There’s been plenty to whinge about in the past few years – but is the world getting worse, or are you just in the middle of the U-shaped happiness curve?

Hundreds of studies support the idea that over our lifetimes, happiness levels will sag in the middle and increase again as we age. Of course this is a trend and not an absolute truth, but it is no doubt comforting to hear that for the majority, things do get better with time.[i]

One of the drivers of happiness, identified in these studies, is money. How much we’re earning, and how much happiness it buys us. 72% of American Millennials surveyed (and 67% of Gen Z participants) believed money could buy happiness.

This could explain the U-shaped curve to some extent; in countries with higher cost of happiness, it takes longer for individuals to reach the satiation point where wealth and happiness levels more or less match. So the happiness caused by financial stability can happen later in life, which means the middle years can feel a bit like a hard slog.

While the oft-quoted study of happiness not progressing much beyond a 75k (USD) salary has been disproven, there is still a point of satiation at which a higher salary will not mean more emotional stability. This is because money can’t actually buy happiness, though it can go a long way to removing stressors causing discontent.

 This point of satiation changes by country, but also by generation. An Empower survey indicated that Gen Zs would need much less wealth for happiness ($0.49m US) than Millennials, whose number was $1.70m. Boomers, perhaps on the other side of the U-shaped curve, indicated $1m as the amount of wealth to bring them happiness in the same survey.[ii]

Part of this discrepancy could be attributed to comparison culture; after all, Millennials are the generation where the upper range could have bought a family home before prices reached their current dizzying heights, but the lower range have only watched these ‘goals’ get further and further out of reach.

Back to the curve – how can we make sure we’re not getting stuck in the trenches of ‘not enough’?

First off, we need to accept that life has seasons and some of these will be lean. Economic reality aside, there are times where our outgoings will be larger due to dependents, mortgages and lifestyle factors. The key is not to get mentally stuck in these murky times, to keep thinking for your future and ensure that when you climb up the other side of the curve – you’re in a good position to smell the roses, without significant financial stressors like lingering debt or uncertain income.

Having a financial plan mapped out to suit your goals, timeframe and unique circumstances is invaluable for giving yourself breathing room once you are no longer earning. It quite literally pays to go beyond just saving a nest egg. Investing in a globally diversified portfolio, contributing regularly to KiwiSaver, or other tax-friendly PIE schemes can help your hard-earned dollars go further over time by earning returns. Depending entirely on a savings account (or if you’re old-school, cash under the mattress) leaves you entirely vulnerable to inflation and the risk that your money will not be worth enough to support you through the drawdown years.

If you are working with a trusted fiduciary with your best interest in mind, you will be able to take a more hands-off approach to your investment strategy once it is in place. Reviews every 6-12 months to track performance as part of a holistic, long-term plan will be sufficient; if you’re checking every other day, you’ll suffer unnecessary anxiety watching short-term market fluctuations.

Of course, taking a long-term view does not mean you completely forego joy or satisfaction today. It merely means taking a different approach where appropriate. For example, spending time with loved ones is incredibly important for our emotional wellbeing – but I have yet to see a study specifying that time must be spent in a holiday destination. Prioritise the basics, and your loved ones. The rest will follow with time and a robust financial roadmap.

If you are looking to take the first step on your financial journey, or want a second opinion on your investment portfolio, insurance or other financial products, sit down for a face-to-face chat with a trusted, local fiduciary. They will have your best interests at heart and can provide valuable advice unique to your situation.

After all, happiness (and financial freedom) is less mystifying with professional help – but taking that first step is up to U.

by Nick Stewart (CEO and Financial Adviser at Stewart Group)

·         Nick Stewart (Ngāi Tahu, Ngāti Huirapa, Ngāti Māmoe, Ngāti Waitaha) is a Financial Adviser and CEO at Stewart Group, a Hawke's Bay-based CEFEX & BCorp certified financial planning and advisory firm. Stewart Group provides personal fiduciary services, Wealth Management, Risk Insurance & KiwiSaver scheme solutions. Article no. 339.

·         This article was written with support from Dimensional Fund Advisors. 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 a 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

[i] https://gss.norc.org/

[ii] https://www.empower.com/the-currency/money/research-financial-happiness?utm_source=chartr&utm_medium=newsletter&utm_campaign=chartr_20231124