead, they find the intersection of their passions and talents and they work for years honing their skills, setting and conquering goals, and becoming better and better.

Then, when they have mastered their craft, an opportunity presents itself, often in the most unlikely manner, and all of the hard work they put in begins to make sense.

If you want to live a life of purpose, then you must first start by building your skills and growing yourself until you are ready to handle your purpose.

Typically, this means working on rather mundane skills and projects so that you can grow your capacity as a human being.

Think about the classic Karate kid movie where Mr. Miyagi had his student wax the car and paint the fence.

These tasks seemed dull, monotonous, and frustrating.

But, when the time came, and the first punch was thrown, these dull tasks that the Karate Kid had practiced suddenly made sense and he realized that he had been practicing for the purpose of learning a new skill.

Steve Jobs summarized this truth when he said

You can’t connect the dots looking forward; you can only connect them looking backwards. So you have to trust that the dots will somehow connect in your future.