So, it used to be that people would declare themselves happy when they attained a certain annual income level. As of 2015, $75,000 per year of income, per household was the new magic number. But after 2008, we all know how a downturn in the economy can impact jobs and incomes, so isn’t it more appropriate to consider building net worth as a surer way to achieving happiness?
What type of goal setter are you? Are you highly disciplined with defined financial goals and a road map to achieve them? Are you moderately disciplined with financial goals but tend to get off course occasionally? Do you have financial goals but have no plan to achieve them? Are you winging it with no goals and no plans? You won’t be surprised then that there is a correlation between discipline in financial planning and financial morale. 91% of highly disciplined planners say they are quite happy compared to just 63% of non-planners.
Having said that, Michael Norton, an associate professor at Harvard Business School suggests that once you have focused on getting money by working with an advisor to build net worth, you should figure out how to get the most happiness out of the money you’ve saved. Just ask any millennial these days and they’ll tell you that it’s all about experiences, making memories and building community. Connecting with other people – for most anyway – and sharing happiness-generating experiences make much better stories than just buying more stuff.
When you meet a retiree ask them if the way they’re spending their money makes them truly happy and if not, it’s a good bet that they’re not confident in their goals. Some people spend years saving money and have a hard time turning the saving mode off and the spending mode on.
And when you hear someone say that money doesn’t buy happiness, consider telling them to try giving some of it away! Money can buy a good experience with family, it’s the sharing of wealth that many can feel good about. After all not everyone seeks social experiences but donating their time and/or money to good works is another whole happiness-generating story.