Welcome to The Invested Dads Podcast, simplifying financial topics so that you can take action and make your financial situation better, helping you to understand the current world of financial planning and investments. Here are your hosts, Josh Robb, and Austin Wilson.

Austin Wilson:

All right. Hey, hey. Welcome back to the Invested Dads Podcast, a podcast where we take you on a journey to bear your financial future. I am Austin Wilson, Research Analyst at Hixon Zuercher Capital Management.

Josh Robb:

I’m Josh Robb, Director of Wealth Management at Hixon Zuercher Capital Management. Austin, how can people help us with our podcast?

Austin Wilson:

Number one; if you’re not subscribed already, we’d love if you would. And number two; go to our website, theinvesteddads.com, and sign up for our weekly newsletter to be notified each and every Thursday when our new episode drops, as well as have a link, and some show notes and everything. So go do that. But today we’re going to be talking about a question that is often discussed; does money buy happiness, Josh?

 

[0:55] – Princeton & UPenn Study on Money Buying Happiness

Josh Robb:

We’re going to dive deep into that because there’s a lot to that, and is money really that key to happiness?

Austin Wilson:

Sounds like a loaded question.

Josh Robb:

The answer most people think of is, “Yeah, if I had more money, I’d be happier.” That’s just the general consensus of most people when you think, “Man, if I just had a little bit more money, things would be better.” But we’re going to find out there’s more to it than meets the eye.

Austin Wilson:

There is more to it.

Josh Robb:

We’re going to start by looking back. There’s been some people smarter than me doing some research on this stuff.

Austin Wilson:

That’s hard to find by the way.

Josh Robb:

There’s a easy way to fill that one.

Austin Wilson:

He’s smarter than me. So are you saying we’re going to get academic?

Josh Robb:

We’re going to get some academic research in 2010 at Princeton University, and they found that day-to-day happiness rose as annual income increased, but anything above $75,000, your happiness leveled off, and you didn’t get much happier after that.

Austin Wilson:

It was much-so incremental.

Josh Robb:

Incremental happiness slows down or about a 100 and some 1000 dollars today by their study.

Austin Wilson:

Okay.

Josh Robb:

Now in 2021, the University of Pennsylvania did research, and they found that happiness does continue to go up well beyond that $75,000 threshold from the original Princeton study without any kind of plateau.

Austin Wilson:

So what you’re telling me is that there is a discrepancy.

Josh Robb:

There is a little bit. So, the two people that were instrumental in each of those got together, and did what’s called an ‘adversarial collaboration,’ which sounds like two words that don’t go together.

Austin Wilson:

It’s like people that hate each other, we’re getting together.

Josh Robb:

They were joined by a Penn Integrates Knowledge University professor.

Austin Wilson:

Okay.

Josh Robb:

She was the arbiter. They got together and looked at their stuff, collaborated, and did a new paper, and they found that on average, larger incomes are associated with an ever-increasing level happiness.

Austin Wilson:

Okay.

Josh Robb:

So you say, ‘Oh, so Princeton was wrong?” No. As they looked into the actual details, more to it than that, right? Happiness is not just defined by an income threshold. So the relationship within that person’s life mattered a lot. Very complex. Unhappy people at any income level struggled to gain happiness, especially above the $100,000 mark, which again, when you look at inflation, that $75,000 threshold, they were moving that up. So this is a quote from Killingsworth, which was one of the two professors that were doing this, said in the simplest terms, “This suggests that for most people, larger incomes are associated with greater happiness. The exception is people who are financially well off but unhappy. For instance, if you’re rich and miserable, more money will not help. For everyone else more money was associated with higher happiness to somewhat varying degrees.”

Austin Wilson:

So back to your point, it is largely dependent on your mindset and how you’re feeling about your life rather than just an arbitrary dollar amount.

Josh Robb:

Yes, that’s really what it comes down to. So, if you are not happy at $50,000, doubling your income to $100,000 because of your mindset and outlook doesn’t add much more happiness.

Austin Wilson:

You’re already unhappy.

Josh Robb:

Yes.

Austin Wilson:

You’re going to be unhappy.

Josh Robb:

Yes. But if you’re a person who’s content or happy at $50,000, if you get bumped to a $100,000, your happiness does go up.

Austin Wilson:

Okay.

Josh Robb:

In fact, for that middle income grouping especially, there was an exponential. They were able to utilize more income to increase their happiness, which is pretty cool to see.

Austin Wilson:

Because they were already happy and they were using the additional income to buy things that would make them even more fulfilled, more happy and all of that.

 

[4:18] – Dad Joke of the Week 

Josh Robb:

Yes. We’re going to talk a lot about that after the dad joke, where money and happiness are correlated, but money is a tool to utilize for happiness. That’s not the only factor that attributes to your happiness.

Austin Wilson:

Gotcha.

Josh Robb:

So let’s do a dad joke, and then we’re going to get into the more–

Austin Wilson:

How about a dad joke three? A triple dad joke.

Josh Robb:

Ooh, that will increase my happiness. That will.

Austin Wilson:

I know. That’s what I’m trying to do, Josh. So three dad jokes coming at you.

Josh Robb:

Okay. I’m ready.

Austin Wilson:

Triple header.

Josh Robb:

I’m ready.

Austin Wilson:

What did the alpaca say to his date?

Josh Robb:

Ooh, I don’t know.

Austin Wilson:

Want to go on a picnic? Alpaca lunch.

Josh Robb:

Alpaca lunch.

Austin Wilson:

Classic.

Josh Robb:

Like it.

Austin Wilson:

All right, here’s another animal related one for you.

Josh Robb:

Okay.

Austin Wilson:

What do you get if you cross an angry sheep with a moody cow?

Josh Robb:

Angry sheep with a moody cow… I don’t know.

Austin Wilson:

You get an animal that’s in a baaad mooood.

Josh Robb:

Oh, man. Two sounds, two animals.

Austin Wilson:

That’s pretty good, right?

Josh Robb:

I like it.

Austin Wilson:

And last but not least, what do you call a penguin in the White House?

Josh Robb:

I don’t know.

Austin Wilson:

Lost.

Josh Robb:

Oh, yeah, that would make sense.

Austin Wilson:

Just lost. Yeah, just lost.

Josh Robb:

I guess that’s true.

Austin Wilson:

Good stuff.

Josh Robb:

They don’t need to be there.

Austin Wilson:

The dad joke of the week turned into three dad jokes of the week.

Josh Robb:

Very good. My happiness factor just went up.

Austin Wilson:

Josh’s happiness really matters here.

 

[5:25] – Money is a Tool to Be Used Well

Josh Robb:

Okay, so now we’re going to talk about this all right. So we’ve learned from these studies, and again, most people would associate that, “Yes, if I had more money, I think I would be happier.” It doesn’t always play out because with more money comes more responsibilities, and different stress levels. But in general, people who are happier content if they do get more income, their happiness level does go up. It just makes sense right? Now, it’s a tool. Here are some things that money does help improve, and it just, again, makes sense. If I have more money, I have better access to healthcare and those different things that would provide better longevity.

Austin Wilson:

True.

Josh Robb:

We see that the higher income people actually have longer life expectancies.

Austin Wilson:

Well, that could be due to; A) healthcare, but B) even things like food. Better choices. Better food. Better options.

Josh Robb:

Better food if they could afford healthier options, yes. If I have more income, I have better education opportunities, and better housing opportunities, which results in a safer family. If I’m in a good place and have access to good education, I improve my generational happiness.

Austin Wilson:

Oh, absolutely.

Josh Robb:

Because they’re going to have those opportunities long term. So money does help in those situations. How you use your money is also very important. So these research things that we saw, and throughout other psychology reviews and sociology stuff that looks at people said; how you spend your money, dictates happiness. People who use their money for experiences report being happier then people who use it for material things.

Austin Wilson:

Gotcha.

Josh Robb:

So if I’m using it for a trip, a family trip that we’re going to go and spend time together versus I’m buying a new car, those drive more happiness during that family trip.

Austin Wilson:

I think of the old saver spender thinking. I think that I don’t have numbers on this, this is just coming to me right now.

Josh Robb:

This is just making it up.

Austin Wilson:

But as you discuss, and we’ve discussed many times, spenders often love the experience side of things, and they may have a bit more of the natural happiness because of that than the savers would have, because they’re not getting the same experience in that way.

Josh Robb:

I would say that is true. If you think about the derogatory terms for a spender and a saver, they’re worse for the saver, right? If you’re a saver, and they look at you, you’re a penny pincher, you start working your way down, right?

Austin Wilson:

Or cheap.

Josh Robb:

I’m thrifty, okay. Then you move into cheap or just not a nice person.

Austin Wilson:

I know.

Josh Robb:

You get there. But if you’re an over spender, it’s, “Oh man–.’.

Austin Wilson:

You move down to responsible. I don’t know.

Josh Robb:

You just, “Oh, you just overspend.” So yeah, you’re right. I think they’re seen as enjoying life more because they are spending.

Austin Wilson:

Absolutely.

 

[7:59] – Purpose Doesn’t Come from Money 

Josh Robb:

And then the second piece of how you use your money is the people who take their extra income, and utilize it to help drive their sense of purpose, are happier. Again, this is common sense when you think about it. The idea there is no matter how much money you have, unless you have a sense of purpose in your life, and have a reason for what you’re doing, happiness is probably something you’re always trying to reach for and can’t achieve.

Austin Wilson:

Absolutely.

Josh Robb:

You and I, we’ve had conversations about these type of things, and it doesn’t matter your income or your wealth, you can see happy people who have found their purpose in life and are doing that. You look at people who, whatever the profession is, and I’m going to say teachers, because that’s, I think a great example of somebody who’s very vastly underpaid for the value they provide. You can have some very happy teachers who are fulfilling their sense of purpose, and not making a ton of money. I look at that and I say, “Okay, that’s really the sense of happiness, is not how much money do I have or how much money has grown? Am I doing the thing that makes me feel fulfilled?”

Austin Wilson:

Right.

Josh Robb:

If money comes along with that, even more so, that’s the end result. Or when we look at retirees, and this is who we deal with a lot, is once you’ve accumulated wealth, and are transitioning out of that working career, the ones that are happiest in retirement are also the ones that say, “I know that thing that’s going to drive me going forward. When I don’t have to get up for work, what is that thing that’s going to make me want to get up in the morning?”

Austin Wilson:

Right.

Josh Robb:

That purpose is huge. We’ve talked about that. We had Scott Miller on, and he has that life coaching program that he’s doing, and he spends a lot of time on that. I think that matters more so than money, is my sense of happiness is; do I have a reason? Do I have a purpose? Do I know what it is that drives me every day?

Austin Wilson:

Absolutely.

 

[9:54] – Does Money Buy Happiness?

Josh Robb:

So does money buy you happiness? The answer is, yes.

Austin Wilson:

It does to a point. It depends on a lot of other factors as we talked about. I think you hit the nail on the head when it comes to; why are you getting up in the morning? That brings up a lot of purpose that can drive the way you feel about your life in general. If you have that purpose, and for a lot of people that we talk to in our lives that revolves around their faith, or their family. Some people, it is their career, but they have a reason to get up and go put two feet on the ground, and get it done that day. Those people are going to have the outlet that as they do get more income, they’re going to find a use for it that is positive. So if things like your faith or something that’s very important to you, as you get more income, maybe that just lets you be more generous. That allows you to give back more. If it’s your family, same sort of thing; as your income goes up, you have more opportunities to spend more time, more special events, more trips, more…

Maybe it’s an experience or some sort of vacation with your family, more memories. I think that those are some things that we can definitely say that we understand that side of the ‘does money by happiness?’ Well, that would be a yes. If you have more money and those are high priorities in your life, that’s going to increase your overall happiness if you have more money. But I think if you just wake up every day and you don’t have that, you don’t have that direction, you don’t have that sense of purpose like you’re talking about, I think you’re really going to struggle even with more money.

Josh Robb:

So then the question becomes, all right; if money’s just a tool that helps me get more happiness, how do I find this of purpose? If that’s really what drives happiness. If the unhappy person with no sense of purpose can’t get happier or much happier with more money, I really need to focus more on the purpose.

Austin Wilson:

Right.

Josh Robb:

So how do you find that sense of purpose? Well, there’s a couple of things that you do. First of all is stop and look back and say, “What are the things that I enjoy doing that provide value to myself, family, or others?” Right? That’s a good starting point because there are a lot of things out there that can provide purpose, but if I don’t enjoy doing them, am I really going to be happy?

Austin Wilson:

Right.

Josh Robb:

So start with that. And then one thing that I’ve done is when you ask people close to you to define some of my strengths or what they see in me, that can help direct you too. Because sometimes you can be blinded or have blinders on to what some talents you have, or some things you’re good at. Because for instance, if I do certain things that, my assumption always was, “Well, everybody can do that so it’s not that special, unique.”

Austin Wilson:

Right.

Josh Robb:

And then other people say, “Well, no, that’s actually not true.” You may think it because it’s natural to you, but not everybody is the same way. And then finding out from others where there’s opportunities, working through that, and then trying things out. There’s nothing wrong with trying something and saying, “That’s not exactly what I thought,” and trying something else. And then, so once you find that sense of purpose, when do you pursue it? Is that something that’s a retirement thing?

Austin Wilson:

It depends, I would say also.

Josh Robb:

I’m of the mindset that depending on what that sense of purpose is, you probably can do something in your life something.

Austin Wilson:

Yeah, something with it.

Josh Robb:

Maybe not full time, but maybe be involved at some way. So for instance, I do enjoy coaching. I’ve coached many different sports and many different teams, and that is something that drives me, makes me happy, and a sense of purpose in my life. Can I do it full time right now? No. But I can do it in limited amounts with my kids in situations, and that it gives me enough sense of purpose from that piece of my life that I’m happy because I do that so.

Austin Wilson:

You kind of get to do that with your job too.

Josh Robb:

I do get a coach and help people as well. Helping people I think if I dug even deeper, the coaching exist even farther down. It’s there.

Austin Wilson:

That’s the reason why.

Josh Robb:

So finding ways that do that is awesome. So purpose is more important than money, and money can help improve your happiness if used correctly. So overall, I think between you and I, we work with a lot of people, all different levels of income and wealth, and there’s no set happiness threshold for any of those. So I think it’s been proven in my own life, having watched people that money can help improve your happiness, but it doesn’t buy.

Austin Wilson:

It’s not the silver bullet. It’s not the answer. It is a thing that can help supplement the other great things that you have going on.

Josh Robb:

Sounds good.

Austin Wilson:

Awesome. Well, thanks for discussing that with us today, Josh, and thank you listeners for listening. As a reminder, if you have any questions about your financial situation, maybe you are looking for some help, some guidance, feel free to email us at, hello@theinvesteddads.com, or check out the ‘Invest with Us’ tab on our website. If you had someone asking you the question, “Hey, does money buy happiness?” Or you asked the question yourself, and you thought someone else might find some value in that, share this episode with them, with your friends and family. And as a reminder, always, we would love it if you’d subscribe, and leave us a review on Apple Podcast or Spotify, and follow our social media accounts, Instagram, Twitter, Facebook. There may even be a Twitter poll out there asking the question, “Does money buy happiness?”

Josh Robb:

That’s right.

Austin Wilson:

Be sure to go vote on that poll. Until next Thursday, have a great week.

Josh Robb:

Right. Talk to you later.

Austin Wilson:

Bye.

Thank you for listening to The Invested Dads Podcast. This episode has ended, but your journey towards a better financial future doesn’t have to. Head over to the; investeddads.com to access all the links and resources mentioned in today’s show. If you enjoyed this episode, and we had a positive impact on your life, leave us a review, click subscribe and don’t miss the next episode.

Josh Robb and Austin Wilson Work for Hixon Zuercher Capital Management. All opinions expressed by Josh, Austin, or any podcast guest are solely their own opinions and do not reflect the opinions of Hixon Zuercher Capital Management. This podcast is for informational purposes only and should not be relied upon for investment decisions. Clients of Hixon Zuercher Capital Management may maintain positions in the securities discussed in this podcast. There is no guarantee that the statements, opinions or forecasts provided herein will prove to be correct. Past performance may not be indicative of future results. Indices are not available for direct investment. Any investor who attempts to mimic the performance of an index would incur fees and expenses which would reduce returns. Securities investing involves risk, including the potential for loss of principle. There is no assurance that any investment plan or strategy will be successful.