It’s because, as research is increasingly showing, wealth and material possessions do not in themselves procure happiness.
To quote the co-author of one such study, Elizabeth W Dunn of the University of British Colombia: “Money is an opportunity for happiness, but it is an opportunity that people routinely squander because the things they think will make them happy often don’t.”
This is something that should always be in our minds when investing and planning for retirement. It is also something that good financial advisers should stress to their clients.
Which is why we at The Whitehall Partnership always take the trouble to talk in detail to those who come to us for money advice and help with retirement planning about their hopes and aspirations, and to pin down what they really want from their wealth.
The reason that Eskimos can be just as happy as billionaires is, as a previous blog on this subject stated, that when resources are scare people savour and value the limited experiences that come their way.
Another way of looking it is to think in terms of what one writer calls “peaks of presumption” and “puddles of pleasure”.
This means that when we think about buying expensive objects, whether it’s a luxury home or car or a holiday on a remote island in the middle of the Indian Ocean, our anticipation of the pleasure they will bring can be sky high, while in reality the pleasure we obtain from them can vanish as fast as a shallow puddle of water in the summer sun.
The exceptional all too often fades into the mundane, leaving us disappointed and regretting having wasted our money.
That is not to say that money doesn’t have its advantages. As Professor Dunn points out, wealthy people are better fed, have better medical care and more free time than those on average incomes.
It’s the way money is spent that counts in equalising out the wealth and happiness equation. Psychologists are discovering the means by which this best achieved.
One way is to invest in experiences instead of things. For example, cookery classes might over time yield far more satisfaction than an expensively fitted kitchen without the culinary skill to put it to good use. And once installed, the kitchen will always be the same, whereas each meal cooked and shared with loved ones and friends will be a different and uniquely enriching experience.
Another way of achieving a balance between wealth and happiness is by spending small sums on frequent pleasures rather than blowing large amounts on big ticket items, the novelty of which will quickly wear off.
A third way – one that is supported by brain scans carried out as part of an experiment at the University of Oregon – is by spending money on others as well as ourselves. The scans showed that allowing others to benefit from our wealth activated areas of the brain typically associated with receiving rewards.
All of which goes to show that the way we spend our wealth is just as important to our long-term well-being as amassing it in the first place.
If you want advice on money management and retirement planning, as well as help in identifying your needs and ambitions, call the Whitehall Partnership today on 0845 43 49 250 to arrange a free introductory meeting.