By Daniel Archibald | CFA
As found in the ageing writings of John and Paul, "money can't buy me love". But can it buy happiness? The answer is only sometimes yes, and often no. But if the pursuit of happiness is really the goal of us all, why should we pay so much attention to it. What does money have to do with being happy?
Money Attitudes
A number of times in the recent past, I have had the opportunity to sit down with individuals who, for all intents and purposes, really "don't care too much for money". After analysing their situations, and presenting some key strategies whereby they could increase their savings, or save on taxes, I was quite surprised to find out that that side of things didn't interest them at all. For most of us, having an extra $5,000 or $10,000 every year would be something to jump at, but the response of these clients was luke warm at best. And it wasn't as if they had riches beyond measure either. I came to realise that they were happy with the level of wealth they had, as they had achieved their goals and objectives.
They've learnt, as I have come to appreciate more, that money is a means to an end, not the end itself. Thus, if you are already at the end, you don't need more money – or in other words, if you have already reached your financial goals and objectives, more wealth is not going to overly excite you (like being offered another piece of cake when your hunger has been more than satisfied). Yes, more money couldn't hurt, and that's why even these clients were still prudent enough to implement further wealth creation strategies.
What Makes Us Happy?
I recently read that research has confirmed that experiences increase happiness more so than things. I also read that planning a holiday increases happiness more than actually going on the holiday. So to increase happiness, we should focus our spending on things like overseas holidays. But to maximise your happiness, don't worry about actually going on the holiday... just plan to go (I don't think my wife would agree with that).
Means to an End
Most of us are not at the end yet. We still have our dream homes to find and pay off, retirements to save for and live through, and mouths to feed. When it comes to money management that really maximises happiness, the key to success is keeping the end firmly planted in the front of our minds - whatever that end may be (holiday, boat, new home, etc). This will help to stop us from getting sidetracked by less meaningful endeavours, and help make the journey more enjoyable.
Being financially fit does not guarantee happiness, but is one of the key means by which we can achieve our dreams and aspirations. Being physically and mentally fit are also key means by which we can work towards our goals.
Healthy, wealthy and wise… means to an end.