We spent a lot of time this past year focusing on the relationship between wealth and happiness. In fact, it was the theme of our recent Shift Symposium with noted expert, Professor Michael Norton of Harvard, as the keynote speaker. While over 200 people attended, the majority of our clients were not able. As a result, we thought we’d end the year by summarizing some important themes from Professor Norton and other research on wealth and happiness.
1. Spend on experiences not things
Studies show that people feel a greater sense of long-term happiness when they buy experiences versus when they buy things. It turns out that the value of things fades over time whereas the value of the memories of our experiences – particularly those we share with others – grows. So, next time you have a choice, think ‘experience’ not ‘stuff.’
2. It’s better to give rather than to receive
We all learn this very young but what we do later in life often doesn’t reflect it. Research reveals that people who give to causes they believe in have greater happiness than others. In fact, generosity in general has a profound impact on our happiness and those who are more generous with their wealth report much higher satisfaction with their lives.
3. Direct your wealth toward your goals
First, have a plan that reflects your goals. Not only can this be both motivating and purposeful, it can also aid your happiness. David Niven, author of 100 Simple Secrets of the Best Half of Life, found that people who could identify a goal they were pursuing were 19 percent more likely to feel satisfied with their lives and 26 percent more likely to feel positive about themselves. With regards to spending, however, even those with goals often spend without necessarily thinking about them. Studies show people feel happiest when they spend their money (and time) in ways that truly reflect their priorities and values.
While happiness is a state of mind with no magic formula, it appears that a better awareness of what we do with our wealth can help. We take great joy helping our clients define for themselves what they want their wealth to help them accomplish in hopes that it will bring them peace and happiness. Here’s to you and a very happy New Year.