Bluffs, Bayous and Musings
| 08 December 2009
What kind of tool are you fashioning with your money?
"Money is better than poverty, if only for financial reasons.” -Woody Allen
It is often said that money cannot buy happiness, but it is rather naive to think that it cannot be an arrow in your quiver to help you achieve the things that can help you to become happy. We have a few thoughts on what has been learned about money and its connection to happiness, as well as the pitfalls it can present. These are important subjects as you plan your goals, and contemplate the meaning of the holiday season.
So can money buy happiness? The evidence is suggestive that it makes a difference. According to the Pew Research Center nearly half (49%) of those with an annual family income of more than $100,000 say they are very happy. Unfortunately, just 24% of those with an annual family income of less than $30,000 say they are very happy. Let’s not bury the old cliché yet though, maybe the answer is that happy people make more money, which would certainly make for good career advice if true.
Other fascinating things came out of the research as well:
Married people are happier than unmarrieds. People who worship frequently are happier than those who don't. Republicans are happier than Democrats. Rich people are happier than poor people. Whites and Hispanics are happier than blacks. Sunbelt residents are happier than those who live in the rest of the country.
We also found some interesting non-correlations. People who have children are no happier than those who don't, after controlling for marital status. Retirees are no happier than workers. Pet owners are no happier than those without pets.
Of course, like with money there is a lot to be discussed. For example, I would suggest our pets have added to my and Robyn’s happiness, especially our dog Beckett. Honestly though, I do not think I am happier because of Beckett, though I love her dearly. My wife however is happier. So possibly, we are both happier than we would otherwise be because my wife would not be able to be as happy with her animals. To generalize, would pet owners be less happy than the rest of us without their pets? It is certainly a possibility.
In looking at other research on other topics (for example children) we see similar issues and variability.
Therefore, I suggest we look further into this money and happiness issue. The correlation is very strong. The more money people make the happier they report being, with a corresponding decrease the lower income happens to be. However, we also know that people are wealthier today than in the past, but as a group, we are no happier. At first glance, we might think that argues against a connection between money and happiness.
In reality, it points to a less noble reason for happiness. What seems to matter is not how much we have, but how much we have relative to others.
What about how we spend the money we earn? The connection there is much more in the spirit of Christmas.
According to a study published in the March issue Science Magazine we can improve our happiness through giving. Researchers sampled 600 Americans. They instructed 46 to spend a $5 or $20 bill on a particular day. Some were to spend the money on others and the rest to spend it on themselves. The ones who spent the money on others were happier at the end of the day. The study also found that employees who gave a majority of their bonus to others ended up happier than those who spent it on themselves. Happiness was not correlated to the size of the bonus but how it was spent. Spending more money on gifts and charity also was highly correlated with increased happiness.
So yes, having money can help us be happier as long as we use it to help us find what it means to live well. Give in addition to getting, spend time and money to build a better family life, and view money as a tool rather than an end. And yes, it just makes us feel better about ourselves to have money.
As psychologists Wortman and Loftis put it,
"Wealth doesn't guarantee happiness -- but it does provide opportunities for leisure activities, better education and better health care, among other advantages -- that can contribute to happiness"
That leads to one area that you definitely should consider spending a little money on to increase your happiness, the biggest threat to your happiness, your health:
“On the health front, while there's a strong association between feeling healthy and happy, there's an even stronger association between feeling unhealthy and unhappy. Fully 55% of people who say their health is poor also report that they are "not too happy." No other characteristic measured in this report comes close to rivaling poor health as a predictor of unhappiness.”
We feel that this is an underappreciated area of financial advice, how to use your money to improve you and your family’s health care beyond health insurance, diet, exercise and regular checkups. We’ll be bringing up some options that can dramatically improve your care as we work together for your consideration. If nothing else, you are the most important asset in your life. It certainly needs management as much as your portfolio.
