Mihir is a type-A personality who comes from a humble background. Type A personalities are those people who are highly ambitious, competitive, and workaholics.
All his life, he watched his parents struggle for money. His dad worked as a peon in a primary school, and his mom was a domestic helper in a neighboring building. From his childhood, Mihir understood the need and importance of money. He knew he needed money to have an excellent standard of living, get better facilities, and never be restricted by the lack of money.
Mihir eventually grew to be a Business Development Executive at a big firm and started earning well. His career required him to be super competitive, but he was finally happy to get the standard of living, which he was aiming for a long time.
However, as time passed by, Mihir started getting promoted in his firm. He had less time to spend with his family and almost no time to pursue his hobbies. He soon became a bit unhappy, but he still believed that earning money and spending more time on his work was a sure way to make himself feel better.
One day at the office, one of his colleagues, Varun asked him a very interesting question about money, “What fact about money is important to you?”
Mihir didn’t think twice and said, “Security, financial freedom, and a good standard of living.”
Varun said, “Well, you have achieved a level of financial security. Now, why is money important to you? If money was not an object, what are the things you would prefer doing?”
Mihir said that he just wanted enough time to spend with his siblings and other family members. He also wanted to restart his hobby of cooking.
According to a recent study mentioned by the Entrepreneur, money does make people happy, but only to a certain extent. Money helps in eliminating financial anxiety. Some studies have shown that happiness rises with an increase in income, but after reaching a certain upper limit, the relation between happiness and income starts fading away.
More Money, More Troubles?
When the motivation to work is only driven by money, high earners start getting stressed out. Studies have pointed out that high earners report lower levels of life satisfaction and reduced well-being. Once we have more money, it leads to higher levels of anxiety, more material wants, isolation, and the fear of missing out.
Higher level of anxiety:
Suniya S. Luthar and Shawn J. Latendresse, in their research paper titled, “Children of the Affluent: Challenges to Well-Being,” show that children who come from well-to-do families report having higher levels of anxiety, depression, and dependence on drugs.
Money leads to more material wants:
With an increase in money, people start having more wants. Once people achieve their money goals, they start thinking about the next thing that can be done. There is an assumption that more material things will lead to more happiness. This is not true at all. In fact, with the rise of material possessions, people start getting more greedy and unhappy.
Countless studies have shown that the main drivers of happiness are spending money on experiences instead of things, spending time with family, and having interpersonal relationships.
Money leads to isolation:
The rise of income leads to a higher status in society. Once people reach this level and gain status, they start viewing other people as their competitors. Harvard Business Review, in its study, said that people with higher status are often isolated and less socially connected.
Fear of missing out drives new purchases:
With the rise of social media and exposure to other people’s lifestyles, most people report feeling insecure and unhappy with their own lifestyles. This has led to an increase in consumer purchases like buying the latest gadgets, following new trends. The fear of missing out on the latest happening causes people to be more materialistic.
Money with Values: Real Financial Planning?
There is no denying the importance of money. The issues with more money can be solved by knowing what your values are regarding money. Actual financial planning and wealth management happens when you know what is essential to you.
Let us go back to Mihir. Mihir wished to get more time for his hobby and family. These are his values. Everyone doesn’t need to have the same values as Mihir. If he decides to pursue things that are important to him, he will start feeling much better. He can choose to work less and take a pay cut. In return, he will get more time pursuing his hobbies and meeting with friends and family. Mihir will still be financially secure and happy.
Many people have goals related to money. They say that they want a certain level of income and make it their goal. People say they will be happy only if they reach that level of income. It is essential to ask deeper questions when it comes to our goals. We need to ask ourselves why we have these goals and not obsess over how much money we need to make before feeling happy.
Wealth management should be our priority with an increase in income. We can get financial advice from knowledgeable advisors who will help develop financial plans, retirement plans, and decisions related to taxes, accounting, estate planning, insurance, etc.
Frequently Asked Questions Related to Money and Happiness:
1. What are the issues with more money?
More money leads to lower well-being as people start focusing more on material gains and higher status.
2. How can these money issues be reduced?
Issues related to the psychology of money can be solved by spending money on experiences instead of purchasing new things, and giving some money to charity, etc.
3. Why is systematic wealth management essential to enjoy a happy life?
Wealth management is important to enjoy a happy life because it helps in eliminating financial anxiety and stress. It also helps in creating financial plans.
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