The Walden Theory

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 fairly 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 every thing 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 house hold 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.

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38 thoughts on “The Walden Theory

    • Thanks! How do you think you would feel 5 levels up or down from your current income? Or have you picked your “spending” level and can just stick with that no matter the income level?

      • I would feel better 5 levels up vs 5 levels down, haha, but I could manage with either if need be. My daily *lifestyle* is the most important part to me and the source of how happy I am or not. So the money matters up to the point of being able to sustain a relaxed life, but doesn’t incrementally add too much more except perhaps once financial freedom is met and then I don’t have to do certain things for money anymore 🙂 But interesting stuff to think about for sure.

  1. Great article! Having experienced multiple levels of income over the years due to changing jobs, divorce, moving, etc., I am still trying to overcome the idea that “everything will be ok” if I just reach that next level. Even knowing that when I was there, it didn’t equate to happiness.

    • So true! Every year I am tempted to think that things would be easier, or a bit more fun, or have more breathing room with “just a bit more”. But I have to bring myself back to gratitude and contentment or else I am just constantly striving for an ever moving line. At every level I work to find a “it’s more than enough” mindset so I can truly appreciate all the amazing things in my life. Cause most of them have nothing to do with my income. =)

  2. I have never heard of the Walden Theory before reading your article, but you explained it very well! I think another fitting name could be, “Keeping Up With the Jones’ Theory”, in that it compares a perceived happiness (or lack there of) with ones income to that of other people. Unless we learn to truly be content and live on less at any level, we will miss out on the peace that comes from financial freedom.

    I read a book last summer that has challenged my thinking about many things, including my possessions and money. Because of this book, my eyes have been opened to the ridiculous excess I have been drowning in for years. At times, we have lived beyond our income. Now, as my husband recently took a new job and a pay cut, we sold our 2000 sq. ft home and are temporarily living in a home with less usable space. As stressful as this situation is, it has also been a blessing in disguise because I am tackling this excess, and truly evaluating what I need, want, or can part with…..I am learning indeed that less is more, and whether we’re at level 2 or 22, I want to live well with the things that money can’t buy, spend less on things by evaluating if we really need to bring it into our home, and journey to a personal and financial place to experience the freedom to give out of a grateful and content heart.

    • “whether we’re at level 2 or 22, I want to live well with the things that money can’t buy”
      This! So good. There are so many great things in our lives, almost none of them are “stuff”. I want more of all those things. Time with friends, adventure, fun, back yard bbq, reading a good book.

      • Hi Kim, the book was “The Life Changing Magic of Tidying Up” by Marie Kondo. I come from a long line of “sentimental” hoarders, with lots of good intentions for possessions & someday projects, what ifs/save it cuz I might use it/need it/fit into it again someday, etc. I’ve been feeling like I’m drowning in stuff my whole life, and now I’m seeing how that way of living is passing onto my own children and I don’t want it to! We could very happily live with half or less of our possessions and be free in so many ways! Sorry for the long response, but this book really challenged me and continues to as I sort through a ridiculous amount of unpacked boxes! Ha! Read it if you want some
        good inspiration!

        • I’m working on a post right now called “Everything I own is a burden” about our process towards a more minimalist lifestyle. It’s a painful and long journey. But we are starting to see the light at the end of the tunnel. I am also trying to create a minimalism challenge to help give some direction for being trying to simplify their lives.

          • This too is what I think I’m trying to accomplish. It reminds me of another book that I’ve heard a lot about…I’ve been wanting to read this one as well, but it’s one that will make us uncomfortable and require some life changes if we are going to truly be challenged by it. It’s called “7: An Experimental Mutiny Against Excess”


          • The Hubs really wants a shed. I agree it’s probably a good idea. BUT there is no way I am adding storage space until we have actually dealt with the excess.

  3. I absolutely struggle with thinking that a few levels up in my income would really make things ok. Everything is so tight all the time. You are right, though, that our perceived needs expand to take up the money we have, no matter what level we are at. That’s why very wealthy people can be so discontent. Do you think we can be content while attempting to grow toward a higher income? Like ok with the “now,” but actively working toward goals for the future?

    Part of my struggles a little with this post too. I’m wondering if you’re saying that people in poverty just need to be content where they are. (I’m guessing that’s not what you’re saying, but it kinda sounds like it.)

    I am reminded of a Bible verse from Proverbs 30:
    “Two things I ask of you, Lord;
    do not refuse me before I die:

    Keep falsehood and lies far from me;
    give me neither poverty nor riches,
    but give me only my daily bread.

    Otherwise, I may have too much and disown you
    and say, ‘Who is the Lord?’
    Or I may become poor and steal,
    and so dishonor the name of my God.”–Proverbs 30:7-9

    • Such a great comment. Thank you! As to your question. “I’m wondering if you’re saying that people in poverty just need to be content where they are.” I think it is great to have big dreams and goals. To want more from your life and for your family. We have big dreams. But if people aren’t able to live below their means, they won’t get ahead. They will always live paycheck to paycheck, and struggle to make those ends meet. That is a hard way to live. And it happens at every income level.

      So in a way I mean the opposite. Want good things. But you can only get there by living below your income. Maybe that means earning a few levels up, or spending less. But if a family earns 25k a year, and spends 26k they won’t get ahead. If they start earning 47k a year but spending 49k they won’t ever have any financial freedom. Instead they will always feel stressed out and broke.

      I want people to find freedom and contentment. I love this quote by Charles Dickens. “Annual income twenty pounds, annual expenditure nineteen six, result happiness. Annual income twenty pounds, annual expenditure twenty pound ought and six, result misery.”

  4. What a great perspective. One cannot put a price tag on the value of time and joy. This harkens much gratitude for all I have. Thank you. It inspires the power of choice in financial decision making.

    • Yes! The “power of choice”. We all make dozens, if not hundred of choices each day. If we convince our self that there is no way to make different choices, we give away all our power to change situations.

  5. Interesting article. It reminds me that, during what I consider the best year of my life, I earned $13k.

    • The first year we were married we made about $12k. Like first years of marriage often go, it was magical. We were in collage, lived a stone throw from all our friends, went out to the dollar movies. We had few work stresses, lots of time to have fun, virtually no appointments, meetings or responsibilities. Thanks for stopping by!

  6. What a great way to look at this. We have definitely lived 2-3 levels below but to look at it in the way you have laid it out is great. Awesome post!

    • Thanks so much for stopping by! I love having the extra flexibility that living below our means enables. If we postpone “happiness and contentment” till we have “more”, we won’t ever arrive. The lure for “more” can keep anyone broke.

  7. As I recall, research says that happiness and income are connected up to about $75k. Personally I think that number is too high. Once a person earns enough to eat, buy utilities, and have a water-tight roof over their head, I think stress is less and contentment more. Those who think they just need more ‘stuff’ to be happier, are delusional, I think. Doesn’t work. Best to read up on ‘hedonic adaptation.’

    • Thanks for the comment! “Those who think they just need more ‘stuff’ to be happier, are delusional” This is so true and gets in the way of so much happiness. People really think that more money will fix the problems, but you are right: after basic needs are met the correlation drops off. I’ve seen people broke at every income. And it’s stressful to be broke.

  8. Folks at lower incomes are in shock when real Income taxes kick in at 25 to 40 % plus state tax, SS & medicare. In 1990 my wife started out of residency at 150k and I made 60K. Our taxes were 90k. Back then no deduction for student loan interest.
    Now we are retired first year my pension is 50K plus 45K from 401k , we pay 16.3 k in taxes Federal & Maryland income taxes. Taxes is always largest expense of successful people. We have significant savings with pension , future SS and withdrawal of savings we could be in 50 % tax bracket again. Do not forget property taxes, sales taxes and all those other taxes. Government gone wild. Perhaps time for the economy to economize. This article is kind of silly from a real life experience point of view. Keep Smiling letro

    • Sounds like you would love Montana! We have more Libertarians than you can shake a stick at. Just this week we met the guy who did all the concerts for the Ron Paul campaign. Plus no sales tax. =)

      • Ms Montana Hi, Interesting Montana and Maryland Income and property taxes in my Talbot county are about equal. The analysis of moving to another state is always complicated by property tax. We currently analyzing and exploring FLA by rental in retirement community Terra Vista for second year. Since retirement we traveled one month Grand Cayman scuba, one month FLA and 2.5 months Hawaii scuba. Endless summer done last winter.
        The keys to our success were to study a profession with passion and support each other thru the long process. We both started working at age 10 so we had specific ideas of what not to do for a living. So we were happy to be solo OB/GYN / integrative Physician and electric company Chemist. Other keys rent what you need and enjoy. We saved 50% from 1985 to 2015 during the epic stock market appreciation. In our late 40’s we bought a house 2100 sqft, 2 acres, one mile from town of my wife’s medical business.
        The income Walden idea is a moving target based on age and needs/wants. The various FIRE authors indicate 25k to 50k take home $ is enough for a great life style. Yes I am a Libertarian 1. Gov out of personal life 2. Don’t waste my $, go Trump and Ayn Rand. Keep Smiling letro

  9. Based on my current financial goals, going up wouldn’t make things “perfect” but it would certainly help me achieve goals sooner. However, that comes with specific items that would be a deal breaker even at the absolute top – no salary would be worth living away from my family for example. I currently spend several levels below my income so going down would impact my savings, but not my lifestyle. In fact, I hope to happily move down all the way within the next 5 years!

    • That is awesome! We have had to make some of those same calls: get to our goals faster, or make time for the most important stuff. We do a bit of both. Some years we really hustled. We went 2 years with out having a regular day off together. Not fun. But it was a time to strike when the iron was hot. Now we are taking a full year off from paid employment. Thanks for stopping by!

  10. Excellent alternative view on the live below your income! I had no clue there was name for it. It sure feels true.
    My wife and I are very fortunate to have managed to channel any extra income towards saving and investing and not into more cars and a bigger house. Getting now 5 levels more of income would mean we add 4 of those to extra investing and probably one to extra experiences via travel!

    • I think we would do the same thing! A bit more to travel, and lots more for saving. Once you can spend a few levels below your income, things just feel better. Not so stretched thin or stressful. Congrats! And thanks for stopping by. =)

  11. Nice post! I recently changed my lifestyle and dropped my income about 3 levels. I also dropped my expenses and have never been happier! Working less and spending less has been a good combination for me!

    I started a blog too that discusses my pursuit of health, wealth and happiness. Check it out at

  12. Hedonic adaptation does lead us to getting used to our higher incomes and everything it can buy us. Worse is that it eventually doesn’t make us any happier.

    Best way to beat this or go down a couple rungs on your ladder would be to use stoicism and negative visualization I would think.

    But here we are us finance bloggers saying the same thing – spend less, save more, buy index funds, retire early. And everyone else just keeps spending away…

    • Sometimes when I talk to folks (in real life), I ask about the happiest year of their life. What made it so wonderful? What was it that brought the joy? It’s never the stuff or income. If we can live below our means, I really believe we can focus on adding more of the things that truly make us happy. But you are right, just buying more stuff is easier.

  13. This is interesting. At the moment, I have very little debt and am in the process of saving for two high-dollar items (Europe trip in the fall and a vehicle that I would like to pay mostly cash, if not all cash for). I have cut down on my expenses by changing my living arrangements (which is the cheapest I can find, short of living with my grandparents, which I don’t currently feel a grace to do). I will continue to be aware of my spending habits as my income changes. Over the last 5 years, I have gone between less than level 1 almost up to level 6. Although level 5/6 it seems like a lot for a single-family household but you are correct that it is easy to adjust lifestyle to what is earned. My hope is to be able to give more as I better steward my income and hopefully earn more! Thanks for writing intelligently and factually on this subject.

  14. I live on about half my income; the rest is devoted to a mix of retirement savings and giving to altruistic causes. In your framework, my annual spending (excluding donations) is about 5 levels lower than my annual earnings.

    It feels pretty nice. There is great peace of mind that comes not only from the savings cushion that is built up, but also from the fact that if I lost my job and could only find one that paid half as much, I would be just fine.

    • That is awesome! I think sometimes people believe they would feel deprived living so far below their means. But just like you said, that is entirely backwards. Having so much extra to save and give creates the feeling of being rich. Thanks so much for sharing!