The Downside of the Quest for Financial Success

by | Mar 1, 2023

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Most of us (all of us?) would rather be richer than poorer. This makes sense. Having more financial resources allows us to have nicer houses and cars, take better vacations, to access better education, and is associated with living longer. Plus, those with higher incomes tend to report greater levels of happiness and overall life satisfaction.

Given the benefits of having money, you’d think that achieving financial success should be a top life goal. Seek more money, get more money, and reap the benefits of having more money. Right?

Wrong. Even though having more money is associated with more happiness, seeking more money dampens our sense of life satisfaction and impairs our happiness.

The leading study on this paradox is from 2003 by Dr. Ed Diener (known as “Dr. Happy”), Nobel Prize Winner Daniel Kahneman (and others). The researchers analyzed survey data of college freshmen from 1976 and follow up surveys with these students decades later. In the 1976 survey the students were asked, among other things, about the importance they placed on being financially successful. Then, between 1995-1997, these same people were surveyed about their educational history, employment history, retrospective views of college, civic activities, satisfaction with various aspects of life, and sociodemographic¬†characteristics.

The findings are fascinating:

  • Those with higher incomes reported greater life satisfaction.
  • But those who had reported back in 1976 strong financial success goals had lower life satisfaction than those who had weak financial success goals.
  • Further, those who had strong financial success goals reported lower satisfaction with family life, satisfaction with friendships, and job satisfaction.¬†Notably, the study found “the greater your goal for financial success, the lower your satisfaction with family life, regardless of household income.”

Other studies have replicated these results, finding that “people report lower levels of well-being when they prioritize materialistic values and goals.” The problem with financial goals is that they are competitive in nature, so “all you have got to look forward to after one set of goals is achieved is renewed competition.” Source.

What to Do Instead

It’s an interesting paradox — more money is correlated with more happiness, but seeking money and material things will make you less happy (or even miserable). What to do?

The answer is to focus on non-competitive goals like “commitment to marriage and children, and also to friendships, helping others, and being socially and politically involved.” These sorts of goals promote happiness and life satisfaction.

What about our careers? If we shouldn’t focus on financial success, what should our goals be? I think the answer is encapsulated by advice my father gave me when I was considering my college major:

Pick something that you love. Because if you love it, you’ll likely be good at it. And if you are good at it, you’ll get paid well enough.

-Michael Jennings circa 1989

As I’ve hit in another IFOD, happiness, and satisfaction in our careers are found where we have (a) autonomy, (b) mastery, and (c) purpose. If you focus on these things (or find these things in your career), you’ll be happier, more satisfied, and more motivated. If you are happy, fulfilled, and motivated in your career, you’ll probably do well enough financially, just like my father intuited.

2 Comments

  1. This can also be similarly expressed that not money, but the love of money, is the root of evil. 1 Tim 6:10

    Reply
  2. very well stated—a very valuable insight. Luv2Nap

    Reply

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