We Americans sometimes play the financial what-if game. What if I won the lottery? What if I invented the Next Big Thing. We often wrap-up that exercise by telling ourselves that being rich is probably a huge hassle and we’re happy with our current money situation.
But it that true? Is it really “mo’ money, mo’ problems?” Recent research says no, and in fact, indicates quite the opposite.
Substantial wealth can go a long way towards creating and maintaining a sense of emotional well-being, says a report from wealth management firm Boston Private Wealth. While most of us typically think of wealth in financial terms, for the highest-net-worth Americans, wealth means more than just dollars and cents.
For them, money provides “emotional well-being,” the report says.
The online survey included 300 Americans with net investable assets between $1 million and $20 million, excluding their primary residences.
According to data from the report, very wealthy Americans say the top measurements of their wealth are not purely financial gains. Instead, 65% of participants ranked “peace of mind” as a top measure of their wealth, and 54% ranked “happiness” as a top measure. Financial capital – including things like savings, investments, etc. – came in third place.
For those polled, their wealth may not be the golden ticket to overall happiness, but it does create positive feelings. Over half of participants reported that thinking about their wealth generated feelings of satisfaction (59%), responsibility (55%) and gratitude (54%).
There are also some negative feelings associated with wealth. For instance, 64% of business owners and 55% of those with $15 million to $20 million in investable assets reported that they regret the time spent accumulating wealth that they could have been devoted to family.
When asked what motivates them to continue to pursue wealth building, almost 70% of participants in the survey reported desires like “living a comfortable life.” Others said they wanted to provide their family with financial security (53%), or that they wanted to achieve financial freedom (50%) and spend quality time with family and friends (48%).
“What we found was that these drivers are fluid and highly nuanced—and how we help people create wealth is not simply about financial figures but about the realization of emotional aspirations,” says David Murphy, head of wealth advisory at Boston Private Wealth.
The takeaway here: money may not buy us happiness, but money matters.
Real wealth is relative; you don’t have to be a millionaire or multi-millionaire to be wealthy. And there comes a point of diminishing returns; a point where more money offers only incremental increases in happiness. I explore this “Plateau Effect” in my book, You Can Retire Sooner Than You Think. In my experience, the happiest retirees understand this truth and don’t pursue wealth for wealth’s sake.
As the late Malcolm Forbes once observed: “Money isn’t everything as long as you have enough, and ‘enough’ depends on the person.”