Money Well Spent: How Dentists Can Buy Happiness - Part 1

In this episode of the Dental Boardroom Podcast, host Wess Read, CPA and financial advisor, explores how money impacts happiness, especially for dental practice owners facing financial stress and responsibility. Drawing on landmark studies by Daniel Kahneman, Angus Deaton, and Matthew Killingsworth, Wess uncovers the surprising truths about income, emotional well-being, and life satisfaction and how dentists can build both wealth and contentment.

He explains that while money does increase happiness, it does so only up to a point, and then its effect plateaus. Beyond that threshold, happiness depends less on income and more on mindset, purpose, and how money is used. He warns that chasing more income without aligning it to personal values can lead to burnout, not fulfillment.

This episode helps dental practice owners reframe how they view money as a tool, not the driver and offers practical guidance on creating both financial security and happiness.

The episode breaks down five key concepts:

• Emotional well-being vs. life satisfaction
  
  • Emotional well-being (daily happiness) improves with income until basic needs are met (~$100K), then flattens.
    
  • Life satisfaction (big-picture fulfillment) continues rising with higher income.
    
• Diminishing returns of income
  
  • Above ~$200K especially in high-cost areas like San Diego, extra income produces smaller happiness gains.
    
  • More money reduces stress, but doesn’t guarantee joy.
    
• Dentists’ unique challenges
  
  • High student debt, business pressures, and lifestyle expectations create financial anxiety.
    
  • Intentional planning, not just earning more, drives peace of mind.
    
• Money amplifies your mindset
  
  • Quote from Epictetus: Wealth consists not in having great possessions, but in having few wants.
    
  • Quote from Ayn Rand: Money is a tool. It will take you wherever you wish, but it will not replace you as the driver.
    
• Purposeful financial planning
  
  • Align spending with values and long-term goals.
    
  • Build systems that reduce stress, provide security, and support a balanced life.
    

Key Points

• Money increases happiness only until basic needs are met; after that, returns diminish.
  
• Life satisfaction rises with income, but daily happiness levels out.
  
• More income alone doesn’t solve unhappiness; mindset and purpose are crucial.
  
• Dental practice owners face unique financial stress that requires intentional planning.
  
• Use money as a tool to support your values, not define your success.
  
• Build wealth through consistent habits (saving, reducing taxes, managing expenses).
  
• True fulfillment comes from aligning financial choices with personal priorities.

Transcript

Wes Read: [00:00:00] Welcome everybody to another episode of the Dental Boardroom podcast. It's Wes Reed, your host coming at you. And today I wanna talk about the relationship between money and happiness. As a dental practice owner, you've taken on a lot of responsibility, a lot of debt, and a long journey to get where you are today.

And one of the things that you are aspiring for is financial security. We all want to feel a sense of purpose in our job. I get that, and we all wanna really enjoy each day of what we do. However, at the end of it, we need to feel financial security. Financial security does have a close relationship to our sense of contentment and wellbeing.

And so I want to talk about that relationship a little bit today. So I've been working with dentists since 2008, and I've seen. All ranges of financial success [00:01:00] among dentists, and it's actually remarkable how large that range is. There are dentists who literally would make more money working at In-N-Out Burger than running their dental practice and it speaks less about who they are and their competence and just a lot more about the challenge of what it is to run a dental practice.

But then I've seen people step up to that challenge. Become very intentional about they are the way they run their business, the way they self-educate, the way that they learn communication and leadership skills. And I see that those practices produce remarkable levels of wealth in dentists as well. We have dentists who have over $10 million of saved assets in their early sixties, and that came because they learned those characteristics of what it means to be a great business owner.

And they coupled that. With a systematic way of reducing expenses, taxes, and [00:02:00] saving consistently. It's the combination of all of that that produces incredible financial security. So what I want to talk about today are the following. Number one, what does the research say about the relationship between money and happiness, and how does it apply to a dental practice owner?

And I wanna be nuanced about this. I don't want just the generic. Kind of tone that money doesn't buy happiness. There's a lot more to that conversation than that one. A quote I think of often is, money is a tool. It will take you wherever you wish, but it will not replace you as the driver. And that's by a rand, and that is very true.

Money will get you a lot of places. Ultimately the destination is your choosing, and there are a lot of destinations that the money will get you to that actually will create a significant amount of unhappiness if we're not careful with our intentionality of the [00:03:00] effect of money in our lives. So we're gonna talk about what the research says.

We're also gonna talk about the sources of financial stress for a dentist, and then I want to talk about some of the characteristics of millionaires. In our country from a very famous book called The Millionaire Next Door by Thomas Stanley and William Danko, and I want to tie those two together. How does that book and the characteristics of millionaires relate to specifically dental practice owners and all of the sources of financial stress that they have?

Then in a subsequent podcast episode, I'm gonna talk about how to spend for happiness. There is an efficiency of. Acquiring happiness through the way that you spend your money. And then lastly, I'm gonna talk about aligning money with a purpose. Alright, so let's dive into this. What does the research say about the relationship between money and happiness?

Well, I'm gonna quote two [00:04:00] studies here. One is a study from. Kahneman and Deaton in 2010. And there have been a lot of studies, as you can imagine on this subject. And as a certified financial planner, I read a lot journals in my space, um, around financial planning for people, the consequences of wealth, how to manage wealth strategies, tactics, all that stuff.

That's just what I, I live in, that's what I swim in every day as a CPA and a financial advisor helping our doctors, um, approach their strategy of financial independence. The first one, Kaine in 2010, this was, uh, a survey. It analyzed 450,000 responses, and there were two things that they were measuring.

The first one was emotional wellbeing, and this is simply your day to day happiness. And the second measure was life evaluation. What was the overall satisfaction as they thought about their life? These respondents? So those [00:05:00] two things, emotional wellbeing. Life evaluation. And here's the key takeaway. I'm just bottom lining this emotional wellbeing being rises with income up to around a hundred thousand dollars today.

And that's sort of where we are with inflation since that study, which was in 2010. Beyond that emotional happiness plateaus, though the life evaluation continues to rise. So I have a few thoughts on this takeaway. The first thing is, and I want to emphasize or decouple the difference between your emotional wellbeing, which is that day-to-day happiness and how you're viewing yourself in the context of a broader life experience.

And that the takeaway from this is in, in my own words, it's that your emotional wellbeing is affected when you simply don't have enough take home income. To support your life and your needs. [00:06:00] However, after a certain point, which to me feels relatively low, at a hundred thousand dollars, after a certain point, your day-to-day emotional wellbeing doesn't rise according to this study.

However, as your income goes up to a hundred fifty, two hundred, three hundred, 400,000, plus your life evaluation, how you view yourself as you go through life. That continues to ride May. Maybe that's a self-confidence thing. Maybe it allows you to do sort of more hobbies, more travel, more experiences, and that elevates the experience that you're getting out of life.

But in terms of your day-to-day happiness, interestingly, the study says it actually has. Very little effect on that. Now, my second comment is, like I said, a hundred thousand dollars feels very low. I'm sure that where you live in the country matters on this here in San Diego, I'm sorry, a hundred thousand dollars.

If you're trying to raise a family, even in a dual income home, it is extremely difficult to do that. If you're not making [00:07:00] at least two to $250,000 in these high cost areas where a very basic home is gonna cost you 1.5 million. And if you wanna live in the slightly nicer part of town, you're probably gonna pay two to two and a half million in a house.

So it becomes very difficult. And this is something that I predict is gonna change over the next 10 years because it is completely, housing is completely inaccessible for people like my kids 18, 20 and 14. For them to come outta college, let's say they come outta college making a good income, and let's say that's $75,000, which is good income coming outta college to go buy.

A house anytime soon ain't happening. That's why essentially it has to be subsidized at some point. Gravity takes hold and things come back down to reality. I don't know when that's gonna be, but I do think with housing, things have to change. There's a bigger conversation there. I could have a whole podcast on why housing prices are up from international investors to large [00:08:00] mutual funds like BlackRock, buying up a ton of real estate and private property, and it's just jacked the prices up.

It's a, it's an issue. But going back to the study here, a hundred thousand dollars. Now again, that fills a load to me. I'd say here in California, um, certain parts of California really should be at 200,000 plus. You think about the journey you went through all the years of school, the student debt, all of the kind of emotional burden of starting and running a business.

All of that. I'm telling you, it's gotta be higher than that. But that's what the study says. That's what the study says. And if you think about that, think of somebody you know who's probably making around. A hundred thousand dollars. And are they able to have an emotional stability, kind of a, a day-to-day wellbeing with that?

I think so. As I think about people that I know, they, you know, they, they may not live in a big house. They may not live in a house at all. You know, it might be an apartment, which is totally fine. It might be driving an older car. But as I think about those people, and I compare them to people I know [00:09:00] who have a lot more wealth.

I honestly don't see much of a differentiation in just the general day-to-day wellbeing. Now, I don't necessarily have deep talks with these people I'm thinking of every day, and so I could be wrong in that, but that's just my general observation that I'm extrapolating a little bit out of this study.

Let's go onto the second study, and this one is Daniel Kahneman and Matthew Killingsworth 2021. So this is really a follow-up study to that first one. So in this one, they track 33,000 working Americans via a smartphone app. It's sort of the simplified method, and unlike the 2010 study, this study found that happiness continues to increase with income well beyond the, at the original study, $75,000 inflated to a hundred thousand dollars today, but the increase slowed down and that's called diminishing returns.

Diminishing returns. If you took a an economics [00:10:00] class, you'll hear a lot about marginal utility diminishing returns, those, those kind of concepts. Well, this one makes a lot more sense to me because if I'm making $75,000 a year or I'm making $400,000 a year, there's definitely going to be an ease financially speaking in my life that creates.

A lot more breathing room. Now, of course, that does depend on my spending habits and I'm gonna get there. But spending habits, all things consider being relatively the same. I'm gonna breathe a lot easier, I'm gonna sleep a lot easier, and that will, I think, reduce anxiety and just have a more. A better emotional wellbeing from day to day.

However, I think it is very true that for every incremental increase in income, there's not a one for month one incremental increase in your day-to-day happiness. And so that's called diminishing returns. So if you go from a hundred thousand dollars of income to $200,000 of income, you're not [00:11:00] necessarily doubling your emotional wellbeing from that increase.

You might be seeing a 20% increase on your emotional wellbeing. Now, I'm completely ballparking that, but that's just what my sense tells me as a financial advisor and in my own life as well, because I've gone through that whole chain, that whole journey. When I started practicum, in fact, my first year of business when I left.

I, um, I, when I left the big accounting firms and I started my own business, I went, this was back in 2009. I went from making about $115,000. That first year I made $29,000. Second year I made about $49,000 and about $80,000, and I had a stay-at-home wife with three kids. And, uh, for a period of time I was living in southern Oregon.

So that did help. However, I remember filling intense amounts of financial insecurity during that period of time because. I sort of launched into this, [00:12:00] I'll, I'll say, um, a goal or a kind of a professional dream to be a business owner, as many of you dental practices are. And I, at the time, you know, I couldn't get a loan, I had to pull from my Roth IRA actually to get through those early years.

However, one thing I love about our capitalistic system, it rewards entrepreneurs. And if you are diligent and you stick to it and you learn the characteristics of what it means to run a tax idea business with checking accounts and credit card accounts and debt and taxes and HR employees and marketing and compliance costs and all of that stuff, it's like this whirlwind of.

Of just stress buttons all over the place. And you really have to learn how to kind of harness what are these requirements, create processes around them, delegate, and then you start to experience the benefit of what it means to be an entrepreneur and a business owner. And I'm gonna get a little bit more to those characteristics, [00:13:00] um, in my next podcast on this subject because I want doctors to find value and beauty as they increase their income.

I want them to have key characteristics of income generation as a dental practice owner, which I highly encourage. If you haven't listened to my, I think I did 10 episodes or so on dental financial planning for a practice owner. I go through what are the four main stages of accumulating a wealth through an effective financial planning system.

Alright, let's come back now here to these studies. So the nuance for this second study in 2021, which was a follow up to the 2010 study, and again, this is Kahneman and Deaton. These are Princeton University professors. This was a study that came outta that university. The nuance was this, for people who are unhappy to begin with, money doesn't fix deeper issues.

For those generally content, [00:14:00] higher income adds incremental happiness. That's the takeaway right there. Beyond that, how you use money matters more than how much you have. How you use money matters more than how much you have. All right. Here's a quote from Epic. TEUs, wealth consists not in having great possessions.

In having few wants. I actually love that. I remember, I remember going off script here a little bit, but I remember when I worked for my first wealth management firm, this 2008 company called Moss Adams Wealth Advisors, and I was talking to an individual whose name I won't mention, but he worked very closely with Steve Jobs at Apple and his job was to set up all of the stores and their.

They're venues whenever they do new product releases. So they're shows. And as you know, apple has a very unique, chic, [00:15:00] slick style, uh, in their stores, and it's made them, it's a very catchy look. And so this guy was very much beloved by Steve Jobs and he made a lot of money and he, I remember he was a fairly down to earth guy though in his living, but he had accumulated quite a bit of wealth.

And he had rental properties and he had of course, a, an investment portfolio and various things, and I remember him saying, I never understood, and I never would've forecasted how difficult it is and how much time it takes to preserve wealth. Once you have it, you know, you think you just work so hard, you get it, and then it kind of does its thing without any effort.

However, when you start to grow a lot of wealth and you start to owe a lot of thing, own a lot of things, it in a interesting way, it adds a complexity or layer of complexity to life that now you have to manage. If you have a a second home, trust me, you're [00:16:00] gonna fill an obligation to go to that home. And I know when you conceptually think about buying that se second home, you're like, oh, it'd be so nice to have a place I could fly to on the weekends or drive to on the weekends and get away.

And that's true. And, but sometimes I have heard this. Now I personally don't have a second home, but I have heard this, that people who have a second home often feel this obligation that now they need to go there because, well, they're paying a mortgage on it. And in some small way, yes, there's gonna be a nice satisfaction that you drive outta that, but in a small way, it can start to own you a little bit and make you feel that obligation.

If you get a third house, you get, you know, more cars, whatever it is, you get more things, you start to fill an obligation to use them. And they go beyond just providing that extra satisfaction to having that extra element in the life. I know when I go outta my garage and I see certain things that I haven't used in a few years, I maybe used them once I start to question what is it worth it to buy that particular thing.

Wealth consists [00:17:00] not in having great possessions, but in having few wants. I think there's something to that statement. Let's go on to segment two here. Sources of financial stress for dentists. I could talk about this a lot, but really I'm gonna just spend about five minutes on this subject. Unique challenges for practice owners.

Alright, so you go to dental school and you come outta school with four to 600,000. Very common range these days for dentists coming outta school. If you're a specialist. You may be coming out of school with more debt than that. I've seen over a million dollars in student loans for certain oral surgeons coming out of certain schools, and that debt starts to fill heavy.

Secondly, you buy a practice and you take on additional debt, and then you have payroll and you have people who are relying on you for their very living. And so you have all these obligations of people who are not only [00:18:00] vying for your dollar, they are literally. Demanding you are required. You have no out unless you want to sell your practice, walk away, maybe file bankruptcy.

You have no out. You have to make these obligations. The last thing I'll say is what I call lifestyle creep. You come outta dental school, you have pent up consumerism and you wanna buy a bunch of stuff. And as a dentist, you're naturally motivated. You are a goal setting, naturally motivated person. And you like you're probably competitive.

And competitive. People like to keep up or like to be ahead even. And a lot of times this is very difficult to untether ourselves from this psychological aspect of life that the things that we display, house, car, jewelry, what clothes, handbag, whatever, it's tend, we tend to feel that these are reflections.

Of our success. Now, I am [00:19:00] not going to dish on the handbags. I know you women, you love those handbags and they're amazing handbags, and I don't want, i, I want you to enjoy some perks. You deserve to enjoy some perks, so don't, don't read into this too far. My main point here, and I don't think that this was, is debatable that people view our success financially simply by what they see.

That's because sometimes we are shallow in our understanding of what success is, but a lot of people have more displays of success than they have actually earned. IE. They have a lot of debt, or perhaps they've inherited some money, but the main point there is that life creep is a real thing. And incrementally, you take on this loan, you get this additional car, you buy this.

You're not setting aside savings. Your emergency fund is really low in and out of the practice, and that lifestyle creep keeps you living on the edge. [00:20:00] So student loans, practice loans you could throw on home loans, car loans, an incredible amount of debt. Dentists have an incredible amount of debt. It's not like you come outta school with $30,000 of student loans and you go get a W2 job and you know you're good.

There's a tremendous amount of debt that you have. You have elected a lifestyle. That comes with it. A lot of debt. Now you can control a certain amount of debt, but a certain amount you can't control. You're gonna need a loan most likely to buy a dental practice, and you most likely needed a loan to get through dental school as well.

Alright, so now I wanna do a research tie in how this sort of relates to that. Happiness increases when money does the following. When money reduces stress, that's when you get the most incremental gains. Out of your money. It's not necessarily that nicer car or that bigger house or that, you know, extended trip or that cruise.

Those add an element of joy and in the experience. However, [00:21:00] when money makes the most impact is when it reduces your stress and the reason why this is absolutely vital to understand and gimme one sec. I'm supposed to have a meeting right now. Lemme just let her know I need a few extra minutes, a few extra.

Thanks. Okay. This is, this is the main point I wanna make before I, I, I try to stick to landing with this in this episode. When you have an extra dollar, one of the most important things a good financial planner will do is they will help you think clearly and in a disciplined manner about how you allocate that dollar.

To the various demands upon you financially speaking, and when life is good, the economy's good, patient flow is consistent and everything feels stable, it's very easy to take that extra dollar and go and use it [00:22:00] to buy a want instead of adding it to an emergency reserve fund or a savings account, or building your, your business checking account balance.

To feel more comfortable at night because we rationalize, oh, I'm in a good state. Nothing's gonna change this. My practice is, is producing well. Everything feels very consistent. Well, guess what? Life will absolutely change sometimes for the better, but sometimes it's gonna change for the worse. And it's my opinion, it's actually not an opinion.

We will go through a down cycle economically. This is not. A statement about the current environment. It's not a statement about politics. It's not a statement about the one big beautiful bill or the Federal Reserve. It's simply a fact that economies go through cycles and they have these very large cycles of a hundred years of a very leveraged debt cycle.

And then there's about every eight years or so, there's sort of your routine up and down cycles in the [00:23:00] economy. Now we have been flooding the zone. We have been flooding the economy with printed money for a very long time's. Kept afloat our sense of wellbeing and financial growth in an an incredible amount.

But at some point, at some point it has to come to a place of sustainability and the national debt is not at a place of sustainability. We had essentially free money for a long time when interest rates were so low. So there's an incredible amount of debt out there as well, and there's a lot going on that inevitably there's going to be significant changes.

Are you prepared for that? Think hard about that. If your collections dropped by 50% for six months, what would you do? How much money do you have in your business checking account or savings account to help you weather that storm? Now the truth is, in COVID there was some, [00:24:00] that was an example of this. The government stepped in and provided huge amounts of money to dental practice owners through the PPP, the EIDL, the Health and Human Services grants.

The, the, the government grants, the ERC employee retention credit, I mean, incredible amounts of money were dropped into the marketplace to keep things afloat, and we increased our national debt. As a country by about $5 trillion because of COVID, it was very expensive and we can't keep doing that. So imagine if your practice had to go through that type of event, but didn't have sort of the government support and you had to shut down so much of your business, how long could you weather that?

This is what an emergency reserve is for. And I promise you, if you were to increase your emergency reserve, most of you probably have, you have something in the bank. A few of you will have a lot in the bank. Most of you'll have something in the bank and a good portion of you will have very minimal in the bank.

How much [00:25:00] you have in that bank is a significant, has a significant effect on your day-to-day sense of ease and anxiety reduction around your money. That is a fact. I've seen this over and over and over. People call me nervous when their cash balance is really low. Am I gonna make payroll? Am I gonna make rent?

Am I gonna be able to pull enough money out to support my personal needs? Am I, am I gonna be able to pay my debt? All of those questions, when you have a, a, a sufficient working capital base in your practice, which I usually say is about a month of total collections, or in your personal account, somewhere around six months of fixed living expenses, you are going to feel so much more at ease.

So. What can you do with your dollar to get the most incremental value? When it comes to happiness, it's to make sure, first, you have a very robust emergency reserve fund [00:26:00] personally and a working capital base, which is essentially an emergency reserve fund in the business. That is the most beneficial thing you can do.

Above that, starting to consistently save money in your 4 0 1 Ks or IRAs or brokerage accounts, then takes another level of cushion and increase to your sense of financial security. I know this may sound rudimentary and basic it is, but I can't tell you how often the lack of discipline exists in humans, not just dentists in humans, to build up that emergency reserve fund in and outta the practice to create that sense of stability.

Alright. The next thing I'm gonna say is happiness increases money when it is used to reduce stress. Now, for dentist, number one, build that emergency reserve fund number two is start to delegate financial complexity, accounting, payroll planning, bill pay, things like that. [00:27:00] Less is more in this case. And what I mean by that is if you can live on less, if I go back to that quote from Epictetus, if I say that right.

Wealth is sort of having few wants. If you could go back to that and live longer as you're building your career or just have fewer needs financially and therefore you are able to retain more money in your practice and you can use that additional money to delegate. To hire a great roster of people.

Gosh, how important is that? I don't mind. If you pay 15% above market. If you have somebody who's simply 50% better than your average employee, trust me, you're gonna get an ROIA return on investment on that particular employee. But if you can hire great people and pay for great people, and you can hire a good consultant, you can hire a good external CFO to help you with financial organization and planning and tax minimization if you're able to use some money.

To, you can't think of it as an expense. The, your employees, try not to think of them as as an [00:28:00] expense. You are a good CPA or financial advisor. Don't think of it as an expense. Don't think of a good consultant as an expense. These are investments. Why? Because investments have return on on those investments and you need to do two things, get your collections up and re maintain your overhead and taxes such that your net take home ends up being a strong number.

As a business owner, you've gotta be so intentional about hiring, about your processes, about your system of delegation, and how you motivate your team. These are the business skills I was talking about at the beginning of the podcast, that as a business owner, life is probably, the business is probably gonna own you and you're not gonna own it if you don't figure out those aspects of business ownership, hiring, well leading processes, delegation and motivation.

All that to say all that, in addition to Better said all that, in addition to being a really good clinician, [00:29:00] and I know it sounds like a lot, but you're very, very capable people. So dentists are some of the most capable people who walk the planet. The amount of education, the devotion, the goal setting. Uh, I don't know of many dentists who can't learn these things.

It's just a matter of being intentional about it and setting aside the time to do it. They can feel important but not urgent, and therefore, like many things that are important but not urgent, they don't get tended to. Lastly, guard against overspending in your life. I know I've talked about that, but be very, very disciplined and intentional about how you spend every time you spend money on something that's a little more maybe a premium or maybe we're eating out a lot or.

What Airbnb you're gonna get, or hotel stay or vacation stay, or car you're gonna buy, of course house. That's a massive one. Ask yourself, how important is this that I have this? And how much emotional sacrifice am I gonna have to give [00:30:00] in order to sustain this purchase? How much emotional sacrifice am I gonna have to make?

Okay. Here's my last quote on this, will Rogers. Too many people spend money they haven't earned to buy things they don't want to impress people they don't like. Will Rogers, just like I said earlier, look in your garage, look around, what have you bought that's got very little use that at the time that you bought it seemed great.

Maybe other people had it and you felt it would incrementally make you that much happier and in the end, or the most part was just money deducted out of your account with marginal return on that. If you're like most people and like me as well, there are definitely items in the garage that reflect what I did.

Which means I probably fell victim a little bit to this. Too many people spend money they haven't earned to buy things. They don't want to impress people that they don't like. With that, everybody, we're gonna conclude this one. In the next episode, I'm gonna go over what are [00:31:00] the characteristics of millionaires.

Then I'm gonna go over how to spend your money to maximize happiness, and how do you align money with a given purpose. Until then, have a great one.