Shopping for happiness? Here’s a better idea.Submitted by TandemGrowth Financial Advisors LLC on December 2nd, 2019
By Jeff Bernier
Black Friday 2019 has come and gone, and consumers gave merchandisers quite a holiday gift: more money was spent in stores and online than ever before.
Sales were up about 20% compared to last year, and sales at ‘Small Business Saturday’ rose nearly as much at 18% higher compared to 2018. In short, consumers were enthusiastic. But while financial analysts are happy to announce that the increase in sales is a good thing because it signals that consumers are feeling optimistic about the economy, I’m not convinced that our willingness to jump into the buying frenzy is a sign of anything but trouble.
Before you start thinking I’ve suddenly become a holiday Scrooge, let me explain.
It’s no mystery that psychology has a huge impact on our relationship with money. On this recent episode of Money & Meaning, psychologist and behavioral finance expert Daniel Crosby shared some of his insights into how psychology and behavioral finance impact our investment decisions. But how we perceive money in relation to ourselves impacts much more than just how we invest. It also drives how we save and, yes, how we spend. For better or worse, how we think about money is directly tied to how we think about ourselves. That makes it all too easy to slide into thinking that the more money we have, the better we are as people. And that the more things we have, the happier we will be.
According to many experts on behavioral finance, quite the opposite is true. In fact, study after study has shown that making more money and buying more things are not the keys to happiness and joy. One example: a 2010 study from Princeton University found that it took about $75,000 dollars a year for people to be happy. People earning that amount reported that they weren’t stressed about how to pay their bills, and that their quality of life made them ‘happy.’ Knowing that, it would be easy to assume that more money would make them even more happy, right? Wrong. The study also revealed that when people made more than $75,000 dollars a year, their level of happiness didn’t increase. People with incomes lower than $75,000 reported that they were less happy, but once income jumped above that amount, there was no reported increase in happiness.
So what does increase happiness?
Once again, research has an answer. A study from Harvard University that began way back in 1938 looked at the lives of hundreds of men over a period of 75 years. The study (now known as The Harvard Study of Adult Development) included two groups: male sophomores at Harvard, and men of the same age from some of the poorest neighborhoods in Boston. Over the years, both groups were followed, interviewed, and given questionnaires, and researchers closely monitored their physical and mental health. What the study found was that levels of happiness and life satisfaction did not depend on how much money the participants had in the bank, how successful they were in their careers, or how famous they became (one subject even went on to become President of the United States). It didn’t depend on how many friends they had or whether they were single or married. In fact, the study concluded this important fact:
The greatest predictor of happiness
is not money or fame or belongings, but the quality of relationships.
Wow. If that’s not a wake-up call for the holidays, I don’t know what is! If Black Friday is any indicator, our focus on materialism has reached a new peak. And yet it has been proven that all of these things we are buying will not bring us happiness. The one thing that can bring us real, long-lasting happiness is connecting with the people we care about most.
Of course, that’s easier said than done. At times, trying to avoid what Daniel Crosby calls the ‘hedonic treadmill’ of continuing to buy and consume despite the lack of any real, long-lasting reward feels almost futile. But to be truly happy, we must continue to try. I must continue to try!
That’s why I’ve decided that before the frenzy of the holidays takes its hold, I’m going to rededicate myself to taking time out for gratitude—beginning with 20 minutes of silence and reflection every morning in December. I’ve learned that, for me, that time helps me get really clear on what I’m most grateful for at the moment, and on what really matters to me. (Hint: the answer has never been a 75-inch flat-screen TV or the newest iPhone.) If I am able to be completely honest and true to myself in those 20 minutes, I know that this simple act of counting my blessings will give me the clarity I need to focus not on what I don’t have already, but on all the things I do have. My lovely wife. My amazing kids. My new grandson. My friends and extended family. My clients and co-workers. These are the ‘things’ that really matter.
Life experience teaches us that life is about much more than money or titles or the things we buy at a Black Friday sale. But I’ve found that unless I take the time to reflect on that truth, I can get lost in the frenzy and stuck on the ‘hedonic treadmill.’ If you, too, find it a challenge to stay focused on what really matters to you—and to find your own happiness by connecting with the people you care about most—I invite you to join me in beginning every day in December with 20 minutes of gratitude. I expect that, come January, we’ll both be on a much straighter path to the kind of happiness we’re really looking for.