{"id":8451,"date":"2018-11-07T13:39:23","date_gmt":"2018-11-07T19:39:23","guid":{"rendered":"https:\/\/digitalblogs.wpengine.com\/?p=8451"},"modified":"2019-09-30T18:53:35","modified_gmt":"2019-09-30T23:53:35","slug":"understanding-the-relationship-between-wealth-and-happiness","status":"publish","type":"post","link":"https:\/\/www.cainwatters.com\/digitalblogs\/understanding-the-relationship-between-wealth-and-happiness\/","title":{"rendered":"Understanding the relationship between wealth and happiness"},"content":{"rendered":"

By Hunter Satterfield, CPA<\/p>\n

Several years ago, a client of mine told me that he was re-reading the \u2018classics,\u2019 because his thinking had evolved since first reading them in grammar school.<\/p>\n

I took his advice and recently picked up \u201cGreat Expectations\u201d by Charles Dickens \u2013 a story in which young Pip is granted a sizeable fortune from a wealthy benefactor. Reading it with my current adult perspective allowed me to identify and ponder Dickens\u2019 question I most likely overlooked as an adolescent: what is the impact that wealth can have upon a person?<\/em> This is a complex topic and one that I find myself discussing with clients constantly.<\/p>\n

This same topic also arises in the book \u201cThe Geometry of Wealth,\u201d by Brian Portnoy. However, in trying to answer it, he takes a different approach from the typical personal finance or investing book. He is less focused on helping the reader maximize the amount of money sitting in stocks or bonds or real estate. Instead, Portnoy\u2019s self-defined quest for the book is to connect meaning and money and to answer the question of how does money figure into a joyful life.<\/p>\n

At the heart of his book is his definition for wealth: wealth is funded contentment. The heart of funded contentment is understanding what brings joy and happiness to a life. Portnoy posits that there are four enduring sources of a joyful life:<\/p>\n

– Connection is the need to belong.
\n– Control is the need to direct one\u2019s own destiny.
\n– Competence is the need to be good at something worthwhile.
\n– Context is the need for a purpose of<\/p>\n

Like Pip, Portnoy makes the point that people who have more money are not necessarily happier, though some are. It\u2019s generally agreed that those with wealth are often less sad, and understanding this makes the case that money \u2013 when spent wisely \u2013 makes a positive difference on one\u2019s life. This is an incredibly healthy conversation to have about money, which most personal finance books do not address.<\/p>\n

Portnoy suggests the first step for a person to have a healthy relationship with money is identifying what they want out of life. The process of earning, saving and investing money only serves to underwrite the purpose a person wants for their life, so it\u2019s essential to identify and understand this purpose first.<\/p>\n

Once Portnoy has broached this topic, he focuses on the process<\/em> in which to obtain the wealth one would need to fund their contentment. Portnoy shows us the strategy on how to think about what matters, how to set priorities in your life, make meaningful decisions, think in probabilities and find a balance between more and enough.<\/p>\n

He makes a compelling argument worth mentioning around protecting resources. He touches on the concept of risk versus reward in a way many authors have not\u2014he argues the importance to \u201cbe less wrong\u201d and challenges the traditional mantra that taking more risk results in more reward. Instead, Portnoy makes the argument that taking more risk \u201cincreases the variability of future outcomes.\u201d This is a helpful concept and one that underlies many of the decisions we make in our financial lives from investing to debt to insurance.<\/p>\n

At the end of \u201cGreat Expectations,\u201d Pip reflects on his circumstances over the years and concludes that the money he sought didn\u2019t bring the happiness he desired. Much of this was because Pip was too young when he received his great expectations to understand what he wanted in life. This is a conversation we have all had over the years and \u201cA Geometry of Wealth\u201d does an excellent job of shining a light on the elephant in the room and talking through both the happiness aspect and the actionable process investors undertake to build wealth.<\/p>\n","protected":false},"excerpt":{"rendered":"

By Hunter Satterfield, CPA Several years ago, a client of mine told me that he was re-reading the \u2018classics,\u2019 because his thinking had evolved since first reading them in grammar school. I took his advice and recently picked up \u201cGreat Expectations\u201d by Charles Dickens \u2013 a story in which young Pip is granted a sizeable […]<\/p>\n","protected":false},"author":7,"featured_media":8454,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"inline_featured_image":false,"footnotes":""},"categories":[27,35],"tags":[],"ppma_author":[48],"class_list":["post-8451","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-knowledge-know-how","category-the-advisors-shelf"],"acf":[],"yoast_head":"\nAn age-old question posed by authors Charles Dickens and Brian Portnoy<\/title>\n<meta name=\"description\" content=\"Brian Portnoy attemps to understand the relationship between wealth and happiness in his book \u201cThe Geometry of Wealth."\" \/>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link 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