Let’s start at the end of that list with the unknowns in our life. Case in point - I’m writing in the midst of the debt ceiling kerfuffle in Washington where a half dozen politicians are “playing” with our futures in between smiles and photo ops. How will it turn out? We’ll know in a few weeks. But at this moment the answer is unknown. Then there are other unknowns…
- What if the US Dollar collapses?
- What if Silicon Valley, Signature, and First Republic Banks are just the tip of the iceberg?
- Are we headed toward a recession, or worse?
- What if AI unleashes new, unfathomable problems we can’t even comprehend?
- How long do I have left to live?
- What is going to happen in the investment markets next week? Next year? And beyond?
- What will be my health later in life?
- What will be the ultimate outcome of the war in Ukraine for my family and humanity in general?
Clearly, there is a lot we don’t know. In fact, we don’t even know everything we don’t know. Thankfully, we’re not completely in the dark. Our patented Goals Based Wealth Management (GBWM) process models thousands of possible lifetime experiences i.e. a lifetime of unknowns and measures how many of them work out and how many of them don’t. By essentially stress-testing the future, we are able to craft advice today that gives you a fighting chance of living your best life both today and tomorrow. It really is a great process for navigating the unknowns and one we have been employing successfully for the past ten years.
In the financial planning world, a proven way to reduce anxiety is to control everything that can be controlled and to measure the uncertainty inherent in the things you can’t control. To learn more about how we help our clients make the most of the one life they have simply contact us through this website.
Intrinsically it seems that the driving force behind financial planning is a person’s desire to be happy. You can use the word fulfilled or satisfied, but let’s just use the word HAPPY. In planning vernacular; Living your BEST life is just another description of being happy as is making the most of the one life you have. In spite of the unknowns we face daily, we endeavor to achieve and then hold on to happiness.
That brings us to a most intriguing social question related to being happy. CAN MONEY BUY HAPPINESS? Or phrased another way, does money make one happy? It’s a question that philosophers, economists and social scientists have grappled with for decades.
For most people in the United States, their answer is seemingly - yes.
Two prominent researchers, Daniel Kahneman and Matthew Killingsworth, came to the same conclusion in a joint study published this year in the Proceedings of the National Academy of Sciences. In their study, Kahneman and Killingsworth surveyed 33,391 adults aged between 18 and 65 who live in the United States. “In the simplest terms, the study suggests that for most people larger incomes are associated with greater happiness,” Killingsworth said in a statement about the study. “The exception is people who are financially well-off but unhappy. For instance, if you’re rich and miserable, more money won’t help. For everyone else, more money was associated with higher happiness to somewhat varying degrees.”
The study acknowledges that happiness or emotional well-being is a changing daily scale for many people and that “happy people are not all equally happy” but argues that there are “degrees of happiness” and often a “ceiling” for happiness.
The study also found that money can affect happiness differently, depending on income. Among lower earners, “unhappy people gain more from increased income than happier people do,” it said. “In other words, the bottom of the happiness distribution rises much faster than the top in that range of incomes.”
In his statement, Killingsowrth made clear that money isn’t everything — “just one of the many determinants of happiness.” He added: “Money is not the secret to happiness, but it can probably help a bit.”
All I can say is that I’m glad the study was not funded with taxpayer money. Haha. Seriously though, having worked with high-net-worth families for over four decades, I feel that I have some standing to comment on this study. The long-and-short of this research is that money buys an incremental increase in happiness relative to a prior state. However at the pinnacle of what money can buy, man realizes that he is still empty and unsatisfied. Therefore, there exists the illusion of a correlation between money and happiness until a point at which time man realizes that no amount of money can make him genuinely and lastingly happy. Thus, we find a distinction between being happier (than before-albeit temporarily) and genuine lasting happiness. It reminds me of taking my kids to Disney World. While in the park, they were having fun and were essentially happy. That state dissipated very quickly however and before we had even returned to our car in Goofy Lot #24, they were complaining of being bored and/or planning the next happiness fix. As a parent, I recall marveling that I could spend so much money to make my kids happy and the feeling didn’t even last until we got out of the parking lot.
Why is it this way?
I’m sure that there are smarter people than me who could weigh in on this question, but for what it’s worth, here are my thoughts on the matter.
To contemplate lasting happiness, we must compare apples to apples and summarily eliminate any temporal standard of measurement. For millennia, the opinions and folly of man have come and gone, but the Bible has endured. With its unparalleled reliability and trustworthiness, it seems prudent to use the Bible as the standard and baseline from which to define and subsequently measure lasting and enduring happiness.
According to the Bible, Man is created in the image and likeness of God for the express purpose of containing and expressing God. In other words, man is a vessel. As a vessel, man inherently needs to be filled. The ultimate vanity of vanities and the epitome of pointlessness is a container without any content. Without God, there is a void that the great mathematician Pascal called - a God-shaped vacuum inside man. As the antagonist and adversary in the universe, Satan has created an entire cosmos or system as a replacement/counterfeit content with which man can be filled.
From this perspective, it makes sense that a scientific study would conclude that money- which can buy things and experiences is able to fill that void incrementally. But as the study also concluded, the incremental and temporal link between money and happiness comes to an end when there is nothing left to buy. So by extrapolation, the wealthiest people on the earth are the most miserable. Just ask them. Oh, don’t bother. There is no need. The super rich are quite public about their unhappiness.
“I’ve made many millions, but they have brought me no happiness” John D Rockefeller
“The care of $200 million is enough to kill anyone. There is no pleasure in it.” Vanderbilt
“I am the most miserable man on earth.” John Jacob Astor
“Millionaires seldom smile.” Andrew Carnegie
“I was happier when I was doing a mechanics job.” Henry Ford
“What can I say? I only know that I am desolate.” John Paul Getty
If a shoe had feelings, it might settle being used as a door stop, but it would not be happy until it contained a foot. An envelope would not really be happy as anything other than a container for a letter. Similarly, a glove would not fulfill its designed purpose until it contained and expressed a hand. So also, man will not experience genuine and lasting happiness until he is filled and expressing God.
For a time-whether it is 50 or 100 years-we journey on this earth. So, simply for our existence let alone our ability to make a positive mark on humanity, we need to be prudent with money. Get educated. Work hard. Take risks. Make and save money. But to look to money as the source or means by which you will find happiness is misguided and destined for disappointment.