The Occupational Adventure (sm)

How not to buy happiness

Is it true that money doesn't really buy happiness? That's what the studies say (like the ones I posted about here and here).

Here's an article that gives it a bit of a different spin, suggesting that part of the reason money doesn't buy happiness is because of the way we use it in our consumption based culture. This paragraph gives the basic gist of the article:

In effect, I wish to propose two different answers to the question “Does money buy happiness?” Considerable evidence suggests that if we use an increase in our incomes, as many of us do, simply to buy bigger houses and more expensive cars, then we do not end up any happier than before. But if we use an increase in our incomes to buy more of certain inconspicuous goods–such as freedom from a long commute or a stressful job–then the evidence paints a very different picture. The less we spend on conspicuous consumption goods, the better we can afford to alleviate congestion; and the more time we can devote to family and friends, to exercise, sleep, travel, and other restorative activities. On the best available evidence, reallocating our time and money in these and similar ways would result in healthier, longer– and happier–lives. 

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Curt Rosengren, Passion Catalyst (sm)

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Dream big, save big

Often my work involves helping people figure out how to make their career transition happen when they're already in the thick of needing it (hint - sometimes reality dictates that change is a longer term process), but in this post I'd like to plant a seed for looking ahead.

This article from MSN Money suggests that if you want to save big, you need to dream big.

How many times have you read that you should tuck away 10% of your money in a savings account? But to what end? If you view saving simply as the opposite of spending, how could you commit to it? It’s punitive rather than rewarding.

To save, you need a goal. Setting goals is both the heart of financial planning and its most difficult task. It requires that you really stretch your mind and think about how you could create a life that’s fulfilling. Look inside yourself and reach for your dreams. That is tough stuff.

"It's much easier to focus on short-term crises and to solve immediate problems," says Stanley H. Breitbard, a financial planner in Los Angeles. "Defining your dreams is the hardest thing to do in life."

Sometimes it's simply a matter of asking yourself the obvious questions...

As for [financial planner] Kinder, he says that a couple of years of living the life he chose for himself have changed his approach to planning. Rather than harping on the virtues of saving for its own sake, he now sees his job as helping clients realize their dreams.

This is one of the questions he asks every new client: "If you died tomorrow, what would you most regret not having done?"

Ultimately, you can use your dreams to fuel your will to save.

Once you've identified your dreams, visualize yourself in them to help provide discipline for saving.

Katharine McGee, a financial planner in Davenport, Ind., likens it to taking a vacation. “When you begin to talk about your vacation, when you get the travel literature and read about the places you will go and the things you will do, that's when you visualize your goal and it becomes real to you."

And that's when it stops hurting to save money.

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Curt Rosengren, Passion Catalyst (sm)

Time for a career change? Launch it with...
The Occupational Adventure Guide:
A Travel Guide to the Career of Your Dreams

Focus on money, prestige, success is a recipe for unhappiness

I've posted about various studies that show that money and happiness aren't linked. Here's an article on the Motley Fool site pointing to a study that found that people who focused primarily on money (or prestige, or "success") were actually more likely to be unhappy.

Unfortunately, it doesn't name the study in question, but here's what the article has to say:

On the other hand, a survey of 800 college alumni showed that classmates who valued high income, job success, and prestige more than close friends and love were twice as likely to be "fairly" or "very" unhappy.

Happy people, it seems, concentrate on their own successes and don't compare themselves -- their income, their family time -- with others. They do not judge others or dwell on negative feelings. If they do dwell on the better performance of a colleague or friend, it is to learn ways for self-improvement.

Curt Rosengren

Passion Catalyst  ^SM

Career passion e-books

Money doesn't buy happiness, part 2

Back in October of last year I wrote a post about a study delinking money and happiness (followed by a post with a link to an article on how much money we really need to be happy).

Here's another article reinforcing the idea that, once basic needs are met, money doesn't buy happiness. The article has lots of interesting tidbits. For example:

Research shows that people in rich countries are not happier than those in poorer ones.

"During the 1980s, the West Germans had double the incomes of the poor Irish, who year after year reported more satisfaction with their lives," said David Myers, a sociologist at Hope College in Michigan who authored the 1993 book "The Pursuit of Happiness."

And this snapshot of the happiness/wealth ration in the US over the last fifty years:

De Graaf notes that the number of Americans calling themselves "very happy" peaked in 1957 at 35 percent and has declined to 30 percent today, according to happiness data from the National Opinion Research Center at the University of Chicago.

Over the same period, average annual after-tax income in constant dollars has more than doubled as the rich got richer and more women entered the labor market.

And then of course there's that pesky hedonic adaptation and social comparison!

One reason we like to chase money and possessions is because of that temporary rush we get from landing them. But the thrill fades in what economist Richard Easterlin calls "hedonic adaptation and social comparison." In other words, once you get the goodies, they quickly become old hat and you want more.

The article makes an interesting point that a hyper-focus on material things has a lot of downside, without much upside.

Gregg Easterbrook explored this gap in perceptions about money and happiness in his book, "Progress Paradox: How Life Gets Better While People Feel Worse."

"Envy and dissatisfaction come from lacking what others possess, but coming into possession of those things does not confer happiness," Easterbrook explained in an interview published in BookPage.

"Seeing the BMW may make you feel unhappy, but psychological studies show obtaining the BMW would not make you happy."

Also interesting is the idea that a huge factor in happiness is truly buying into the fact that you're not going to get it from money.

Research shows that some things have high odds of improving mood and increasing life satisfaction: Ranked No. 1 is "Realizing that enduring happiness doesn't come from financial gain.

Not only can a focus on money keep us from feeling happy, it can also have a very real negative impact.

In fact, a focus on money can be a formula for depression and anxiety. Richard Ryan, a University of Rochester psychology professor who has studied how the desire for money affects mental health, said surveys of college students show that those putting the most emphasis on materialism scored the highest in measurements of those afflictions.

Curt Rosengren
Passion Catalyst  ^SM

Career passion e-books

How much money do you need to make?

After yesterday's post about the study de-linking money and happiness, it seems like a good follow-up to point to Penelope Trunk's interesting column a few weeks back asking the question, "how much is enough?"

Looking for happiness through financial success? Wondering what is the magic number that equals satisfaction? It's $40,000 a year.

Really. Oprah's magazine says so. And so does Harvard psychologist Daniel Gilbert, who studies such things.

She describes her own experience in the past as her yearly income rose to a point where she was making $200,000 a year. As so often happens, she says, "My expenses rose with my salary, and my desires expanded with my bank account." In a situation where money is the focus, there is no such thing as "enough." She points to her experience working with venture capitalists as an example.

Maybe you're thinking there's another magic threshold beyond $40,000. Like maybe $40 million. But you're wrong. When I ran in circles of venture capitalists, there was a common phrase, "It's not jet money." Which was a way of saying, it was a good deal, but it wouldn't earn enough money to pay for a private jet. No matter what size the pile of money, there's always a way to see it as small.

Back to the magic $40,000 figure, Penelope writes...

In fact, the rule is well established in research: The first $40,000 makes a big difference in one's level of happiness. After that, the impact is much smaller. The difference between someone making $40,000 and someone making $15,000 is far greater than the difference between $100,000 and $1 million.

Happiness is dependent on being able to meet basic needs for food, shelter and clothing. After meeting those needs you need to turn to something other than consumerism because additional money has negligible impact on how happy you are. Your level of happiness is largely dependent on your outlook.

Curt Rosengren
Passion Catalyst ^SM

It's official! Money doesn't buy happiness

You just never know what you're going to find on the Science Blog. This time, it's a study delinking money and happiness.

It has been assumed that money increases well-being and, although money can be measured with exactitude, it is an inexact surrogate to the actual well-being of a nation. In a 1985 survey, respondents from the Forbes list of the 400 richest Americans and the Maasai of East Africa were almost equally satisfied and ranked relatively high in well-being. The Maasai are a traditional herding people who have no electricity or running water and live in huts made of dung. It follows, that economic development and personal income must not account for the happiness that they are so often linked to.

The authors of the study in question had the interesting notion of adding various well-being measurements to the standard economic measures policymakers look at.

"Scientists are now in the position to assess well-being directly, and therefore should establish a system... to supplement the economic measures," encouraged the report authors, Ed Diener, University of Illinois, and Martin E.P. Seligman, University of Pennsylvania.

The variables measured would include engagement, purpose and meaning, optimism and trust, and positive and negative emotions in specific areas such as work life and social relationships. The periodic assessment of a sample of the population would provide policymakers with a much stronger basis to gauge the well-being of the nation. It would allow them to refocus. "After all, if economic and other polices are important because they will in the end increase well-being, why not assess well-being more directly" the authors ask?

Curt Rosengren
Passion Catalyst ^SM

Your Money or Your Life - rethinking money

I realized the other day that one of the biggest obstacles standing in the way of people pursuing their passions is also something I have scarcely touched on in this blog...money.

A perceived need to earn X amount of money can (and often does) shut down someone's passion pursuit in seconds flat. "You can't make enough doing that." "I need to be able to maintain my current lifestyle." "I want to be able to provide my children with _____."

I'm not going to sit here and preach that you should forget about the money and focus on the passion (though I've repeatedly seen the importance people attach to money drop when they're living their passions). Each person will figure out what works best for them. What I would like to do is plant a seed for a different way of thinking about it.

Right now, I'm reading Your Money or Your Life: Transforming Your Relationship With Money and Achieving Financial Independence by Joe Rodriguez and Vicki Robin. They've got some interesting ideas on how to think about money. The following paragraphs are from an article that sums up one of the main ideas:

Try turning around that old maxim "time is money" and look at it this way: "We pay for money with our time." Those hours on the job (or our partner's hours on the job) are what bring money into our lives. Money, by definition, is simply something for which we choose to trade the hours of our life - what we'll call "life energy."

Defining money as something we trade our life energy for gives us significant information. Our life energy is more real in our actual experience than money. While money has no intrinsic reality, our life energy does - at least to us. It is precious because it is limited and irretrievable, and because our choices about how we use it express the meaning and purpose of our time here on earth.

I love the idea of looking at the things we buy in terms of how much life we gave up to get them. It really puts it in perspective. Maybe any given thing is worth it, maybe it's not, but just having a tangible way to start examining it is invaluable.

Curt Rosengren
Passion Catalyst ^SM