Most of us know someone who has achieved great financial success, yet still isn’t satisfied.
Their life seems to prove the old maxim that “Money can’t buy happiness.”
However, if we’re honest, most of us would still have our doubts. We’d like to experience wealth—even if only for a while. (Probably because we know that NOT having money isn’t exactly a ticket to bliss.)
A while back, I perked up when I stumbled across an interesting idea—an actual formula for happiness.
It was espoused by the psychologist and author Martin Seligman. He contends that the personal experience of happiness can be explained with the following formula:
H = S + C + V
The “H” in Dr. Seligman’s formula stands for happiness. He suggests that happiness (H) is a combination of three factors: your “set point (S),” your “circumstances (C),” and your “voluntary control (V).”
Here’s what he means by those terms…
Set point (S)
Dr. Seligman contends that we each have a unique “set-point” that explains our base level of happiness. We’ve all observed this. Some people approach each day like Tigger, the optimistic, enthusiastic tiger in the world of Winnie the Pooh. Others move through life like Eeyore, the pessimistic, gloomy donkey of the same world. Most of us are somewhere in between. How much of our normal temperament is nature and how much is nurture is hard to say. But this “set point” IS a factor in our happiness, and we need to understand it.
Circumstances (C)
Here’s where the money comes in. If you are facing a devastating financial situation: a lost job, an illness that keeps you from working, a natural disaster, a scam, a serious legal issue, a mountain of debt…such negative (and costly) circumstances will affect your happiness levels. The thing to do with such circumstances is to both acknowledge and accept their current reality, but also to couple that with the reminder that you have…
Voluntary control (V)
Even when things are bleak financially, we still get to choose our actions and our attitudes. The good news is you can improve your financial happiness through simple actions like:
- Making an appointment with a financial advisor
- Creating a realistic budget that aligns with your income and your long-term financial goals
- Curtailing your spending
- Beginning to save part of each paycheck
- Cutting up your credit cards
- Following a plan to pay off consumer debt
There are all kinds of things we can do. But that’s not all.
Attitudes are also incredibly important. You can’t always control how you feel about a financial matter, but you can choose to be a thankful person. You can decide to be grateful. You can decide to be generous.
Reducing happiness to a formula may sound like something only a nerdy psychologist would dream up, something only an engineer could love.
But if it can at least move you toward a life of greater financial awareness and increased emotional contentment, that’s a big win.
And speaking of winning…to win in retirement, it’s a good idea to figure out a smart way to turn your retirement savings into regular retirement income (so that your money lasts and you’re able to accomplish all your financial goals).
If you’re not sure how to do that, I’ve got a free tool that can help. It’s called the RISA (i.e., Retirement Income Strategy Assessment), and in just a few minutes it can show you what kind of retirement income plan best aligns with your personality and lifestyle. There’s no obligation, and you can access it by emailing me (bmoore@argentadvisors.com).
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