In a recent interview, Chamath Palihapitiya said, “people just want economic security and to be left alone”. The ‘left alone’ part needs no explanation, but what exactly does economic or financial security mean?
Economic security or financial security is the condition of having stable income or other resources to support a standard of living now and in the foreseeable future. It includes:
– probable continued solvency.
– predictability of the future cash flow of a person or other economic entity, such as a country.
– employment security or job securityWikipedia
To have economic security, you need to have and maintain a reasonable standard of living. Beyond the basic needs of shelter, warmth, and food, this standard tends to be heavily comparative and determined by the living standards of those around you. Someone who has a standard of living near or above the average of those they interact with will feel like they have economic security. However, this standard of living must be sustainable through continued solvency, a predictable future cash flow, and job security.
Continued solvency means that you have more assets over time than you have liabilities, so the total value of equity in your house and car and the amount you have in savings and investments is greater than the value of your mortgage, loans, and credit card debt. The predictability of cash flow means that you have a good idea of your income over the next few months to a year, either through a reasonable promise of continued employment as an employee or entrepreneur and/or a stable investment income from stocks, bonds, or a pension. Employment security refers to the confidence that if you continue to do your job, you will keep it and that you have control of your continued employment.
Beyond a comfortable living, what other factors are essential in living a happy life? Since early 2019, the Office for National Statistics (ONS) has been identifying and tracking metrics that the government can use as a measure of prosperity separate from the financial measurement of Gross Domestic Product (GDP).
According to this well-being study, you are happier in Britain if you have a high level of perceived health, are married, employed, own your home, and earn slightly above the average household income of £29,900 per year. You are also happier if you are female. Multiple studies show that self-reported life satisfaction is heavily age-dependent following a U shape, with a dip in happiness in your late thirties and early forties.
So if you want a safe bet at happiness, you need to find a stable job that pays just above the national household average, live below your means, avoid unsecured debt, build security with additional income streams, stay healthy, get married and buy your home.
If you are a government, you should focus your efforts on getting as many people as possible to the situation described above and then leave everyone alone.