$ = $ = $ = $ = $ = $ = $ = $ = $ = $ = $ = $ Intentional Investing Newsletter September, 2004 $ = $ = $ = $ = $ = $ = $ = $ = $ = $ = $ = $ IN THIS ISSUE: 1. Note from Your Editor, Lynne 2. Article: Does Money Buy Us Happiness? 3. Resources: Money and Happiness 4. Intentional Investing Announcements ^`^`^`^`^`^`^`^`^`^`^`^`^`^`^`^`^`^`^`^`^`^`^`^ -=- Note from Lynne -=- Dear Reader, As I write this note, I'm watching news coverage of the ravages of hurricane Ivan. I hope that you and your loved ones are safe, and spared the devastating consequences of this recent reminder that "Nature rules." It seems pertinent, perhaps ironic, that I've planned a series on choice, money, and happiness for the next several issues of Intentional Investing. Natural events like hurricanes and tornadoes are reminders that we human beings have "imperfect control" in our worlds. Choice is both a blessing and a burden. The freedom to choose does influence how happy or satisfied we feel -- to a certain extent. There is some current, fascinating research on the negative impact of overchoice, as well as psychological factors that influence how we do -- or don't -- make choices. This information is very relevant to how we deal with our finances, and whether we feel at peace with money or chronic financial angst. In the next five issues, Intentional Investing will distill key ideas from the choice research and recent studies of consumerism. We'll apply these ideas to various money topics so that you can more effectively make wise, intentional decisions about your money. If the topics of choice and money resonate with your experience, let me know. If there are ways that you've managed to deal with difficult choices, I'd love to share them with other readers. And, do pass this newsletter on to friends who might benefit as well. Together we can discover ways to make smarter, more satisfying money choices. Warm regards, Lynne ^`^`^`^`^`^`^`^`^`^`^`^`^`^`^`^`^`^`^`^`^`^`^`^ Lynne Hornyak, Ph.D., Editor e-mail: Lynne@LMHServices.com Coaching successful professionals to greater financial freedom and well-being. ^`^`^`^`^`^`^`^`^`^`^`^`^`^`^`^`^`^`^`^`^`^`^`^ -=- Feature Article: Choice, Money, and Happiness Part 1, Does Money Buy Us Happiness? -=- =$= Series Overview =$= How many of us remember wishing as kids that we could make our own decisions? Wishing that we had our own money to spend the way WE wanted to spend it? No more fights with Mom and Dad, no more tears and disappointment. We'd be free to do what we wanted to do. And we'd be happy. Autonomy and freedom are central to the human spirit, and highly valued in our society. Freedom means the ability to make our own choices. Autonomy is about being an individual, making our own decisions WITHIN the matrix of our relationships. There is the assumption that when we can make our own choices, we are happy. And by extension, since money buys the freedom to have and do what we want, money buys us happiness. Over the next several editions of Intentional Investing , we will examine what we now know about choice, money and happiness. We will look at the relationship of money and happiness as well as the impact of overchoice on happiness. We'll examine how we make choices. Then we'll delve into factors that influence satisfaction with our choices -- maximizing, raised expectations, comparison to others, fear, missed opportunities and regret, adaptation and disappointment. Awareness of factors that can influence our choices buys us the potential to be more intentional. Yet, with that awareness must come action. So, we'll provide tips for moving forward toward greater financial security and well-being incorporating what we now know about choice. =$= Part 1: Money and Happiness =$= What do we now know about the relationship of money and happiness? Here are three key points. 1. Having more money doesn't necessarily make you happier. Over twenty-five years ago, economist Richard Easterlin pioneered the branch of research that studies the money-happiness connection. Reviewing surveys of individuals, Easterlin noted that American society was getting richer, but people were not becoming more content with their lives. Similar findings were reported in 2000 by psychologist David Myers when he examined the connection between affluence and subjective well-being over the past four decades. His conclusion? Young adults today grow up with more affluence, more depression and more social problems than their grandparents. Actually the relationship between money and happiness is quite complex. When you are poor, having more money does solve basic problems, which can result in greater well-being. What gets trickier is the assumption that more money creates greater satisfaction. What studies show is that money and happiness aren't directly correlated. (If directly correlated, as wealth increased, your life satisfaction would similarly rise.) So what factors affect the relationship of money and happiness? 2. Materialism. Materialism is the desire for material wealth. Psychologist Edward Diener is a well-known researcher of this subject. Diener's research shows that the least materialistic people report more life satisfaction. Yet the relationship between materialism and happiness is complex. Some studies suggest that people who focus on extrinsic goals such as acquiring wealth, possessions and status (i.e.., materialism) report greater unhappiness in relationships, lower moods and more psychological problems (Kasser, in DeAngelis, 2004). Yet Diener points out that materialists can be quite content if they have money AND their acquisitive habits don't interfere with their social life and other personally meaningful pursuits. As Diener sums it up, the worst combination is to be poor and a materialist. A second combination for unhappiness is a materialist with conflicting desires. And, while the research didn't address this point, we could predict that a materialist partnered with a nonmaterialist would also be a combination for unhappiness -- or at minimum, money conflicts -- if they weren't able to find common ground for their differences. To illustrate the point about conflict, let's consider the situations of Jill and Ella. Jill has been working 60 hours per week for the last nine months to snag a $200,000 year-end bonus. Jill is single and content with work as the focus of her life. She plans to retire at the age of 50 and is highly motivated to make money and build the lifestyle she wants. Jill most likely would report high life satisfaction. Ella also wants to snag that great bonus, and works as hard as Jill. Ella is very focused on her family's economic security. She lists family and close friendships as her highest values. Edna's husband is angry with her work habits, her two children cry when she misses their school functions and she hasn't seen her best friends in ages. What would you predict as Ella's level of life satisfaction? 3. Comparison to others. Social comparisons also affect the money-happiness connection. If you are making $60,000 and your peers are making $45,000, you're probably going to feel pretty good. Now, hang out with people who earn $150,000 and you are likely to appraise your $60K income quite differently. British economist Andrew Oswald points out another relevant angle on comparisons. His study, reported in the Wall Street Journal (Hilsenrath, 2002), finds that even if a person's income is rising, his\her happiness is likely to decline if the incomes of others are rising even more. The work of other economists raise the question of whether this is more pronounced in Europe than the United States. Regardless, you may still want to be on the alert for envious competitive feelings and their impact on your happiness. In addition, television programming and all forms of advertising induce us with messages that certain lifestyles and products will make us happy and attractive like the people in the images. They provide a powerful form of social comparison for many individuals. Unhappiness can result from not being able to acquire these possessions. It can also result from unrealistically high expectations about what these consumer goods will do for one's happiness and relationships once they are acquired (Richins, as reported in DeAngelis, 2004). Tips So what advice can we distill from the research regarding money and happiness? 1. Honestly assess your materialistic desires. Pursuing material wealth and possessions is neither good nor bad. It's the role you give them in your life and the expectations you have for what affluence will provide you that is critical to your happiness and well-being. 2. Know and live your values. Living in alignment with your values (i.e.., realizing intrinsic goals) is satisfying in and of itself, and offers more psychological benefits than pursuing wealth, status and possessions (Kohn, 1999). 3. Look for ways to reduce conflicts between your materialistic aspirations and your intrinsic goals. As the studies show, it's the CONFLICT between materialistic aspirations and other desires that causes unhappiness. For example, Ella might want to question whether she really needs to put in 60-hour weeks to get that great bonus. Is she assuming that she has to be the last one to leave the office to show her dedication and value? Is she working less efficiently because she's tired and stressed? Ella may be able to feel more satisfaction AND get her bonus by leaving at 6 pm, enjoying dinner with her family and coming to work less stressed and fatigued. 4. Be selective about your comparison group, watch your envy and stay alert to media messages that can influence your perceptions. Like materialism, comparisons aren't good or bad. They can inspire us and spur us to achieve. They can also result in feelings of failure or misery if the target of our comparison is unrealistic, unattainable or some idealized image of life. 5. Remember that YOU choose your reference points, consciously or unconsciously. So, why not intentionally choose the way many athletes do? They play tennis, golf or swim with somewhat more proficient athletes to inspire themselves to play at their best. They select a well-matched competitor to track during a race to space themselves, not judge themselves. How does this translate to you and your money life? Choose comparisons or reference points that promote healthy striving -- to earn at your peak, to accumulate assets that build financial security, to deiscover products and services that will give you pleasure without breaking the bank. Some ideas: Surround yourself with people who have healthy attitudes about earning money and good salary negotiation skills. Take classes, read books, find a financial advisor, create a success group that support getting off the work-and-spend treadmill. And remember to enjoy the abundance of life. References DeAngelis, Tori. Consumerism and Its Discontents. APA Monitor on Psychology, June, 2004. Hilsenrath, Jon. Does Money Buy Happiness? Wall Street Journal, January 4, 2002. Kohn, Alfie. In Pursuit of Affluence, at a High Price. New York Times, February, 2, 1999. ^`^`^`^`^`^`^`^`^`^`^`^`^`^`^`^`^`^`^`^`^`^`^`^ Like what you're reading? Then send this newsletter to friends, family, and colleagues who are interested in moving toward greater financial freedom and well-being. They can subscribe at www.lmhservices.com, or by sending an e-mail to Lynne@WLMHServices with "subscribe newsletter" in the subject line. ^`^`^`^`^`^`^`^`^`^`^`^`^`^`^`^`^`^`^`^`^`^`^`^`^`^ -=- Resources: Money and Happiness -=- $ Interested in reading more about the consumer culture? Here are books by two authors mentioned in our feature article: "The High Price of Materialism" (2002), by Tim Kasser. "The American Paradox: Spiritual Hunger in an Age of Plenty" (2000), by David Myers. $ Also, check out Amazon.com's Listmania series, particularly Robert Moore's Confronting Consumerism. Moore lists and reviews 25 books on this topic. $ Interested in reading more about ways to develop both financial and personal fulfillment? Here are two of the many possibilities available: "Your Money or Your Life" by Joe Dominguez and Vicki Robin. Their 9-step program helps you understand the price you pay for living your money life unconsciously, both the earning and the spending parts. Dominguez and Robin address value-lifestyle conflicts, the work-and-spend treadmill, reordering material priorities, discovering the power of "enoughness" and other critical factors for taking control of your money and increasing your happiness. "The Millionaire Next Door" by Thomas Stanley and William Danko. Surveying over one thousand millionaires, Stanley and Danko distill seven common denominators --- beliefs, attitudes and actions -- among those who successfully build wealth. While the authors don't directly address the money-happiness connection, their interviewees' stories are revealing. Happy Reading! ^`^`^`^`^`^`^`^`^`^`^`^`^`^`^`^`^`^`^`^`^`^`^`^`^`^ If you are interested in coaching, contact me for a free half-hour consultation at Lynne@LMHServices.com. or (202) 387-5923. Please include your name, e-mail address, phone number and brief description of your interest in being coached. ^`^`^`^`^`^`^`^`^`^`^`^`^`^`^`^`^`^`^`^`^`^`^`^`^`^ -=- Intentional Investing Announcements -=- $ Free September Teleclass $ Can Money Buy Me Happiness? Tuesday, September 28 7:00 – 8:00 pm EST We know that more money doesn't translate into more happiness, but what about going for financial AND personal fulfillment at the same time? In this informal teleclass, we'll discuss how to make that happen, obstacles that get in the way, materialism, happiness-sapping social comparisons, and much more. Bring your questions, share your solutions. It's sure to be a lively exchange! To register: Send an email to Lynne@LMHServices.com with Register Sept 28 in the subject line. In the body of the e-mail, please include your name and email address where you'd like to receive the teleclass phone number and information. Please register by Monday afternoon, September 27 so that you are sure to receive the phone-in information on time. ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ Have you been to the Intentional Investing webpage lately? Go to www.lmhservices.com and click on "Changing your Relationship to Money." On the Intentional Investing webpage, you can take a self-quiz on Your Relationship to Money, participate in a survey on gender and money, access articles written by Lynne as well read previous editions of this newsletter! ^`^`^`^`^`^`^`^`^`^`^`^`^`^`^`^`^`^`^`^`^`^`^`^`^`^ PLEASE NOTE: Intentional Investing [TM] is intended for informational and educational purposes only. It is not a substitute for financial, legal, accounting, psychotherapeutic, or other professional advice and consultation. ^`^`^`^`^`^`^`^`^`^`^`^`^`^`^`^`^`^`^`^`^`^`^`^`^`^ Copyright 2000-2003 Lynne Hornyak. All rights reserved. The above material is copyrighted but you may retransmit or distribute it to whomever you wish as long as not a single word is changed, added or deleted, including the contact information. However, you may not copy it to a website without my permission. Reprint permission will be freely granted upon request. Advance written permission must be obtained for any reprinting of this material in modified or altered form. ^`^`^`^`^`^`^`^`^`^`^`^`^`^`^`^`^`^`^`^`^`^`^`^`^`^ $=$ CONTACT INFORMATION $=$ Lynne Hornyak, Ph.D. LMH Services Coaching and Consulting 3818 Klingle Place, NW Washington, DC 20016 Phone: (202) 387-5923 Fax: (202) 244-3373 e-mail: Lynne@LMHServices.com Web: www.LMHServices.com ================================== Please be advised that confidentiality of email transmissions can not be guaranteed. ================================== Lynne Hornyak, Ph.D., PCC LMH Services Coaching and Consulting lynne@lmhservices.com (202) 387-5923