think about money a lot!
Mostly I think about my clients, and their own relationship with money to better understand their motivations and behaviors. That understanding is critical in guiding and advising them to make smarter decisions with their money.
Money simply isn’t about having more of it; but rather going deeper to understand the psychology of money and the relationship between money and happiness.
I recently read an article from a colleague who was profoundly moved by a Buddhist teacher's reply to a simple question – “Why do Westerners struggle so much with meditation?”
The Buddhist teacher in his infinite wisdom simply replied: “You won’t get the benefit from meditation as long as you are meditating to get the benefit.”
Hidden in his response is a perfect paradigm for life – You can only truly attain a lot of life’s rewards when you are NOT seeking them.
Just consider the relationship between money and happiness.
One of the most famous quotes in history “Money can’t buy happiness” first appeared in the United States in the William and Mary College Quarterly[1]. Ever since that first reference it’s been quoted a billion times in text and speech.
Can the Buddhist teachers’ quote on meditating actually be applicable to money and happiness? Maybe money CAN buy happiness – as long as you don’t try to buy happiness.
Social scientists have long sought to understand the relationship between money and happiness. In a 2010 study, two Nobel laureates tried to answer that exact question on whether money makes people happier[2]. What they found was “yes” money does make people happier, up to a point.
Does the limit point of happiness and money have a specific figure?
Yes, a person’s various measures of life satisfaction increases with a person’s income up to about $75,000.
Which is oddly specific don’t you think?
That’s right, they found that beyond $75,000 ($112,000 in today’s dollars) a person’s “happiness” does not increase.
According to psychologists the relationship between money and happiness is a bit more complicated. It turns out that your own relationship with money has more of an impact that just having a large amount of it.
Our education system is not set up to deal with the emotional side of money. They primarily deal with money from a number’s perspective.
We are certainly missing the boat on money and happiness when we are only taught in simplistic and antiquated ways.
That’s the frustrating part of investing – how are investors supposed to be successful when our entire understanding of money from birth to death is based on materialism and the importance of acquiring money and possessions to convey our status?
Is that what money is really about?
I would suggest that money is much deeper and more complicated than just trying to “keep up with the Joneses.”
A 2014 study conducted in the Journal of Personality and Social Psychology[3] reached a similar conclusion: materialistic values are negatively correlated with overall life satisfaction, mood, self-appraisal, and physical health.
Maybe the Buddhist teacher really was onto something – If you are striving to get rich to feel superior to everyone else, or to boost your self-worth, you actually become less happy.
The most important understanding of money and happiness comes down to the most basic thought: Money CAN buy happiness, so long as you’re not trying to buy happiness.
Stay the course, my friends.
[1]"Money can't buy happiness"
[2]https://www.pnas.org/doi/10.1073/pnas.1011492107
[3]https://selfdeterminationtheory.org/wp-content/uploads/2019/08/2014_DittmarBondHurstKasser_PPID.pdf