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I daydream about what my life would be like with more money. In some cases, I really do believe that more money equals more happiness, but only to a certain point.
Brad Klontz, a financial psychologist and author of Mind over Money , says there is no correlation between money and happiness once your income reaches $75,000 a year. He adds that many of us set arbitrary "more money" or "more stuff" targets, believing that these magical numbers and material items will bring us meaning, peace, happiness, security or whatever else we feel is missing in our lives. The problem is that when the target is met, the corresponding payoff never shows up. Yet, we still want for more - and millionaires are no different.
In a recent survey of more than 1,000 American millionaires, more than 42 per cent said they did not feel wealthy. These respondents had at least $1-million (U.S.) in investable assets, excluding any real estate or retirement accounts. The same respondents said that to feel wealthy they would need an investable asset level of $7.5-million. I know many people who would feel wealthy with a million dollars in investable assets. It's all relative.
In the April issue of The Atlantic, we're given a preview of a new study by Boston College on the super rich - 120 people with a net worth $25-million plus. These individuals were asked to reply in writing to questions about love, work and family. You can read the full article here.
According to the article, "the respondents turn out to be a generally dissatisfied lot, whose money has contributed to deep anxieties involving love, work and family. Indeed, they are frequently dissatisfied even with their sizable fortunes. Most of them still do not consider themselves financially secure; for that, they say, they would require on average one-quarter more wealth than they currently possess."
More than $25-million to feel secure? Really? It's hard to believe. Again, ultimately how much money we need, or want, is relative to our expectations, our situations and our goals.
The ideal is to come to happy place with what we have while maintaining a healthy drive for what we want. Dr. Klontz says to get to this place, we need a clear idea of why we want to build wealth in the first place. If you believe that having more money equals more happiness, then be prepared to explain why.
Ask yourself why you want more money and then continue asking questions until you have the specifics. If you say you want more money so you can quit your job and travel, then imagine what you'll do in six months, one year, etc. Then what? Keep digging until you've mapped out what more money really means. Get to the heart of why you want more and then work on attaching a realistic dollar amount to that vision. Working backward from the more money, more happiness theory and asking "why" usually debunks the myth that more is always better, Dr. Klontz says.
Angela Self is one of the founders of the Smart Cookies money group.