"Annual income twenty pounds, annual expenditure nineteen nineteen six, result happiness," the novelist Charles Dickens wrote. "Annual income twenty pounds, annual expenditure twenty pounds ought and six, result misery."

If that's too literary for your taste, an article in the New York Times this month puts a finer point on it:

"For more than half a century, Americans have proved staggeringly resourceful at finding new ways to spend money... But now the freewheeling days of credit and risk may have run their course at least for a while and perhaps much longer as a period of involuntary thrift unfolds in many households. With the number of jobs shrinking, housing prices falling and debt levels swelling, the same nation that pioneered the no-money-down mortgage suddenly confronts an unfamiliar imperative: more Americans must live within their means."

I may hold a minority view, but this is probably a good thing.

Capitalism does a wonderful job of improving our standard of living, creating jobs, generating wealth and offering us a spectacular and unending array of new products to lust after. But beware too much of a good thing.

In the continual pursuit of greater material success, some of us lose important relationships, our health, our perspective, our peace of mind. (And, perhaps even, our credit rating.)

Modern commercial culture often promotes what I call "a sense of lack," a constant, gnawing belief that something is missing. If only we had another car, a better car, a bigger house, a more lavish kitchen, a trip to St. Thomas - or whatever - then we would finally be set.

Unfortunately, life doesn't work that way. You can amass more and more stuff, yet still find you're not satisfied. You don't feel content. You have no sense of abundance. And the bill collector is knocking at the door.

Psychologist Dr. Martin Seligman calls this getting caught on the "hedonic treadmill." He writes, "As you accumulate more material possessions, your expectations rise. The things you worked so hard for no longer make you happy; you need to get something even better to boost your level of happiness. But once you get the next possession, you adapt to it as well, and so on... If there were no treadmill, people who get more good things would in general be much happier than the less fortunate. But the less fortunate are, by and large, just as happy as the more fortunate."

The poet William Wordsworth got wise to this a couple hundred years ago. "Getting and spending," he wrote, "we lay waste our powers."

A few other smart guys have offered us essentially the same message. Including, perhaps, the smartest of them all: Albert Einstein. The Nobel Prize-winning physicist wrote, "The trite objects of human efforts possessions, outward success, luxury - have always seemed to me contemptible... I believe a simple and unassuming manner of life is best for everyone, best both for the body and the mind."

Not to mention the bank account.

Of course, material possessions aren't just a monetary consideration. Once you accumulate a bunch of stuff, you find you've created a whole new set of problems. You have to store it... care for it... maintain it... insure it. Hence the old saying, "Do you own your possessions, or do they own you?"

Of course, none of us is required to buy into the consumerist mentality. We can step off the hedonic treadmill whenever we want. We can choose to live more simply and forget about the Joneses. (They've already forgotten about you, by the way.)

In a society as rich as ours, a "sense of lack" is really just a state of mind.

Vanguard founder John Bogle likes to tell a story about a party given by a billionaire on Shelter Island:

"At the party, the late Kurt Vonnegut informs his pal, the author Joseph Heller, that their host, a hedge fund manager, had made more money in a single day than Heller had earned from his wildly popular novel Catch 22 over its whole history. Heller responds, "Yes, but I have something he will never have... Enough."

Carpe Diem,


Author's Bio: 

Alexander Green has just launched Spiritual Wealth (www.spiritualwealth.com).

What is “Spiritual Wealth,” exactly?
According to Alex:
"Anything that can be measured in dollars and cents, I call material wealth. Everything else – the love of our families, the health we enjoy, the time we spend doing things we enjoy or working on things that really matter – I call spiritual wealth."

Alex is also the Chairman of Investment U, where his actionable investment ideas are published three times a week. He's the Investment Director of The Oxford Club, as well, where he's beaten the S&P 500 nearly 5-to-1 over the last five years.