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Does money increase happiness? Wellbeing in five parts

In the second installment of his financial wellbeing column, Ovation Finance chairman Chris Budd outlines the five parts to financial wellbeing

Does money increase happiness? Wellbeing in five parts

In the first column, I looked at financial wellbeing in very general terms. Now let us look at the subject in a bit more detail.

To recap, our objective is to look at ways in which financial planners can help their clients to be happier, not just wealthier. If you help a client plot a path to their future and if you give them confidence their investments are being looked after, you will have a loyal client.

If you help increase the wellbeing of your client, you will have an ambassador.

This is the objective of both this column, and the Financial Wellbeing Conference, which I will be hosting on 19 June.

First, then, let us put money in its proper place. Does money increase happiness? Well, that depends on how we use it.

According to Gallup, there are five parts to wellbeing:

  • Social wellbeing;
  • Career wellbeing;
  • Financial wellbeing;
  • Physical wellbeing;
  • Community wellbeing.

The most important one of these (according to a Harvard study) is social wellbeing.

Professor Tim Kasser (who appeared on the Financial Wellbeing Podcast episodes 42 and 46) has produced decades of research showing the value of accumulating money and materialism has a negative effect on wellbeing.

Once we have enough money to secure our physiological and safety needs, the focus of our wealth should therefore be on how it can support the other areas of wellbeing. To continue the journey up Maslow’s hierarchy of needs, we should consider how money can improve our loving relationships and our sense of belonging; help us find self-esteem, and then ultimately achieve our true potential through self-actualisation.

We can therefore see how a focus on wealth and possessions takes our attention away from what makes us happy. A financial planning meeting that focuses on a client’s money is not going to increase their wellbeing.

What, therefore, can financial planners, do to help their clients become happier, as well as wealthier?

Those attending the Financial Wellbeing Conference will hear from a series of speakers who will provide answers to that question. I will also have a few ideas in the next column.

Book your tickets here 

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