So how much cash really is enough?
A new book claims that it’s not how much money we earn but what we do with it that makes us happy
Recession, credit crunch, banking meltdowns -- it's impossible to avoid the topic of money and finances right now. For that reason, now is the perfect time to publish a book focusing on the role of money in our lives and how much we really need to live a happy, fulfiling life.
'How Much is Enough?', by Arun Abey and Andrew Ford, could be summed up as The Secret meets The Intelligent Investor. By drawing on extensive psychological and behavioural studies, it asks the reader to stop and think about why they are working so hard, what they have been spending their money on, and, crucially, whether this makes them feel satisfied with life.
At its heart, 'How Much is Enough', is all about finding the balance between financial security and contentment, a philosophy that Arun Abey says he has been developing with clients ever since he co-founded ipac Securities 25 years ago (he sold the company in 2002 to AXA Asia Pacific for a cool $250m).
"When I got into this business, I thought I was just going to be dealing with people's money," Abey explains over coffee in Dublin's Four Seasons Hotel. "It took me some years to discover that I was actually dealing with people's lives and that you can't divorce money from the person.
"The point of this book is to give people the courage, the knowledge and the tools to follow their own path in life. All the research we consulted, particularly that of Daniel Kahneman [the first psychologist to win the Nobel Prize for Economics], shows that human beings, regardless of education, aren't really good at forecasting what will make them happy, nor how to be good investors.
"People have to think about happiness first, and then the money follows. If you're just after the money, without thinking about what it should be doing for you, you won't be successful. If you can actually work out what your passions are -- and that can take a long time -- and if you can build a life around those passions, then there's a much better chance of living a life which has both deep well-being and, at the very least, financial security."
Abey, who was born in Sri Lanka, but spent most of his teen years in various schools around Australia, believes that money is as much emotional as it is legal tender, quoting research that found that the four words most associated with money are 'anxiety', 'depression', 'anger' and 'helplessness'.
"Money represents so many things about success and failure, and there's a whole range of hidden anxieties associated with it," he explains. "If you want to bring a dinner table conversation to a standstill, just ask someone how much they earn. It makes people incredibly uncomfortable.
"The research also shows that if children ask their parents what they earn, they'll either fob them off or lie to them. The result is that this younger generation have grown up with little or no understanding of the role of money in life, so parents should be aware of that."
The ideas discussed in How Much Is Enough? seem particularly relevant right now here in Ireland, where the country is experiencing its first recession since the Celtic Tiger boom. After more than a decade of frenzied conspicuous consumption on houses, cars, holidays and designer clothes, the Dior belt is being tightened as many begin to feel the pinch from the global downturn.
Abey, who has been doing business in Ireland for the past 12 years, sees our current economic crisis as an opportunity for us to take a breather and think more deeply about how we can make our finances work best for us when things pick up again.
"When a country goes within one generation from having so little to having a lot of affluence, people don't have the skills to deal with it," Abey says. "They can't look to their grandparents, or parents even, because they didn't have affluence. So I think inevitably a certain amount of that affluence is going to be squandered on poor investment and lifestyle decisions.
"I'm very confident about the basic resilience of the Irish economy. It remains an attractive place to do business. But I think this time right now is the learning curve. Now there's a chance -- more than that, there's a need -- to think about how to make your money work for you."
So just how can we do that? Abey replies: "I want Irish people to ask: 'If I have two scorecards, and one of them is my happiness scorecard, and the other my financial, how did I score on the happiness side over the past 10-12 years?'
"The research into what generates happiness boils down to distinguishing between pleasures and gratifications. For instance, if you get a pizza, do you find the 10th slice as pleasurable as the first? We underestimate that our neurons go into neutral very soon after we get a new material thing.
"Gratifications, on the other hand, are things that draw on our personal strengths, that require concentration and skill, and that encourage flow. This could be writing, dancing, surfing, or whatever. There's a huge choice available today. If you can build your life around your gratifications, that's what really creates enduring happiness because they stimulate psychological growth and a positive attitude.
"From now on, I'd like Irish people to use the pursuit of their gratifications and flow as a guide to how much money they need. Which activities give you flow? Go find out. My advice to people is to buy experiences, not things."
'How Much is Enough?' is on sale from October, exclusively in Hughes & Hughes bookstores.
- Declan Cashin
