How do you beat the one force that will keep you broke forever? First, you need to know your enemy. It’s called the Walden Theory.

The theory is basic, but profound in application. We all have a certain comfort level with our income. 4 or 5 levels below our current income feels like deprivation. It feels nearly impossible and just plain horrible. You can’t imagine any joy in life if your spending budget was based on that paltry income. (Even though many other people in our country live at that level, some perfectly happy, whichever level it might be).

On the other hand, 4 or 5 levels above seems perfect.  Like you couldn’t possibly have a care in the world if that were your income. All the stress you have with money would vanish. It’s just ideal.  And you think that you would be completely content with that for the rest of your life. (Despite the fact that many other people live at that level and feel stressed and stretched thin.)

If you can’t beat the Walden Theory, you will never achieve financial freedom.

Now here is the cruel joke with the whole thing. When your income changes over time, you naturally adjust to this new level. It becomes the normal, shockingly fast. Sure, when you were making 30K a year, 61-75k seemed like a perfect, amazing amount of income. But a few years later, a few kids later, a bigger house payment later, and 61K feels tight. 30K a year feels just impossible and 120K would be oh so nice! The line in the sand where your “perfect income” lies has just moved. Welcome to the Walden Theory.

Some people preach that you need to be more frugal to beat the system and some preach to earn more. Either way will get you there. But at the end of the day, you still have to be able to overcome the Walden Theory. No matter what income you land at, you need to find happiness at a lower level than you earn. Only then are you going to be able to invest the difference.

How many levels below will take you to financial freedom? Well, that depends on how long you are willing to wait. 1 level should get you there in about 30 years. 2 or 3 levels will be faster.

Perhaps the best approach is a mix of both spending a level or two below and then earning a level or two above. Easier said than done. Not the spending less part, that is relatively straight forward. Or even the earning more. It can be done too.

When your heart isn’t fooled by thinking financial comfort lies just a few levels up, only to have your “perfect income” line moved on you yet again.  But can you arrive at an income and say-even years later, “This is way more than I need. I have everything I want. Shoot, what would I even do with more income?” If so, you have just beat the Walden Theory!  Financial freedom will be quick coming my friend.

My Walden Chart

Level         Income per Year

  1.          8,000
  2.          14,000
  3.          18,000
  4.          24,000
  5.          30,000
  6.          35,000
  7.          43,000
  8.          50,000
  9.          61,000
  10.          75,000
  11.          90,000
  12.          105,000
  13.         125,000
  14.         140,000
  15.         160,000
  16.         185,000
  17.         220,000
  18.         260,000

As a personal side note, our household income over the last 14 years has hit every level between 1-10. At every level, we saved a bit and gave a bit. There has honestly been little correlation between what level we earned in a given year and how happy we were that year. The small amount of correlation would be in the higher-earning years; we were a bit more stressed, maxed out with our jobs, and had less time for fun, travel, and friends.

What are your thoughts? Have you managed to beat the Walden Theory yet? Look at where your household income falls. How do you think 4 levels below or above would feel? By the way, I totally made up these numbers. I swear I read this someplace about 3 years ago, but for the life of me, I can’t find it.