The below post was sent to the clients of Future You Wealth in December 2023 looking forward to 2024. While the note was dated 2023 with reference to 2024, the content is applicable to any new year. The letter has therefore been captured as a blog post for prosterity.
Client note sent 12/21/2023
Throughout the holiday season, the classic calling for “health, wealth and happiness” for the new year is bound to be lightly passed between people seeking to spread good wishes. Unfortunately, these “light” words are likely quickly discarded as meaningless cliché that bear little consequence to our actual lives. So why do we wish this seemingly meaningless saying for our clients in 2024?
If we look a little deeper, the saying is surprisingly spot on as to what is required to build a great life, and while all three elements are deeply inter-related, the core enabler of the trio is our primary concern: wealth.
As we at Future You Wealth look forward to 2024, we have been reflecting on our “why” and, more generally, the “why of wealth”. Wealth is something we all work towards, not because it itself is a desirable end, but rather because it is a fundamental means in our pursuit of a good life. And that is our why: to help our clients live great lives by facilitating the growth of their wealth and their optimal use thereof!
But how does one practically put their wealth to work in building their best life? How does it relate back to health and happiness? In our office, we often comment on the fact that we live in an incredible time of abundant information and knowledge, and as far as the above trio goes, this certainly holds true.
The independent sciences of health and happiness have been researched in depth for centuries, and we stand today as the fortunate beneficiaries of this extensive research. Adjacent to those fields, we live in a time of economic abundance unparalleled by any before, with access to software and professionals (us!) who can help ensure the strategic development and use of wealth over a lifetime.
Yet each of these fields can be somewhat daunting and siloed despite their interrelated nature. This undermines our ability to effectively execute on building our best lives; where on earth would we even begin? Let’s start from the end, happiness, and work backwards to the means: health and wealth.
Happiness
The ultimate goal most of us are after is happiness, both for ourselves and for those around us. Unfortunately, what seems simple is actually a complex issue; happiness and what drives it is difficult to pin down to specifics, and as a result deliberately seeking to improve our “happiness” is a daunting challenge. Fortunately, in this time of abundance we find ourselves, the field of positive psychology (the branch of psychology focused on human flourishing as opposed to psychological illness) robustly defines happiness and how to pursue it with intention.
Starting with what it is, scientifically we break happiness down into three core components: short-term positive and negative moods in our day-to-day experience of life (maximized positive moods and minimized negative moods being the goal), and our longer-term overall life satisfaction.
These three components are driven by a variety of factors, roughly distilled by Martin Seligman, the father of Positive Psychology, into his acronym PERMA, each of which can be deliberately pursued to bolster our happiness.
P = Positive Emotions: this refers to those emotions that result in us feeling good and drive positive affect (positive moods), including joy, gratitude, hope, pride, inspiration, curiosity, amusement, serenity, awe and love.
E = Engagement: this refers to being absorbed, interested, and deeply involved in an activity or the world.
R = Relationships: this refers to feeling loved, supported, and valued by others. This is a key driver of both positive emotions and satisfaction with life, and refers to the full spectrum of relationships from intimate personal relationships to community level acquaintances.
M = Meaning: this refers to having a sense of purpose in life, a direction as to where life is going, and feeling that life is valuable and worth living. It is also about being connected to something greater than ourselves, such as religious faith, a charity or a personally meaningful goal.
A = Accomplishment: this refers to the deliberate application of personal skills and effort as one moves towards a chosen goal.
If the pursuit of PERMA drives happiness, this should be our focus in 2024. Take a moment to reflect: in which of these areas do you currently lack, and accordingly, which areas will have the biggest impact on your happiness if focused on in 2024?
To pursue PERMA, however, we require two key resources: health and wealth.
Health
Health, or as I would term it “vitality”, refers to both our physical and mental health, and it contributes to our happiness through two key mechanisms:
(i) longevity (time), ensuring that we maximize our time on earth in which to build and live a great life, and
(ii) energy and mobility, enabling us to pursue those activities which build wealth and enrich our lives in pursuit of happiness.
While these mechanisms are certainly desirable, knowing what to work on in optimizing our personal health is unfortunately dauntingly complex. We need to reduce the complexity into actionable areas on which to focus. Vitality is driven by four key ingredients:
1. Nutrition (our food, vitamin and mineral supplements, and daily hydration),
2. Exercise (strength training and endurance (V02 max) training),
3. Sleep (quantity (7-9 hours) and quality (often overlooked!)), and
4. Mindfulness (10 minutes a day is enough to make a material impact on our mental well-being).
Taking another moment of reflection, which of these four would be your primary target for improvement in 2024?
An important point to note at this point is the reliance on the above four elements on our wealth: good nutrition is expensive, exercise via a gym contract and exercise gear are generally not cheap, adequate sleep requires wealth driven luxuries of adequate time and an optimal sleeping environment, and mindfulness generally requires a subscription of sorts to guide us. Health is often seen as separate from wealth, yet its dependence is undeniable: wealth is fundamental to good health.
Wealth
Wealth is key to living a good life as it gives you the resources required to invest in your health (as shown above) and happiness. This conclusion is robustly supported by scientific study. While the link between wealth and well-being has been hotly debated in the past 15 years, 2023 will be remembered as the year in which that debate was put to bed.
In 2010, Daniel Kahneman, a Nobel Laureate, published that past a certain income ($75,000 per year in 2010 dollars), additional income earned was of insignificant impact on well-being. I.e., they found that happiness topped out at $75,000 per year in income. In 2021, however, this was challenged by Matthew Killingsworth, who showed that an increase in income reliably increases well-being with limited diminishing returns.
In 2023, Kahneman and Killingsworth partook in an “adversarial collaboration” in which they reviewed one another’s data, and they came to the joint conclusion that Killingsworth was in fact correct: well-being (happiness) increases with income (and by extension, wealth).
Earning and high income and having wealth is, however, not what makes us happy; it is what we do with it that counts. Intentionally investing our wealth in our health and in activities which drive our happiness (PERMA) can significantly improve our lives.
Beyond health, which expenditures of our wealth drive our happiness (via PERMA) most significantly? Three key expenditures should be focused on: (i) spending money on experiences, not things, (ii) buying time to do things (per (i)) in pursuit of happiness, and (iii) spending money on others (giving).
To conclude
Our wish to you for 2024, for health, wealth and happiness, may at first seem simple or cliched, but it intentionally speaks to our deepest why: to help our clients build and live their best lives, using wealth as a fundamental resource to do so. We hope that this piece has given you fuel for thought as you look at the year ahead with happiness on the mind!
Happy new year, and we look forward to continuing our work with you in 2024.