Happiness is a subjective state of being. Every person has a different set of criteria which determines how happy that person is. Every person can report a level of happiness in one aspect of their life but a different level of happiness in another aspect of their life.
When a person is asked “Are you happy?”, it may be easy to answer in the affirmative or the negative. But putting one’s happiness on a scale provides a more detailed response.
Spectrem asked 700 wealthy investors to rate their level of happiness on a 0-to-100 scale and the overall score arrived at 69.63. That is a relatively high level of happiness, and reflects the possibility that living at a certain level of financial success can produce happiness in an American citizen.
There is further proof. When the investors were segmented by wealth, the greater the level of wealth, the greater the level of happiness. Among investors with a net worth between $100,000 and $500,000 (not including the value of the primary residence), the happiness rating was 63.80, but when the investor had a net worth between $10 million and $15 million, the happiness rating reached 76.85.
So that’s it, right? Money buys happiness.
Except that investors with a net worth between $15 million and $25 million rated their happiness at 71.92, well below investors in the range of $3 million to $15 million in net worth.
So that’s it, right? Great wealth can negatively impact happiness.
There are dozens of factors which impact wealthy investors and their level of happiness. Advisors can inquire of their clients what factors are impacting their level of happiness to determine if a change in investment strategies can assist in improving the life conditions that are preventing client happiness.
But is happiness entirely tied to financial success? Investors were asked to rate their happiness in their personal financial situation, and the overall rating was 70.26, and it ranged from 57.45 for those with a net worth under $500,000 to 82.70 for those with a net worth between $10 million and $15 million. For those investors with a net worth between $15 million and $25 million, however, the rating dropped to 75.20.
So that’s it, right? Great wealth can negatively impact one’s happiness with their financial situation.
Does having too much money negatively impact happiness?
There may be an answer to that question within the other questions asked in the Spectrem study. Asked to rate their level of happiness with their relationship with their children, the rating followed the same trend that greater wealth produced grater family relationships (60.36 to 79.25) until the $15 million-$25 million investors responded with a rating of 58.56, the lowest rating of them all.
There is a story there, to be certain.
Asked to explain what might elevate their level of overall happiness, most investors blamed their investments, as 52 percent said a better rate of return on investments would improve their happiness level. The wealthier the investor, the more they looked to a higher rate of return as a way to improve their happiness.
For the lower wealth levels, an improved salary at work (36 percent), and less personal debt (28 percent) matched or exceeded a greater rate of return (28 percent) as an ingredient to greater happiness.
©2019 Spectrem Group