Being happy with a salary today/tomorrow doesn't mean you'll be happy with the concessions you made yesterday. Being able to afford a house and kids doesn't happen as soon as you decide you want a higher paying job: it happens a decade later.
> Why would you think someone would be happy with their salary if they wanted to own a home & have kids, if that salary didn't let them?
I think the clear implication is that if someone didn't realize that a small amount of negotiation on their part could have made the difference between being able to buy a home or not, they might regret not having negotiated when they do realize it, regardless of how happy they were in the past with their salary.
Your interpretation is essentially "if you are as happy as you could possibly be, and a higher salary couldn't possibly make you any happier, then don't negotiate," which is logically valid but fairly unrealistic.
You said: life is too short to forgo being able to own a home or raise kids
Why would you think someone would be happy with their salary if they wanted to own a home & have kids, if that salary didn't let them?
Implicit in the caveat if you're happy are all of those the goals predicated on having a salary at a specific level.
If the salary won't let you afford a home & kids, you're not going to be happy with it. So you don't take it.