I was lying in bed one night, half-awake when a question suddenly popped into my head (true story) – “If I had a sudden increase in my net worth of a million dollars (bitcoin perhaps?), how would I choose to spend, to increase my current happiness or wellbeing?”. I pondered about the same thing as many – a car, a house upgrade or travelling to exotic places that I always see on travel magazines. However, for some reason, none of those options felt like they can truly make a significant impact to my happiness over a long period of time. I ended up going with the option of getting myself the latest high end cordless vacuum cleaner from Dyson that I had been eyeing on for some time (another true story).
The above episode intrigued me a little and brought me to think a bit deeper. Was it that there really was nothing that I could buy that would be game changing to my life? Or was it that I already have everything that I wanted and am perfectly happy where I am today? That was when I realised that many things that will truly bring about long-term happiness are not things that can be bought, and that was the same when I thought back of the happiest moments in my life.
What Makes a Good Life?
A number of years back, I came across a TED Talk about what makes a good life and how Harvard’s longest study of adult life reveals the biggest predictor of happiness.
“If you were going to invest now in your future best self, where would you put your time and your energy? There was a recent survey of millennials asking them what their most important life goals were, and over 80 percent said that a major life goal for them was to get rich. And another 50 percent of those same young adults said that another major life goal was to become famous. And we’re constantly told to lean in to work, to push harder and achieve more. We’re given the impression that these are the things that we need to go after in order to have a good life.” Waldinger said in the TED Talk.
However, when the study tracked the lives of 724 men on their work, home lives and health, they learned that the biggest predictor of happiness was not wealth, fame or working harder. It is that “the good life is built with good relationships”. Even Warren Buffett famously said “Basically, when you get to my age, you’ll really measure your success in life by how many of the people you want to have love you actually do love you. I know people who have a lot of money, and they get testimonial dinners and hospital wings named after them. But the truth is that nobody in the world loves them. I don’t care how big your bank account is — your life is a disaster. That’s the ultimate test of how you have lived your life.”
So, there you have it. If you want to have long-term happiness, invest in your relationships. And through my work with various families from all walks of life, I sense the low correlation of their level of wellbeing with the amount of wealth they have.
What Makes a Good Career?
Another aspect that tends to come up high with regard to life satisfaction is from work, and this is no surprise, considering how much time people spend in their careers.
A significant influence in my thinking on this topic came from a book titled “Drive” by Daniel Pink that I read many years ago as well. Again, research findings showed that money is not the most powerful motivator or driver of career satisfaction. Instead, the three major elements that brings fulfilment at work are autonomy, mastery, and purpose.
Autonomy – Humans are naturally self-directed and have our own inner motivation in terms of how and why we do certain things. And the greater the autonomy (versus simply complying), the higher the level of engagement and satisfaction at work.
Mastery – We all like to get better at doing things, regardless of whether it is work related or something else like playing a sport or a musical instrument. It is the sense of progress that motivates us and contributes to our desire to continue pushing on, even when it gets frustrating.
Purpose – Having a purpose and meaning behind what we do provides the highest level of intrinsic motivation (or “starting with why” as what Simon Sinek says). It also gets people to willingly go the extra mile, if they care deeply enough.
Since then, I have always regarded these 3 areas as my guiding principles when it comes to making sure I invest my time well at work in achieving meaningful and fulfilling outcomes.
How Much Do You Need to Be Happy?
So, with all that being said, we still cannot run away from the fact that money is still required in nearly every aspect of our lives. Hence, how much do we actually need to be truly happy?
There have been numerous studies that showed, while money helps to provide for a basic level of needs, the happiness it provides starts to plateau above a certain level. But what if you have millions in your account?
Harvard Business School researchers Grant E. Donelly and Michael Norton surveyed 4,000 millionaires to find out their levels of happiness and discovered that those above $10 million were reportedly much happier than those in the $1 million to $2 million range. However, they also found that how the wealth was made matters, as those who were self-made seem to have significantly greater happiness than those who inherited the wealth.
But one interesting finding was that there is a way to buy happiness, and it is by giving. And many other research also supports this finding, that spending on others leads to greater happiness compared to spending on oneself.
Professor Norton also asked millionaires to state what net worth would they need to reach optimum levels of contentment. The answer consistently came out to be about two or three times compared to where they are today, regardless of what levels of wealth they already have.
This meant that the pursuit of wealth for happiness is a never-ending game, and sometimes, decreasing wealth by giving away can actually be better.
As a Conclusion
I realised that while wealth is important in helping to provide for what is most important to us, it remains exactly what it is, just a means to an end. The real currency in our lives is happiness, and there are many ways to invest and give, and subsequently reap the benefits that might not have a direct relation to money.
As I continue to ponder these big personal questions, perhaps I do not need to wait for my million-dollar windfall to come but just go and get that vacuum cleaner I wanted.
This is an original article written by Tan Chin Yu, Client Adviser of Providend, Singapore’s First Fee-Only Wealth Advisory Firm.
For more related resources, check out:
1. Story of Chin Yu: The Unspoken Sacrifices of Working Overseas Right After Marriage
2. To Live the Good Life, Make Life Decision First Before Wealth Decisions
2. How Indoor Gardening Influenced My Views on Wealth Building
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