Okay, so many of us may have heard our peers and family members say that we should cancel 2020 and start afresh with 2021!
We can all agree that it has been a tough battle with many unexpected changes along the way. It’s remarkable how well the nation has adapted to these dramatic changes to our everyday lives. People are working from home again; companies are more drawn to having digital strategies and the markets have become more volatile.
The Hedonic Treadmill is a theory stating that people repeatedly return to their baseline level of happiness, regardless of what happens to them. In one study, individuals who were paralysed were happier than individuals who won the lottery.
Who would have thought that? Isn't winning the lottery and gaining that level of financial freedom everyone’s dream?
Adam Smith, a philosopher and economist, noted adaptability goes both ways:
“In every permanent situation, where there is no expectation of change, the mind of every man, in a longer of shorter time, returns to its usual state of tranquillity. In prosperity, after a certain time, it falls back to that state; in adversity, after a certain time, it rises up to it”.
As discussed above, the Hedonic Treadmill, quite literally states that our goals are unstable, they’re always changing.
I guess I’d call it human nature. We typically aren’t satisfied with what we have for a long time. Just like the lottery ticket above we may be happy for a day or two but we go back to setting a new goal to achieve. One study showed a very low correlation of 0.13 between income and life satisfaction. To help our clients live a good life, we need to help them think beyond only the dollar and cents, as the research shows achieving a certain financial position is not by itself a meaningful end for many people.
In 1998, Dr. Martin Seligman describes five elements people pursue because they are intrinsically motivating and they contribute to wellbeing. His P.E.R.M.A formula describes the values we need to pursue to achieve a happy life during our working lives and retirement. Research has shown “significant positive associations and physical health, vitality, job satisfaction, life satisfaction, and commitment within organizations”[1]
Positive emotions
We can all say that positive emotions are the cornerstone to well-being. You can improve your positive emotions by being grateful and kind. Asking your colleagues if they would like a cup of coffee while you go grab yours, holding the door for someone, or even carrying groceries for an elderly neighbour are just some examples. Practicing such activities is more in your best interest than the other person as it makes you feel good. Do you remember the last time you did such activities?
Engagement
According to Seligman, engagement is ‘being with the music’. It is in line with Csikszentmuhalyi’s (1989) concept of ‘flow’. Flow includes the loss of self-consciousness and complete absorption in an activity. In other words, it is living in the present moment and focusing entirely on the task on hand.
It has been shown that those who interact regularly with people, undertake activities and remain mentally active tend to have a more successful retirement, as they do not retire from something, they retire to something.
Positive relationships
Positive relations with siblings, parents, peers, friends and colleagues are one key way for overall joy. The next time you see a group class that interests you, a family or work get together, or even come across a long lost friend on social media, JUST DO IT! Obviously, keeping within the rules around social distancing and lockdown that are applicable at that time!
Meaning
Having meaning or purpose in life is different for everyone. For example, understanding the impact of your work and why you chose to “show up at the office” may help you enjoy the tasks and become more satisfied with what you do.
Accomplishment
Accomplishments contribute to wellbeing because individuals can look at their lives with a sense of pride. They can be as simple as making your bed in the morning to becoming the entrepreneur of a millionaire company like Elon Musk (CEO of Tesla).
In conclusion
While helping clients achieve their financial goals is important, clients having a great life and being financially independent provides no guarantee that you will achieve happiness and wellbeing. For financial advisers, our purpose is to help our clients live their best possible lives by helping them feel more positive about their personal and financial well-being.
· Nick Stewart is a Financial Adviser and CEO at Stewart Group, a Hawke's Bay-based CEFEX certified financial planning and advisory firm. Stewart Group provides personal fiduciary services, Wealth Management, Risk Insurance & KiwiSaver solutions.
· This article is prepared in association with Stewart Partners, Australia. The information provided, or any opinions expressed in this article, are of a general nature only and should not be construed or relied on as a recommendation to invest in a financial product or class of financial products. You should seek financial advice specific to your circumstances from an Authorised Financial Adviser before making any financial decisions. A disclosure statement can be obtained free of charge by calling 0800 878 961 or visit our website, www.stewartgroup.co.nz
