Have you ever wondered the cost of happiness? There’s a report on that.

Or, more accurately – the S Money report details the point of income satiation from countries around the world, using data from a Purdue University study (among other sources). This data does the legwork to shift the age-old question of “Can money make you happy?” into “How much might it take?”

New Zealand ranks lucky number seven on a scale of the ten countries with the highest price of happiness. According to the data, the tipping point after which income had no further discernible impact on an individual’s happiness comes in at NZD $195,679.[i]

Not a small chunk of change, by any standards.

The same study suggests satiation occurs later in life for countries with a high price of happiness – partly due to the time it takes to reach that level of income, and partly due to comparison culture. Trying to keep up with the Joneses is enough to make anyone a little bit miserable…

TradeMe Jobs places NZ’s average salary at just over $70k (our average is slightly lower in Hawkes Bay, at $68k). This is a 6% increase on last year, a growth prompted by a competitive job market and the rising cost of living in Aotearoa.[ii]

This means the average earner is unlikely to reach the price of happiness, even if they were in a dual income household.

What’s the solution? Up and moving to another country with a cheaper threshold? Unfortunately, it’s not that simple. Money doesn’t actually buy happiness. It’s a tool to provide us with security and a sense of control, which can help keep us happy (along with other significant factors). And while it’s interesting to put a price on it, it is also essential to remember that these figures are indicative of the plateau of happiness. Happiness rises sharply with income and plateaus, even decreases, after that satiation point as been reached.[iii]

Coming back to comparisons with what we have vs what others may have: this can keep us in an endless cycle of reaching goals, but not being satisfied by them. There’s an effect known as the ‘hedonic treadmill’, which describes those who are focused on how much happier they will be at their next milestone rather than enjoying their present moment. Each achievement becomes hollow as the person is only thinking of how much better they could be doing. We need to be thinking of the future, yes – that’s fairly crucial for financial planning. But not by robbing ourselves of satisfaction and happiness in our current lifestyle.[iv]

Moving to another country might seem like a brilliant idea in the short term when contemplating the local price of vegetables at the supermarket. But you could end up losing connections and relationships; these contribute significantly to your long-term wellbeing and happiness both in your personal life and at work, where most of us spend a large part of our waking hours. You should also consider the ramifications for your financial journey; whether a move will deplete your savings, any debt you may have and how you would manage the interest from overseas, and the impact on investment products like KiwiSaver or other schemes.

Some tips on enjoying where you are currently at, while keeping an eye on the future:

 

Make money dates

If you are on your journey with a partner, this opens communication about goals and keeps you aligned with each other. While it may feel awkward the first few times to sit down and go through your finances in detail, you’ll find that after a while it becomes an opportunity to celebrate your wins as they happen. This has the dual benefit of strengthening your financial position and your communication in the relationship.

 

Spend time, not money

Our relationships with friends and family are so important to our wellbeing. We humans are social creatures – even if you’re an introvert, having someone in your corner is invaluable. If you’re having trouble balancing your social life with your savings goals, it may be worth reassessing whether your friends’ money mindsets align with yours… It will be easier to save in a friend group where potluck dinners and local travel are in vogue, than a group planning Euro summers and weekly nights out.

 

Review your plan regularly – but not too regularly…

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 just give yourself unnecessary anxiety watching short-term market fluctuations. Investment is not a sprint. It’s an endurance event, and a trusted financial adviser can help keep you on track towards your personal goals.

 

Planning for your future can mean a shift in thinking and priorities; it doesn’t have to mean foregoing joy and satisfaction in your present. If you need help with your long-term financial plan, or are looking for a second opinion on your investment journey so far, start by sitting down with a local fiduciary for a no-obligation chat about your goals and lifestyle.

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. 329.

·         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://www.smoney.com.au/blog/the-price-of-happiness-in-every-country/

[ii] https://www.trademe.co.nz/c/jobs/news/average-salary-in-aotearoa-cracks-70-000-for-the-first-time

[iii] https://knowledge.wharton.upenn.edu/article/does-money-buy-happiness-heres-what-the-research-says/

[iv] https://peninsulatherapyservices.com/657/manage-preoccupation-wealth/#:~:text=There's%20a%20term%20for%20how,has%202X%2C%20even%20if%20she