On many occasions, Buddha himself said that your mind creates, shapes, and experiences everything that happens to you, without a single exception. That's why, from the Buddhist point of view, what goes on inside you (in your mind) is much more important in determining whether you're happy or miserable than any of the outer circumstances of your life.
Hold it right there. Does what you just read sound reasonable? Do the inner workings of your mind really have a greater effect on you than, say, your possessions or your surroundings? After all, big companies and advertising agencies spend billions of dollars every year trying to convince you that the opposite is true! In their eyes, your best shot at achieving happiness is to buy whatever they're selling. They appeal to the "if only" mentality: If only you drove a fancier car, lived in a bigger house, gargled with a stronger mouthwash, and used a softer toilet paper — then you'd be truly happy. Even if you don't believe everything advertisers tell you, don't you believe that the external conditions of your life determine how well off you are?
You should get into the habit of asking yourself these types of questions when you come across new information. Investigating points brought up in a book that you're reading or in teachings you receive isn't an intellectual game or idle pastime. If done properly, such questioning becomes a vital part of your spiritual development. As Buddha himself indicated, merely accepting certain statements as true while rejecting others as false without examining them closely doesn't accomplish very much.
In this case, examination is particularly important because the questions concern the best way to live your life. Should your pursuit of happiness focus mainly on the accumulation of possessions and other "externals"? Or is primarily devoting yourself to putting your inner house in order the better way to go?
To get a feel for how you might go about examining this issue, consider the following situation. Two friends of yours, call them Jennifer and Karen, take a vacation together to Tahiti. They stay in the same luxurious guesthouse, eat the same food prepared by the same master chef, lounge on the same pristine beaches, and engage in the same recreational activities. But, when they get home and tell you about their trip, their stories sound like they vacationed in two completely different worlds! For Jennifer, Tahiti was heaven on Earth, but for Karen, it was pure hell. For every wonderful experience Jennifer brings up, Karen tells you about two awful ones. This situation is hypothetical, of course, but doesn't it sound familiar? Hasn't something like this happened to you or your friends?
Consider one more scenario. During wartime, two friends get thrown into a prison camp. As in the previous example, both soldiers end up in identical situations, but this time, the outward conditions are miserable. One soldier experiences extreme mental torment due to the horrible physical conditions and ends up bitter and broken in spirit; the other manages to rise above his surroundings, even becoming a source of strength for the other prisoners. True stories like this scenario aren't rare, so how can you account for them?
These examples (and relevant ones from your own experience) demonstrate that the outer circumstances of your life aren't the only factors — or even the most important ones — in determining whether you're content or not. If external conditions were more important than the condition of your mind, both Jennifer and Karen would've loved Tahiti, both prisoners would have been equally miserable, and no rich and famous person would ever contemplate suicide.
The more closely you look, the more clearly you'll see (if the Buddhist teachings are correct on this point) that your mental attitude is what mainly determines the quality of your life. This is not to say, however, that your outer circumstances count for nothing, any more than a person has to give away all of his or her possessions to be a sincere spiritual seeker. But, without developing your inner resources of peace and mental stability, no amount of worldly success — whether measured in terms of wealth, fame, power, or relationships — can ever bring real satisfaction. Or, as someone once said, "Money can't buy happiness; it can only allow you to select your particular form of misery."