Can Money Buy You Happiness?



Happy New Year!! We hope you had a fantastic holiday season. Now, it’s on to 2019 with planning and resolutions for the New Year. What are your goals? More money? More Happiness? More Joy? As you tackle these huge questions of money and meaning, we’d like to offer you some ideas.

Does money buy happiness? King Midas was rich, but his gold didn’t bring him happiness.   That’s because there’s a difference between being rich and being wealthy. Brian Portnoy, in his book, “The Geometry of Wealth,” articulates this well: “Being rich is having ‘more.’ The push for more is a treadmill of which satisfaction is typically fleeting. Wealth, by contrast, is funded contentment. It is the ability to underwrite a meaningful life- however one chooses to define that.”

Money, of course, is a huge part of our daily lives. Our life cycle with money includes earning, spending, saving and investing. Our first paycheck shows us our ability to earn and sustain ourselves. Next, where do we spend the money and how much do we save? Lastly, as we accumulate money, we choose to put our financial capital at risk to grow at a higher rate of return than cash. Money is like the oil in your car; without it, the car grinds to a halt, but with it, YOU still have to steer the car in the right direction.

Sonja Lyubomirsky in “Pursuing Happiness,” identifies three factors which determine happiness/human fulfillment. These are disposition (who you are), circumstances (what you face) and intentions (what you do). Her research shows that outcomes are impacted as follows: 50% comes from disposition, 40% from intentions and 10% from circumstances. The good news is that we can control our intentions; which, of course, is our review, planning, implementation and monitoring of our life planning.

As Daniel Kahneman (featured in earlier DWM blogs) has proven, how well we handle our intentions and planning has a lot to do with “Thinking Fast and Slow.” The fast brain is the home of impressions, impulse, and feelings. The slow brain is engaged when we are deliberately thinking and making informed choices. The two systems work together; the key is using our slow brain as we shape a life of money and meaning. The process of building and executing a plan can be, in itself, a source of happiness.

In 2015, the Dalai Lama and Archbishop Desmond Tutu met and discussed life; recapped in “The Book of Joy.” They separated happiness into two categories; one, experienced happiness, which comes and goes with daily pleasures, and, two, reflective happiness, the achievement of joy, which takes work. Dr. Portnoy identifies the four pillars of joy:

  • Connection-the need to belong
  • Control-the need to direct one’s own destiny
  • Competence-the need to be good at something worthwhile
  • Context-need for a purpose outside of one’s self

These “Four C’s” are at the heart of funded contentment. And while contentment can be achieved by all, including those in lower levels of income, money helps.

Dr. Kahneman found in his research that happiness directly increases as income increases. However, after about $75,000 of annual income (per person), experienced happiness levels out. The concept is that good and bad moods come and go at the same pace for someone making $100,000 per year as compared to someone making $1 million per year. However, reflective happiness, or funded contentment, does increase with higher incomes for many people. This is because at higher levels of income, money, allocated wisely, can underwrite the Four C’s, which constitute reflective happiness. Money can be used for both experienced and reflective happiness and, by using both our fast brain and our slow brain, we can achieve both.

In our crazy, chaotic world, it’s important not to let our fast brain guide all of our intentions. We need to have a plan and a process and be ready to adapt it as the world changes. True happiness takes work. Our goal, as wealth managers, is to assist you with a process not only to protect and grow your money, but also to help you achieve “funded contentment”- the ability to underwrite a meaningful life- however you choose to define that.

Good luck on your planning for 2019. Please let us know if you would like us to help.

How Would You Rate Your Life?

happiness prosperity healthWe hope you had a wonderful holiday weekend. Perhaps some time with the family, a barbeque, some physical activity and maybe a great beverage or two. Labor Day is one of my favorite holidays. It marks the end of summer and start of fall, including kids returning to school and another season of college and NFL football games. It’s also a reflective time, when many people take a look at their life and review where they are and where they want to be.

A couple of weeks ago, the WSJ ran an article entitled, “On Gauging the Pursuit of Happiness.” It included the most recent edition of the World Happiness Report. The six most important metrics Gallup used to gauge happiness are GDP, life expectancy, generosity, social support, freedom and corruption. In addition, the researchers posed two questions. First, they asked people about their emotional experience the previous day- were they happy, angry, or stressed? Second, they asked respondents to rate their life as a whole on a scale of 0 to 10. How would you have responded?

The U.S., while #1 in overall GDP, is eighth in GDP per capita. Norway, Switzerland, Australia, Sweden, Denmark all are wealthier than us on a per person level. In terms of happiness, however, America ranked 15th, behind Switzerland, Iceland, Denmark, Norway, Canada, Finland, New Zealand and even Mexico. We performed well in GDP but weaker in the other variables.

Countries, including the U.S., are now starting to measure well-being. In 2011, the United Nations adopted a resolution encouraging member states to measure happiness and economic well-being. The U.K. systemically collects data on well-being. Our Labor Department Bureau of Labor Statistics has included well-being questions in its American Time Use Survey. And, lots more is happening at the local level.

Santa Monica, CA, won a $1 million award to develop a well-being project aimed at increasing trust and connectedness among residents. Apparently it is working- Santa Monica residents are even filling potholes these days.

Businesses are joining in as well. Certainly companies have for decades cited lofty mission statements as proof they are interested in more than just net income. And now, workers of all types are demanding more meaning from their careers as work simply takes too much of their time; with longer hours, more competitive pressures and IT “advancements” keeping them tethered to work 24/7. In many cases, employees are not looking for a job but, rather a higher calling. For them, it’s about the purpose, not the task.

For example, KPMG is trying to inspire its accountants with world-changing focus. “We see ourselves as cathedral builders, not bricklayers,” said Global Chairman John Veihmeyer. The company held a contest for its U.S. employees to share stories illustrating the higher impact of their jobs and it received 42,000 submissions. CEO Chris Loughlin of Travelzoo encourages his 400 employees, who help customers book low-cost travel worldwide, to look at their job this way: “if everyone traveled, there would be significantly more peace on earth.” Of course, not every worker believes that their company or their job is changing the world. According to Amy Wrzesniewski from the Yale School of Management, about 1/3 of individuals feel their job is a calling, while 2/3 are happy being a “cog rather than a cathedral builder.”

And, finally, we take a look at the great number of older Americans that are continuing to work. Average retirement ages are climbing and nearly 50% of baby boomers expect to work until 66 or beyond. Certainly, for many, it’s an economic necessity. However, driving the trend of not retiring are highly educated workers in professional-services jobs who are staying there by choice, rather than economic reasons. In some cases, they may continue working (either for pay or as a volunteer) because they believe they are changing the world. However, for most, it is their passion and commitment to stay involved, stay current and make a difference that brings them happiness.

For example, Jan Abushakrah, 69, typically works a 60-hour week as the chairwoman of the gerontology department at Portland Community College with no plans to retire. “I have pretty much purged the word from my vocabulary,” she says. “As long as I am happy and healthy every morning when I wake up and something exciting on my plate to look forward to, it is easy to say I could keep doing this forever.”

As we all start the fall, we hope that you, if asked, would rate your life and well-being (including happiness, health and prosperity) as a 10, or very near a 10. At DWM, our passion isn’t about changing the entire world, but rather helping each of our clients achieve their highest possible state of well-being. It’s our higher calling and passion 365 days a year. Here’s to you and your life and making it a 10.

Can Money Buy Happiness?

happy moneyThe holidays bring an opportunity to examine many inherent aspects of our lives and assess the quality of our existence. It can be a profound and rather daunting ritual as we prepare for New Year’s resolutions and year-end evaluations. One question that comes to mind is how connected is our happiness to our financial circumstances? Can money buy happiness?

It turns out that how you spend your money is more important than how much you have. “Happy Money: The Science of Happier Spending”, by Elizabeth Dunn and Michael Norton outlines some core principles for spending that shows how to “buy” more happiness in your life. These authors and professors suggest that there are spending strategies and habits that can contribute to your overall happiness. Here is a breakdown:

• Buy experiences

Our human instinct is to acquire possessions and material goods for our comfort and convenience. People tend to believe that the purchase of a tangible item that lasts will bring more value than an experience that is fleeting. However, studies show that experiences might be worth more than you think. Experiences tend to bring a greater sense of connection to others and provide life-long memories that increase in value over time. You will always remember a wonderful birthday dinner at a special restaurant, a fishing trip to Costa Rica, or a family trip to Disney World, and talk about it for years to come.

• Make “luxuries” a treat

The truth is that everything is more enjoyable when consumed on a limited basis and that you CAN have too much of a good thing. The pitfalls of overindulgence are a good thing to remember during the holidays! This concept is also behind many corporate marketing strategies of limiting certain items to occasional offerings, making them more desirable.

• Buy some time

Make time for the things and people you love the most. Slowing down and not rushing allows you the ability to savor small pleasures. Taking that new job with longer hours or living in a bigger house that might require a longer commute may cause stress that makes you unhappy. A university of Zurich study estimated that you would need to earn 40% more to counteract a one-hour daily commute increase! Researchers at Princeton have determined that there is a certain income level of comfortable satisfaction, defined as around $75,000 in the U.S. They concluded that the “beneficial effects of money tapered off entirely after the $75,000 mark.”

• Break the Consumerism pattern

The authors suggest that saving up for something that you really want will increase the value you place on it and your happiness with it. Some studies also show that debt has a detrimental effect on happiness and that married couples in more debt had more marital conflict. As author Professor Elizabeth Dunn notes, “Savings are good for happiness” and incurring short-term debt has a negative impact. Have the money saved before you do something, not after.

• Don’t take things for granted

How many times have you watched a child have tremendous anticipation for and then excitement upon receiving a coveted gift? And then watched as the novelty and thrill of the new object quickly wears off? We tend to adapt to our purchases, so taking time to be grateful for what we have is shown to boost happiness. Studies show that employees tend to do a better job when they feel appreciated by their bosses, too.

• Spend on Others

Many studies have shown that people who spend money on others, or who practice “pro-social” spending behavior are generally happier. One study even suggested that people would be less resentful about paying taxes if they had more choice about how it was spent and felt more like it was a charitable contribution. A 2014 U.S Trust Study showed that 98.4% of high net-worth households make charitable donations and that 75% of these individuals volunteer their time. But what counts is not the dollar amount, but the perceived impact of the donation that increases your overall happiness. Studies show that people are happier when donating to charity, in time or in money, and in poor and rich countries alike.

As this year closes, take some time to give to others, spend time with those you love, show gratitude and don’t overspend. That is a financial plan that will make you happy!