Today’s culture tells us we need a lot of money to live a happy and successful life. Sure, having enough money to meet our basic needs increases happiness, but more money won’t turn an unhappy life into a happy one. Consider that the United States is nearly three times as rich today as it was in 1970, but according to most surveys, Americans were just as happy then as they are now.
The magic amount of money people think they need to be happy varies among individuals and across countries, but in the United States, it falls somewhere around $75,000. Using Gallup data collected from almost 500,000 Americans, researchers found that higher household incomes accounted for better moods, but the beneficial effects of money tapered off after the $75,000 mark.
According to the 2011 documentary Happy, by Academy Award Nominated Roko Belic, our baseline genetic makeup accounts for 50 percent of our happiness quotient. Surprisingly, our personal circumstances such as job, health, money, and status in society account for merely 10 percent. The remaining 40 percent comes from activities we can control and regularly participate in such as exercise, hobbies, connecting with friends, family, community, and compassion or service to others.
Money, Temporary, Not Lasting
It seems that the vast majority of “happiness” surrounding money is temporary, not lasting. In his comprehensive work The Psychology of Happiness, Oxford University psychologist, Michael Argyle found little difference in levels of reported happiness between rich and very poor countries. It seemed that a satisfying state of social relations, work, and leisure creating happiness does not depend upon money, either absolute or relative.
While many people automatically equate money with security and freedom, that mindset can leave us feeling insecure and restrained. For some, without thoughtful planning, wealth can be more of an emotional burden than a financial benefit, creating feelings of guilt or being overwhelmed.
The documentary Born Rich, by Jamie Johnson of the Johnson & Johnson pharmaceutical fortune, showcases perceived burdens of inherited wealth among young adults such as Ivanka Trump and Georgina Bloomberg. While money has it blissful limits, in our practices, we believe that people are happier when they spend on experiences, value what they buy, and when they stop trying to keep one step “ahead of the Joneses.”
Each of us builds our legacy by the way we choose to live one day at a time. We coach our clients on the importance of addressing their emotional prosperity throughout life’s journey, and how they might consider charitable giving for those who are truly in need.
Greg Hammond, CFP®, CPA and Ron Ware, JD are wealth impact strategists who work with individuals, families, and businesses to help them invest to grow and preserve wealth, plan for retirement, and manage their charitable giving.
For a Wealth Impact Assessment to see how you can build a legacy of your values, influence and money, contact Greg at (800) 416-1655 or firstname.lastname@example.org and Ron at (781) 489-9800, or email@example.com.