People tend to embrace this statement. It sounds true: surely only shallow, materialistic people would insist that money could buy happiness. To utter the thought aloud is almost like a declaration that we aren’t materialistic (and hopefully not shallow!) Scientists have long been perplexed about how to measure such a thing as happiness. Studies that examine relationships between money and happiness raise the idea that although money may not directly bring us happiness, it has the potential to. Believing that money can’t buy happiness is a bold and sweeping generalization that weakens under scrutiny. The authors of the book, Your Money or Your Life present a “fulfillment curve.” As the curve in the diagram shows, money spent to meet basic needs brings the most precipitous rise in satisfaction.
We use money every day. We spend on things, experiences, etc. Maybe you are planning the next big adventure in your life…or figuring out how to save the money to remodel the bathroom. Behind these activities there is a presumption that money used in these ways will make us happy. Do money and happiness even belong together in the same sentence? In some of my workshops participants fill out a survey asking them to agree or disagree with statements on money beliefs. One of the statements is “money makes me happy.” I never kept a specific tally but I always looked at whether they checked yes or no on that question. My recollection is a fairly even split between those who agreed with the statement and those who didn’t. I wonder if some checked “no” because we’re not supposed to find happiness in such a thing as money
In the past several articles, we’ve looked at the variable nature of prices. What does a gallon of milk or a hotel room cost? How much does it cost to retire? What types of financial management services are there, how much do they cost, and which one might work best for you? In that vein, why pay someone to manage your money? I recently told the story of a client who experienced immense relief upon delegating the management of her finances. Making all the decisions on her own had left her plagued with fear and anxiety. My listener exclaimed, “But my father said never to pay fees!” Such advice might be good for one person, but not so good for another. While I agreed that one should pay as little in fees as possible, my listener’s objection raised the question: What are some of the reasons to have your money managed professionally?
Do you know how much a half gallon of orange juice costs? Think carefully. What was once a 64-ounce container of juice is now 59 ounces. A pint of Hagen Daz is just 14 ounces (Ben & Jerry’s still has a 16 ounce “pint.”) How do you compare? Take another example, hotel rooms. I found a great place to stay in Sonoma for under $200 a night in February. This summer there was nothing under $300 at the same place. I recently purchased artwork for my office. I had no idea how much to offer, except that it had to be lower than the asking price! Plane flights, cars…ditto. Clearly, some prices do vary based on seasonal factors. Yet, is there such a thing as the “real” or best price for anything?
In a workshop I gave some time ago, a woman named Lisa related the following story. She had been sent to the store with money to buy milk for dinner. As she was leaving the store, she spotted a cute little stuffed bear. She had change in her pocket and thought, “I can buy this!” All the way home she was excited as she anticipated showing her mom what she had bought. But when she got home, her mom screamed at her, ordering her to return the bear and bring back the change! The little girl was traumatized...
Back in 2008 a woman in her mid 50’s came to my office for an initial meeting to discuss her personal finances. She had rescheduled at least three times. About half way into our meeting I asked her, “So, how was it for you gathering your information to come see me?” Her response displayed such vulnerability and courage I’ll always remember it. She said, “I’m am so embarrassed! I’m so disorganized! I’m at a point in my life where I feel like I should be more together. I’m ashamed that I don’t have more saved.” Whether you earn a little or a lot of money you can find yourself having similar feelings.
Consider the following scenario. You are perusing the menu at a restaurant, deciding what to order. The fresh, local salmon in a piquant sauce with sun gold tomatoes and basil has your mouth watering. It is $32. You definitely want fish, but immediately conclude that the salmon is simply “too expensive.” No, can’t do that. So you order cod, perfectly respectable, broiled – but plain – at $22. It arrives. It’s OK – but it isn’t what you really wanted. We’ve all experienced this type of automatic compromise that seems so sensible we accept it as the “right” decision. Such thinking may become an unconscious principle behind our money decisions. This is the smart thing to do. But is it? Why do we so often deny ourselves what we really want? One obvious answer is that it is about the money. Ten dollars is . . . well, ten dollars.
It’s the sort of thing people ask friends and acquaintances. Recently at the gym I happened to overhear a conversation that began with this question. Unfortunately, I was on my way into the shower and didn’t get to hear the answer. It’s an intriguing question. What is a “good investment guy” anyway? At some point, you may want to find some investment guidance, too. What should you be looking for?
In Part 1 of this series, women shared stories from learning when to ask for more money to never assuming that someone else will take care of you financially. Here, a few women share more lessons learned. Hopefully these stories will help you plan your own finances, rather than realize your errors in hindsight. Taking Time Out to Raise Children For those planning on taking time away from the workforce to raise kids, Lori had this to say. “I was astounded how difficult it was to find work (that paid well and utilized my skills) after having been away just a few short years.” Her advice was to do something — anything — part-time rather than leave the workforce altogether. Keep up your contacts and your skills. “Getting back to where you were earnings-wise can be a real challenge.” Being Emotionally Tied to a Home She Couldn’t Afford Madeleine’s wake-up call came in 2008. Her husband told her that he had decided to move out and seek divorce. Even though half the household income just walked out the door, she continued to spend like she and her husband were still together.
Many of the women I see in my financial planning practice have been through divorce. Many are experiencing for the first time what it is like to live independently. I hear familiar themes with respect to money —phrases like, “I should have paid more attention,” and “I shouldn’t have assumed my ex-husband knew what he was doing.” Finally, it dawned on me to start asking these women what lessons they would want to pass along to younger women, including their own daughters, about money. What follows are their stories and mistakes. Every one of these women has a valuable lesson to share!
Last month I posted a piece encouraging people to pay attention to their money. This, I argued, was “the one thing” that could make a meaningful difference in peoples’ financial lives. It may strike my readers this month, therefore, as counter-intuitive when I suggest that over-vigilance of one’s investments might backfire. Let me explain.
I’m beginning to wonder if how much money we have is less important than how we feel about it. I suspect that if I spent as much time exploring how I felt about my money as I have trying to earn it, I’d be a much happier person today. Is the person who is wealthy yet miserable just a cliché? What about people living in poverty who seem joyful and display incredible generosity? Before we dismiss these extremes as stereotypes, perhaps there is more to be learned by looking below the surface. As a financial planner, I have heard people express the gamut of emotions when it comes to finances. Often, just talking about our money issues can be very liberating.