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Buying Happiness


A recent study found that people experienced greater happiness as their income rose, which is not  surprising.  But, it also found that rate of growth in happiness slows down when income reaches about $75,000 annually.  More money increases happiness less and less.

At that point, spending has a greater impact on happiness than income.  But, the type of spending must fit the personality type.  Some people are more materialistic than experientialist, and some are the opposite.  Some people enjoy having nice things, and some people enjoy having good memories.

Happiness continues to increase when a materialistic person continues to acquire goods and when an experientialist contines to have good experiences.  If an experientialist spends his money on nice things, he will not achieve the same happiness as a materialist.  To increase happiness, the spending must match the personality type.

Of course, the vast majority of people are somewhere in the middle.  After all, who does NOT want a good memory?  The role of the financial planner should fit the client’s personality.  I have one client who could happily spend the rest of his life aboard cruises.  Since he can afford it, I encourage him to do so.  I have another client who is fascinated by oriental art and has acquired more than she can afford.  Since it makes her happy, I have to stretch her dollars as best I can.

So, is my job as a financial planner measured by dollars in a client’s portfolio, or is my job measured in terms of client happiness?

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