By Warren MacKenzie, for Canadian Moneysaver
Special to the Financial Independence Hub
Retirees should remember that money only has value to the extent that it can be used to increase happiness. Unfortunately, some retirees who already have sufficient wealth may miss an opportunity because they mistakenly believe that greater wealth leads to greater happiness. In this three part series we discuss the relationship between money and happiness.
In his book, The Art of Happiness, the Dalai Lama says, “The purpose of life is Happiness” Aristotle has said, “Happiness is the meaning and the purpose of life, the whole aim and end of human existence.”
Wealthy individuals have absolutely no reason to feel guilty for using their wealth to maximize
their happiness. Whether rich or poor, going to a job we hate, or to the fridge for a snack, the reason we do something is always the same: we do what we do because we believe we’ll be happier by doing it. In this regard, rich and poor people are alike.
… one big difference between a poor person and a rich person is that the poor person believes that his or her problems will disappear with more money. Wealthy people know that this is untrue.
The Importance of both Managing and using your money wisely
The main focus of the financial services industry is to increase the size of investment portfolios. However, in many cases investors would be happier if, in addition to having a larger investment portfolio, they also had a better understanding of the relationship between wealth and happiness so they get to enjoy the pleasure that comes from using their money wisely.
Don’t mistake joyful events for a Happy Life
We all want a happy life so it’s important to understand the difference between a joyful event and true happiness. Examples of joyful events include buying your first new car, weddings, purchase of one’s first home, or a spectacular vacation. But we’re lucky if we experience a few joyful occasions each year. For a happy life we also have to be able to experience happiness as we participate in the routine activities that take up most of our days.
Regardless of our level of wealth, we all spend most of our days doing routine activities such as watching the news, checking emails, or speaking to family and friends. For a happy life we need to find happiness during these routine activities. The secret is to live in the present moment, to focus intently on our activities, and by so doing we may find happiness as we do the things we need to do each day.
Unconditional happiness is when you’re so absorbed in what you’re doing that you temporarily forget about who you are or how the time is passing by. You’re not thinking about yourself and instead you’re 100% focused on what you’re doing. You may be working or watching your favorite TV program, or you’re focused on a friend or spouse. And since you’re not thinking about yourself you have no wants or unfulfilled desires, financial or otherwise, which are the only source of unhappiness.
Unconditional happiness is also known as ‘living in the moment’ or being ‘in the zone’ or a ‘flow state’. As an example, imagine you’re watching your favorite TV comedy show and it’s the funniest show you’ve ever seen. You’re laughing almost hysterically and you’re thinking of nothing except the TV show and you’re unaware of the time passing. Now you’re living in the moment! Now you’re experiencing unconditional happiness.
In the next moment, your mind kicks into gear and you start thinking, and wishing your friend was here to enjoy the show. Now the spell is broken and you’ve lost the moment of unconditional happiness. You have an idea of yourself as a friend and you wish your best friend was there to share this experience. Now you’re no longer living in the moment, instead you’re conscious of yourself and your unfulfilled desire for your friend to be with you.
We all have the same opportunity for moments of unconditional happiness and our experience is the same regardless of the size of our income or investment portfolio.
Conditional happiness is when we’re happy because of something that you’ve acquired, or some experience you’ve enjoyed. These external events might include receiving an unexpected income tax refund, enjoying a new home, when our investment portfolio increases in value, or as our candidate wins the election.
When it comes to conditional happiness, wealthy individuals have the potential to acquire more material goods and experience more travel and adventures. Therefore, in this area, they have an advantage over less wealthy people.
It’s also interesting to note that happiness research shows that, in terms of conditional happiness, there is greater long term enjoyment when we spend money on experiences such as a cruise or climbing a mountain than spending the same amount on new toys or material goods.
Recognizing opportunities for Happiness by knowing when it’s as good as it gets
Regardless of one’s wealth, similar activities usually give about the same amount of pleasure. For example, if you enjoy a cup of coffee in the morning, you should know that no amount of wealth will increase the enjoyment of your morning coffee.
We know that Warren Buffett and Bill Gates enjoyplaying bridge. When they’re laughing and having fun playing cards they’re not enjoying their game any more than we do when we play cards or enjoy some sport.
If you have a child or grandchild who does well in school or has success in achieving some goal, you can be sure that this would trigger no greater pleasure for a wealthier parent or grandparent.
A lot of happiness (and sadness) comes from comparisons with our peer groups. Billionaires compare themselves with other billionaires and, as the British Philosopher Bertrand Russell points out, beggars compare themselves with other beggars.
Some wealthy individuals use wealth as a yardstick to measure success and they compare themselves to their friends or neighbours. But this may be a source of unhappiness because, unless you’re like Jeff Bezos or Bill Gates, you can always find someone with greater financial wealth.
But it’s nice to know that, whether rich or poor, if you compare yourself to the happiest person on the planet, you’ll find that for a good part of each day, you have the same level of happiness as that person does. These are the times when we’re ‘living in the moment’, when we’re so engrossed in what we’re doing that we’ve lost track of time and we’re not thinking about who we are and what we want. And fortunately, everyone, including the poorest, the happiest, and the richest people, can spend much of every day living in the moment, that is to say, being totally absorbed in routine tasks and activities.
It’s been said that one big difference between a poor person and a rich person is that the poor person believes that his or her problems will disappear with more money. Wealthy people know that this is untrue.
Part one of this three part series has explained how the main key to happiness is not greater wealth. We spend much of every day doing routine tasks and we can increase our happiness when we focus totally on the task, instead of thinking about something else we’d like to be doing. Each day we have many opportunities for happiness and part two of this series will explain how our happiness comes from our thoughts not our financial circumstances.
Warren MacKenzie studied, religion, philosophy and psychology at university, and after completing a B.Ed. at Dalhousie University he began teaching school in Nova Scotia. He left teaching to become a Chartered Professional Accountant, where he specialized as a Bankruptcy Trustee. Eventually he left public accounting to work as a financial advisor with a major brokerage firm, where he earned the CFP, CIMA and CIM designations.
Warren is the author of a number of books including, Zen and The Art of Wealth, The Philanthropic Family, The Unbiased Advisor and he is co -author of New Rules of Retirement and The C.A.R.P. Financial Planning Guide. He is a regular contributor to The Canadian Money Saver Magazine and the Financial Facelift column in the Globe and Mail.
Warren believes that it’s not enough to manage money wisely. It is also important for investors to have the information that allows them to use their money wisely. To use money wisely investors need to know how much of their capital is essential, i.e., necessary to achieve all their goals, and how much is surplus, i.e., money which can be spent or given away. On weekends he can be found at his farm working on his drystone rock wall.
This article originally appeared in the October 2021 issue of Canadian MoneySaver and is republished here with permission.