New Year’s Resolutions and “Buying” Happiness in 2011

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The tradition of making New Year’s resolutions goes all the way back to ancient Rome. In 46 B.C., Julius Caesar developed a new calendar and named the first month of the year after Janus, the god of beginnings and endings. Janus is depicted with two faces, one on the back of his head that allowed him to look into the past and one on the front of his head that allowed him to look into the future. At midnight on December 31, the Romans imagined Janus looking back at the old year and forward to the new year; therefore, he became the symbol of the resolutions made on the first day of each year when Romans asked their enemies for forgiveness.

In more modern times, New Year’s Eve is still an occasion for reflecting on the past year and looking forward to the new year. It is the time we are more apt to think about the changes we want (or need) to make and resolve to follow through on those changes. In fact, this frame of mind seems to permeate the whole month of January and provides the perfect opportunity to meet with your clients to discuss their financial and life goals. And I predict they will be more open to these types of conversations than ever before—read on!

In their 2010 consumer sentiment report, the Boston Consulting Group (BCG) concluded, “Recession anxiety has triggered a clear shift back to basics in what consumers say they value most.” The BCG researchers found, for example, that home and family, stability and calm, saving, and the environment have all increased in importance while luxury and status are becoming less and less of a priority. For many individuals, this change in focus will not only lead to wiser financial decisions but to greater and longer-lasting happiness as well.

There is a growing body of research that identifies what types of purchases give us the biggest bang for our buck. The truth is—money can help your clients buy happiness, if they spend it on the right things. Based on mounting empirical evidence, Dr. Sonya Lyubomirski, a leading happiness researcher, describes the types of expenditures most likely to increase life satisfaction:

  1. Activities that will help us grow as individuals, strengthen our connection with others, and/or contribute to the well-being of our communities.
  2. Experiences that will provide lasting memories (such as a rock climbing expedition, a wine tasting tour with friends, or a destination family reunion) rather than material possessions.
  3. Many small pleasures (such as regular massages, a weekly delivery of fresh flowers, or frequent lunches with a best friend) rather than one big-ticket item like a new car or super-sized flat-screen TV.
  4. Purchases that represent something that you have worked very hard to earn or to achieve will make the item or experience seem all the more valuable and rewarding. In addition, scholars have found that anticipation increases happiness.

More importantly, Lyubomirski reminds us that happiness is a choice. She writes, “We can choose to become never-satisfied janitors of our possessions, or we can use our money in ways that improve our worlds and, as a bonus, supply us with genuine and lasting well-being.” And, as trusted advisers, you have the opportunity (and responsibility) to pass this wise counsel along to your clients.

In this regard, I believe that all financial planners are in the position to be “choice architects” for their clients. This term was introduced to me in the book Nudge written by well know behavioral economists Richard Thaler and Cass Sunstein: “A choice architect has the responsibility for organizing the context in which people make decisions.“ Good choice architecture does not interfere with free choice, but  clearly lays out options to assist individuals in making decisions that will benefit them the most—and “nudge” them in the right direction.

Therefore, when you meet with your clients to discuss their 2011 goals, help them to reflect on what is most important to them, and guide them in making financial decisions that will contribute to their life satisfaction and lasting happiness. The ancient tradition of setting New Year’s resolutions is symbolic of fresh beginnings and unlimited possibilities. Use this time to guide your clients in establishing meaningful financial and life goals, and adopting strategies for honoring those commitments.

Carol Anderson
Money Quotient
Poulsbo, Wash.

One thought on “New Year’s Resolutions and “Buying” Happiness in 2011

  1. When I was growing, up my father gave me the best advice I’ve ever heard (and used). It was this… “You’ll never go wrong investing in yourself”. That includes formal education as well as “rich experience” education. Thanks for reminding me of that great advice.


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