Real Money, Real Families

REAL MONEY, REAL FAMILIES

Insights on happiness and money By Luke Erickson

With the holidays that come this In other words, once a person has some time of year we’re reminded fairly reasonable needs and wants covered, of many of the things that the only thing extra money will do is increase bring happiness to our lives, expectations that offset any increases in such as candy, turkey, and presents. If only income. happiness were so simple, right? When choosing careers, we might visualize

Happiness is an elusive thing. Yes, food an “importance-of-money spectrum.” On one and gifts can provide small, temporary paths end of this spectrum are those who strongly to a little happiness, but research indicates believe that the more money they earn, the that sustained happiness involves things like happier they will be. This belief drives many gratitude, life-purpose, relationships with people into careers that they do not really others, etc. enjoy, but which are fairly effective at filling

And where does money fit into the Luke Erickson bank accounts. On the other end of the equation?! spectrum are those who believe that money has

First of all some quick spending tips. Research has been very little value in determining one’s career, life pursuits, and pretty consistent in showing that dollar for dollar, money ultimate happiness. These folks can sometimes find deep and spent on experiences, time-saving options (like a house lasting meaning in their careers, but can also be left wanting cleaner), and connecting with others (dinner out with friends) in certain basic financial goals, which can ultimately subtract tend to produce more happiness than material goods of the somewhat from the happiness level the meaning in their jobs same price. gives them.

But what about earning more It would seem that the key to money? Since money spent on certain things like experiences can The good news is that one of the best money and happiness is in finding a balance in the middle of the boost happiness, shouldn’t more tools for combating this tendency is spectrum, or, in other words, in money and more spending result in even more happiness? pretty simple and straightforward. finding that career path where you can pursue both meaning AND a It’s common to see articles listing the highest earning actors, It’s gratitude. fairly generous paycheck. Easier said than done, right? In a 2018 most successful rock stars, richest survey by BetterUp labs, 9 out billionaires, etc., but how often do you see those same kinds of 10 people said they would give up about 25 percent of of lists for happiness? What if we could actually measure their income for a job that was more personally meaningful, happiness like we can dollars? Who would be the happiest meaning that most people do not find much meaning in their person on earth? Would the list of happiest people line chosen careers. up with the same folks on the billionaire list? We know So many of us feel stuck because we don’t know where instinctively that that is probably not the case, yet it is so to find such jobs, or, heck we don’t even know what our easy, and we’re so often pushed by the pop media, to equate strengths are and what will actually give our jobs meaning. money with happiness. This is a sentiment echoed by a quote One way to find out is to explore and increase your personal I came across a while back, “Money can’t buy happiness, but strengths at viacharacter.org. Or, just try jotting down a it can buy a pretty close imitation.” few of your values until some patterns emerge that might

How close do money and happiness align? A well-known translate into a career adjustment that you may find to be study in 2010 by Princeton professors Daniel Kahneman more fulfilling. and Agnus Deaton found that a person’s happiness level will Now, let’s say that somehow you are able to become one generally rise as they make more money, but only up to a of the few who have managed to find that perfect balance of point. That point, according to their estimation, was about meaning and pay in your career. Is your happiness level (as it $75,000 a year per person. A later study out of Purdue relates to money) set? Nope! That would be far too easy. We published in 2018 put that number more around $95,000 per also have to avoid the tendency to compare ourselves to others. person per year. But the evidence suggested that anything Comparison is one of the quickest paths to unhappiness over roughly $100,000 per year did not correlate much with with money, and yet we all do it. Even if we may be better increased happiness. off than 90 percent of our neighbors, we will tend to focus 6 OCT/NOV/DEC 2020 | Idaho Family Magazine

our attention in on that one neighbor who always seems to be driving a newer car, and taking slightly more luxurious vacations, and of course with the slightly greener grass. That’s the one we choose to compare ourselves to…and with predictable results: discontent with what we have.

Teddy Roosevelt is credited with saying, “Comparison is the thief of joy.” Today a similar concept is found in the popular term FOMO (Fear Of Missing Out). Experts say FOMO is exacerbated by comparisons to others on social media, where the vast majority of posts are meant to highlight the very best of a person’s life and hide the worst. Research has shown that about 10 percent of a typical person’s thoughts involved comparisons to others. So, if Teddy is correct, that means we spend 10 percent of our time unintentionally sabotaging our own happiness. The good news is that one of the best tools for combating this tendency is pretty simple and straightforward. It’s gratitude.

Author David Steindl-Rast said, “Gratefulness is the key to a happy life that we hold in our hands, because if we are not grateful, then no matter how much we have we will not be happy – because we will always want to have something else or something more.”

Keeping a regular gratitude journal can help us keep in mind those things that we might otherwise take for granted. Robert Emmons, a professor at UC-Davis, said that emphasizing people over things and treating the good things in our life as “gifts” can make a substantial difference. It also serves as an added distraction from the tendency to compare. When we’re dwelling on gratitude for something or someone, it’s hard to simultaneously dwell on feelings of comparison and discontent.

This brings us to the last main ingredient for happiness: strong relationships with others. Weak relationships tend to foster misunderstandings and jealousy, whereas strong relationships help you see a person as a whole – complete with strengths and weaknesses – which will help melt away tendencies for superficial comparisons.

So yes, money can help you on your path to happiness, but that is only one ingredient. Relying solely on money for happiness would be like using only sugar to make a batch of cookies. Sure, sugar is a pretty important ingredient, and may even taste okay on its own, but without the other ingredients it will never be a cookie.

In summary, take some time this holiday season to be grateful for the good things (“gifts”) and people in your life, and give a little thought to ways you might find a better balance of meaning and pay in your career.

Luke Erickson, Ph.D., AFC®, is an associate professor of personal finance for the University of Idaho. He lives and works in the Treasure Valley. Luke and his wife Rachel have been married for 15 years and live in Meridian, Idaho with their four energetic children. Got questions or comments about kids and money? Email them to erickson@uidaho.edu; he’ll respond in future articles.

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