- Doug Oosterhart, CFP®
Money Buying Happiness - Mega Millions
We know the old adage, "money doesn't buy happiness," but what does it do?
Let's try to break things down in the most simple form.
Coming off one of the largest jackpots in lottery history leaves the mind open to wonder how they would use the money if they had won.
Imagine getting a deposit of $700 million. Obviously, a large portion of that would go toward taxes - but still, let's say you keep something like $400 million after-tax. What would you do first? Second? Who would you include in your new lifestyle? How would you decide who not to include (an even scarier question)?
The night of the drawing on January 22nd, I had a conversation like this with my fiance and her friend. At the end of the conversation, my fiance's friend exclaimed, "Oh my gosh you are getting me so excited just by talking about this!!" I quickly followed it up with the mathematical side of things to calm her down - that we probably wouldn't get struck by lightning on that particular evening.
However, the conversation got me thinking back to how we answered the "what would you do if..." questions. The answers all revolved around using the money we had won to buy something very specific - time. A finite resource that everyone has the same amount of. I often ask prospects and clients what they're saving for or why they're saving? Why do they want their money to grow? Isn't "retirement" literally using the money that one has saved to buy their calendar back? Money may not buy happiness directly, but one thing it can do is allow a person to do whatever they want whenever they want to do it.
I think back to reading one of the best books I've ever read, titled, The Psychology of Money (by Morgan Housel). Here are a few quotes from that book:
The highest form of wealth is the ability to wake up every morning and say, "I can do whatever I want today."
The ability to do what you want, when you want, with who you want, for as long as you want, is priceless. It is the highest dividend money pays.
Money's greatest intrinsic value - and this can't be overstated - is its ability to give you control over your time.
Using your money to buy time has a lifestyle benefit few luxury goods can compete with.
Flexibility and control over your time is an unseen return on wealth.
Now think about this - doing something you love on a schedule you can't control can feel the same as doing something you hate.
All of those quotes should make one really think. I've definitely seen a mindset shift with a lot of prospects and clients when it comes to their planning. Generally, the reasoning behind it has a lot to do with everything that happened in 2020. People want to retire (buy their calendars back) earlier, they're willing to save more, make sacrifices now. All with an overarching goal - use money as a tool to buy more time, time that allows them to do the things that truly make them happy. This is another reason why financial planning isn't one-size-fits-all -- what makes one person happy bores the heck out of another.
It all comes back to being able to do whatever you want, when you want, for as long as you want. The ultimate freedom. That's the biggest reason to save and invest appropriately.