Blogs > Your Money

Dave Patterson and Erin Preston, a father-daughter team of Certified Financial Planner® licensees, provide thoughts and suggestions on a broad collection of personal finance topics.  Information provided in this BLOG is intended to be of a general nature and may not be appropriate for all situations.  Readers should consult with their own financial advisors before relying on any information contained herein.

Friday, August 20, 2010

Happiness Requires More Than Money

Note: We originally wrote this article in April 2008. With the current, continuing economic crisis, many are now adopting a simpler lifestyle reminiscent of years past. We felt this article, updated to reflect some changes since we wrote it, might be of interest to our readers who may be considering a return to the “simpler life”.

Everyone seems to think that having more money will make them happier. Clearly, everyone needs a sufficient amount of money for food, shelter, health care, education of their children and so on, but do they need to be rich to be happy?

To the contrary, Sophocles, the Greek philosopher warned of the perils of money: “Of evils current upon earth, the worst is money. Money ‘tis that sacks cities, and drives men forth from hearth and home; wraps and seduces native innocence, and breeds a habit of dishonesty.”

In his book Your Money and Your Brain (Simon and Schuster, 2007) Jason Zweig, currently a weekly writer for The Wall Street Journal, quoted the results of a survey of 800 people with a net worth of at least $500,000: 19% agreed with the statement that “Having enough money is a constant worry in my life.” Zweig went on to say that among those worth at least $10 million, 33% still worried about money. He stated: “Somehow, as wealth grows, worry grows even faster.” Fewer than half of those with a net worth of $10 million felt that as they accumulated more money they became happier.

Working people always want a raise but studies show that the satisfaction we get from a raise is very short lived. After all, in most cases people feel they deserve more than they are being paid. Therefore, when they finally get a raise they often still have a feeling that they’ve been short-changed, since raises are seldom, if ever, retroactive.

One of our favorite columnists, Jonathan Clements, previously wrote a weekly column for the Wall Street Journal. In his final article, he focused on the reason people save and invest. He said: “You save now so you can spend later.” He went on to say: “People dream of endless leisure and bountiful possessions. Unfortunately, after a few months, endless leisure seems like endless tedium.” And, people quickly tire of the material things that money can buy. Jonathan went on to say: “The ’rich life’ of popular imagination is no great shakes.”

So what does money do for you? Clements points to what he believes are three key benefits. The first is that if you have money you don’t have to worry about it. The second is that money can make it possible for you to pursue your passions. And the third is that having money allows you to spend more time with friends and family.

What is somewhat ironic (and Clements pointed this out), is that the second and third benefit of having money don’t really require money to achieve. As we noted in our past article titled “Rethinking Retirement” (available on our website in the “In The News” section), if we pursue a profession that we truly love, then how much we make is less of a concern. If we truly love what we do, we can continue to work beyond the common retirement age of 62 to 65. Doing so reduces the amount of money we will need for retirement by reducing the number of years in retirement and at the same time increasing the amount we will receive from Social Security. With less stress in our work life and less need to work long hours, we can spend more time with friends and family.

Regardless of the evidence that there’s more to happiness than being rich. People will still continue to be slaves of the mighty dollar. Perhaps Sylvia Porter, famed economist and journalist (1913 - 1991), summed up best the dichotomy of views about money: “Money never remains just coins and pieces of paper. Money can be translated into the beauty of living, a support of misfortune, an education, or future security. It can also be translated into a source of bitterness.”


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