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…as if only shallow people would admit such pleasure. But if we really pay attention we’ll find many circumstances in which money does bring pleasure…if not happiness. Who can deny receiving a check in the mail and feeling some sense of elation? Money feels good coming in! Likewise it can be thrilling to spend it.
Money and happiness may seem to be intimately linked in those moments. But how are we at predicting how we’ll feel long-term? What if we are poor predictors of our future happiness?
Back in 2003, the New York Times magazine carried an article, The Futile Pursuit of Happiness. I’ve never forgotten it. The decision to buy something, whether an expensive meal out, a grande double soy latte, or a new car is based upon our own predictions of how we will feel having done so.
The authors of the study which inspired this article spent years researching the accuracy of our predictions about our happiness or unhappiness. They suggest that we don’t do a great job of it! We tend to overestimate the intensity and duration of how we’ll feel. What does this mean? When we anticipate buying that new car we imagine how wonderful it will feel and how happy we will be. We can see it! We can feel it! We imagine this feeling will last for a long time! Turns out that these predictions are most often wrong.
The feelings are never as intense and wonderful as we imagine and don’t last as long as we think. The car soon becomes ordinary and as a result our pleasure diminishes. Sure this makes intuitive sense, that the buying of things doesn’t really make us happy…and we think we know it. However, we tend to inaccurately forecast our future feelings based on the feelings of the moment, which the researchers term “miswanting.” As pleasure diminishes, we move onto the next thing that captures our fancy.
The study talks about “hot” and “cold” emotional states. The hot state is a state of high emotion involving anxiety, fear, craving, sexual excitement, courage and such, and the cool state is calm and rational. A decision made in a “cool” state of mind may be completely reversed in the “heat” of the moment, still feeling like the “right” decision. An example of this might be the purchase of an investment. You do your homework. You know it involves risk. Yet when the feelings of loss you experience when it goes against you may prompt you to sell it at a big loss, or alternatively justify holding it until it gets back to where you bought it before selling. Either decision may be a poor decision long-term.
What is going on here is that we can’t predict in a “cold” emotional state how we might react in a “hot” one. And in a hot state we may do things we later regret. This can apply to all facets of our lives, all the important personal, health, happiness, and money decisions we make. It can even be a matter of life and death. For example, in the interest of safety, mountain climbers all agree on a ‘turn around time,’ when no matter where they are on the mountain, they will return to base. Often when climbers are close to reaching a goal, and are filled with desire and determination (a hot state), they ignore the turn around time (made in a cold state.) This happened on Mt. Everest in 1996, and led to the deaths of eight climbers.
What does all this mean when it comes to the connection between money and happiness? It certainly suggests that we are challenged when predicting what will make us happy. And our emotions play a bigger role than we might think.
Perhaps when it comes to decisions about money and happiness, we can set up a system of checks and balances. One of these may be to delay a final decision by using a multi-step process. Consult trusted experts with experience in financial matters and your best interests at heart. Research the outcome of decisions made by others in similar situations. Try to always consider the big picture in any financial decision.
Though we may not be good at predicting our own future happiness, perhaps we can bring a cool head to the table, and avoid succumbing to temporary good feelings at the expense of our future well being. This way we can link money and happiness in a personal and meaningful way.