There aren’t many iron laws of money. But here’s one, and perhaps the most important: If expectations grow faster than income you’ll never be happy with your money. One of the most important financial skills is getting the goalpost to stop moving. It’s also one of the hardest. First, a little story about the 1950s. “The present and immediate future seem astonishingly good,” LIFE magazine’s January, 1953 cover story begins. “The country has just lived through what was economically the greatest year in its history” it wrote. It had done this with “10 straight years of full employment, through new management attitudes which include an increasing realization that the well-paid worker, who does his job under healthy and agreeable conditions, is a valuable worker.” Wealth came so fast to so many it was jarring. “In the 1930s I worried about how I could eat,” LIFE quotes one taxi driver. “Now I’m worrying about where to park.” If these quotes don’t surprise you it’s because the 1950s are so often remembered as the golden age of middle-class prosperity. Ask Americans when the country was at its greatest and the 1950s is usually near the top. Compared to today? Different worlds, no comparison. The overwhelming feeling is: It was better then. George Friedman, a geopolitical forecaster, summarized the nostalgia a few years ago: In the 1950s and 1960s, the median income allowed you to live with a single earner — normally the husband, with the wife typically working as a homemaker — and roughly three children. It permitted the purchase of modest tract housing, one late model car and an older one. It allowed a driving vacation somewhere and, with care, some savings as well. I know this because my family was lower-middle class, and this is how we lived, and I know many others in my generation who had the same background. There are two ways to debate a position: Asking whether it’s true and asking whether it’s contextually complete. This version of the 1950s lifestyle is true in the sense that the median American family indeed had three kids and a dog named Spot and a breadwinning husband who worked at the factory and so on. But the idea that the typical family was better off then than now – that they were more prosperous and more secure, by nearly any metric – is so easy to debunk. That doesn’t mean those yearning for the 1950s are necessarily wrong. It just shows that something else changed in the last 70 years that created a gap between what happened and how people feel about what happened. And that something else is not complex: America’s wealth grew but its expectations grew more. The numbers are not close. Median family income adjusted for inflation was $29,000 in 1955. In 1965 it was $42,000. In 2018 it was $63,000 (last year was higher but stimulus checks skew the data). Higher median income wasn’t due to working more hours, or entirely due to women joining the workforce in greater numbers. Median hourly wages adjusted for inflation are nearly 50% higher today than in 1955. LIFE described the 1950s as prosperous in a way that would have seemed unbelievable to someone living in the 1920s. The same is true today – a 1950s family would have found it unfathomable that their grandchildren would earn 50% more than they did. Some of today’s economic worries would have puzzled a 1950s family. Healthcare costs have indeed exploded in the last 20 years. But half of Americans didn’t even have health insurance in 1950, and two-thirds lacked “surgical insurance” to cover a major incident – which partly explains why 4% of Americans didn’t live to see their fifth birthday in 1950 vs. less than 1% today. Saving for retirement is a burden today, but in the 1950s the entire concept of retirement was a luxury reserved for the upper classes – 47% of men age 65+ were still working in 1950 vs. 23% today, to say nothing of how much more physically demanding a typical job was back then. Average Social Security checks adjusted for inflation were half what they are today; poverty among those age 65+ was nearly 30% compared with less than 10% today. The homeownership rate was 12 percentage points lower in 1950 than it is today. An average home was a third smaller than todays despite having more occupants. Food consumed 29% of an average household’s budget in 1950 vs. 12.9% today. Workplace deaths were three times higher than today. That’s the economic era we long for? Yes. And it’s important to understand why. Ben Ferencz had a hard childhood. His immigrant father didn’t speak English, was unemployable, and settled in an area of New York controlled by the Italian mob where virtually everyone faced violence. But Ferencz said none of it seemed to bother his parents. They were thrilled. He recalled: It was a tough life but they didn’t know it because where they’d come from it was tougher. So it was an improvement no matter what. The Ferenczs fled Hungary to escape Jewish persecution during the Holocaust. His family came to America on an open deck of a ship in the middle of winter, nearly freezing to death. Ben later became a lawyer and prosecuted Nazi war criminals during the Nuremberg trials, and today seems to be one of the happiest people I’ve come across. It’s staggering how expectations can alter how you interpret current circumstances. In 2004 the New York Times interviewed Stephen Hawking, the late scientist whose motor-neuron disease left him paralyzed and unable to talk since age 21. “Are you always this cheerful?” the Times asked. “My expectations were reduced to zero when I was 21,” Hawking said. “Everything since then has been a bonus,” he replied. If an abjectly terrible situation can be offset with low expectations, the opposite is true. Not long after the Times interviewed Hawking it interviewed Gary Kremen, who founded Match.com. At the time Kremen was 43 years old and worth $10 million. That put him in the top half of 1% in the country, and probably the top 1,000th of 1% in the world. In Silicon Valley, it made him just another guy. “You’re nobody here at $10 million,” he said. The Times wrote: “He logs 60- to 80-hour workweeks because he does not think he has nearly enough money to ease up.” The point here isn’t to say Hawking has the clarity of a monk or that Kremen was out of touch. Just that all happiness has its roots in expectations. And Kremen’s situation is by far the more common one. It’s natural. It’s so natural that an important question is wondering if most of us walk through life on the same path. Warren Buffett once told a group of college students that they all lived better than John D. Rockefeller: I mean you’re warm in winter and cool in summer and can watch the World Series on TV. You can do anything in the world. You literally live better than Rockefeller. His unparalleled fortune couldn’t buy what we now take for granted, whether the field is—to name just a few—transportation, entertainment, communication or medical services. Rockefeller certainly had power and fame; he could not, however, live as well as my neighbors now do. This is another one of those technically-right-but- contextually wrong problems. Rockefeller never had Advil or sunscreen or penicillin. But nobody today wakes up feeling better off than Rockefeller because that’s not how people’s heads work. People gauge their wellbeing relative to those around them. It’s the path of least resistance to determining what life owes you and what you should expect. Everyone does it. And goalposts move both ways: Sebastian Junger’s book Tribes details the long history of camaraderie during shared disasters, like soldiers during war and neighbors during natural disasters. Hardship is more palatable when everyone around you is in the same boat. Subconsciously or not, everyone looks around and says, “What do other people like me have? What do they do? Because that’s what I should have and do as well.” And this, I think, is a window into understanding why we yearn for the 1950s despite today being better by almost any measure. Paul Graham wrote a few years ago about what happened to the U.S. economy after World War II: The effects of World War II were both economic and social. Economically, it decreased variation in income. Like all modern armed forces, America’s were socialist economically. From each according to his ability, to each according to his need. More or less. Higher ranking members of the military got more (as higher ranking members of socialist societies always do), but what they got was fixed according to their rank. And the flattening effect wasn’t limited to those under arms, because the US economy was conscripted too. Between 1942 and 1945 all wages were set by the National War Labor Board. Like the military, they defaulted to flatness. Indeed, a few years after the war historian Frederick Lewis Allan wrote: The enormous lead of the well-to-do in the economic race has been considerably reduced. It is the industrial workers who as a group have done best – people such as a steelworker’s family who used to live on $2,500 and now are getting $4,500, or the highly skilled machine-tool operator’s family who used to have $3,000 and now can spend an annual $5,500 or more. As for the top one percent, the really well-to-do and the rich, whom we might classify very roughly indeed as the $16,000-and-over group, their share of the total national income, after taxes, had come down by 1945 from 13 percent to 7 percent. This went beyond income – even the variation in consumer goods flattened out. Harper’s Magazine wrote something in 1957 that was so important to the era: The rich man smokes the same sort of cigarettes as the poor man, shaves with the same sort of razor, uses the same sort of telephone, vacuum cleaner, radio, and TV set, has the same sort of lighting and heating equipment in his house, and so on indefinitely. The differences between his automobile and the poor man’s are minor. Essentially they have similar engines, similar fittings. In the ear...

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