Sometimes we forget that financial wealth is designed to serve us and enhance our life rather than the other way around. We are not slaves to our money. One of the major rationales for financial planning is to adhere to an objective methodology that considers the value of money in supporting one’s goals and pursuits. Otherwise, we often get lost in the day to day process. We concentrate so attentively on work and maintaining assets (house, car etc.) that we forget that these represent what we may do and own but are less than what and who we are.
Richard Easterlin, a professor and researcher with the University of Southern California has devoted over 30 years of research on this area. He is one of many researchers looking at this growing topic.
All of the research on happiness and wellbeing boils down to the following five situations:
- Good health
- Healthy relationships
- Sufficient income – the operative word here is SUFFICIENT
- Meaningful activities
- Leisure activities
The basics are simple: good health is needed to enjoy healthy relationships, leisure time, generate sufficient income and engage in meaningful activities. Healthy relationships mean you genuinely enjoy others, and relating to friends, family and colleagues grows beyond satisfying your own needs; you’re able to see beyond yourself. This means that you allocate time with each person to develop that relationship. Sufficient income means having enough cash flow to meet your current needs: room, board, leisure activities and meaningful activities. Sufficient income does not require a yacht, multiple homes and cars or dining out each evening. Sufficient income means that you may not get everything you want, but you will utilize everything that you receive. Meaningful activities are pursuits and actions that matter to you and your unique contribution in this world. Often, the activities are related to other people and serving in the world. It could be working or volunteering or even raising a family. Leisure activities are those activities that offer you time to recharge your batteries to ensure you are not living on a treadmill.
Most of Easterlin’s research shows that people, in general, overestimate their health, under-nourish their relationships, underappreciate the need for leisure and overreach on “stuff” (house, car, furnishings etc.). The cost in money and time to maintain the “stuff” can be significant and that behavior not only undercuts the foundations for wealth but also health and wellbeing.
One of the major ironies of Richard Easterlin’s research is that most people fall into the trap of thinking that their happiness will improve if they have a little more money, and bigger things. The cost for achieving more and bigger is working longer hours. Working more means less leisure time, less time to stay healthy and less time to nurture relationships. Most recent brain studies show that having a strong network of friends and/or family results in better mental health (less dementia and depression) and better physical health (lower nursing care needs).
The results of a misguided search for happiness are predictable. People are more burdened by possessions than enjoying them; they spend less time maintaining their health (exercising, sleeping enough, and eating right), and being with friends and family. As a result, they are lonely and lack the leisure time to appreciate what they have.
In which aspects of the five components of well-being (health, relationships, sufficient income, meaningful activities, leisure) do you feel satisfied, and which ones are calling for your attention?
