Finding Financial Happiness, Part 1

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Every three years, the Federal Reserve publishes a report about the finances of US families. Based on data and interviews, the triennial “Survey of Consumer Finances,” “…collects information about family income, net worth, balance sheet components, credit use, and other financial outcomes.” In short, it reports how Americans are faring financially.

But their recent report was a little different. Published in November of 2023, it reflected 2019–2022, during which families experienced a pandemic, mass unemployment, and the literal shuttering of most economies worldwide. With all that in mind, its conclusions seemed surprising. Over this period:

  • “Real” (which means adjusted for inflation) median income rose by 37%! Real net worth grew by the same amount, 37%.
  • Debt grew by a paltry 4%.
  • Housing values greatly contributed to the gains, but renters outperformed homeowners with median net worth growing 43% compared to 34% respectively.
  • “…the 2019–2022 growth in median net worth was the largest three-year increase over the history of the modern SCF, more than double the next-largest one on record.”

If we consider net worth and income as the two defining factors of household financial health, then Americans did exceptionally well during a rather tumultuous time.

In theory, these newfound gains should have translated to “happier” households. Yet, as we’ve discussed in previous articles, consumers are less confident about their finances and the finances of the US today than ever before.

What’s the disconnect? Why are people seemingly wealthier than ever, yet simultaneously more worried about money, both for themselves and others?

Returning to the survey time period, it’s important to consider one simple fact: people weren’t spending. Sure, they had small expenditures like sourdough starter and new video games, but with a worldwide pandemic raging, few took international trips or started large home renovation projects. Trainers say you can’t outrun a bad diet, and financial advisors say you can’t out save bad spending habits. For the first time, people were forced into not spending — providing a salient reminder of how to save.

Today, I believe spending relative to income weighs heavily on the “happiness” people report. Thanks to rampant inflation, everything costs more than just a short while ago. While incomes may have increased, so did the cost of the weekly trip to the grocery store and gas station. Post COVID, people’s frequency of spending money also increased. Meanwhile, home prices went up alongside higher interest rates, putting those who had been saving for homes at an even greater disadvantage. And landlords raised rents, squeezing tenants with seemingly fewer options. People felt as if they had finally increased their income, only to have the rug pulled out from under them with higher prices on everything needed to survive, let alone thrive.

As consumers, there’s little we can do to affect these macroeconomic headwinds. You and I don’t control the federal interest rate or the cost of milk. Time may help to heal these issues, but until then it’s on us to find happiness — or continue down the road of misery over aspects outside of our control.

That’s why I’m such a big believer in gratitude.

I understand how tone deaf “being thankful for what you have” may sound, especially if you’ve been looking to purchase a new home or struggling to find enough money for groceries. But unlike those external issues, a mentality of gratitude is something you control. A gratitude mindset recognizes — and thereby reinforces, and often even replicates — your positives in life.

Americans enjoy abundant resources, from multiple energy sources to warm us, to airplanes that can transport us almost anywhere. Not long ago, air travel was prohibitively expensive. My stepbrother and I recently reminisced about my first commercial flight to Phoenix in the 1960s; it cost $600 per ticket from the old Stapleton airport. Today, travel typically costs a fraction of this price, and flight options abound.

Consider the comforts of a home today versus 50 years ago. Things we take for granted were either unavailable or considered luxuries — air conditioning, large televisions, even garages. In the 1950s, the average home had 1.3 cars per household; today the average is 2.1. The number of households with two or more cars increased from 20% in 1950 to nearly 66% today.

Today we also have a small piece of metal and glass in our pockets that literally connects us to the entire world. It can make free long distance video calls, something old sci-fi shows showed as “the future.” It can also order our dinner, a car, help around the house…or really anything.

Our opportunities exceed our ability to comprehend them. So many things are now faster, easier, cheaper and better. But it takes intentional thought to step back and appreciate our world, despite its faults — recognizing this as a time of abundance rather than scarcity. This mindset shifts us from what we don’t have to our nearly unlimited options.

The world tells us we should always have more. More cars, more vacations, more fine clothes, and fancier food. Stopping to consider what we already have resets our mind, shifts our attention, and changes our attitude from dissatisfaction to contentment.

The misery we associate with our modern world is cancerous. Don’t let it overwhelm you or control your mindset. While we may lack the tools to fight back on a macro scale, we can still seek happiness in gratitude for all that surrounds us daily. We will always find worries, just as we will witness economic cycles and seasons. I encourage you to step back, observe with perspective, and take stock of your position through a lens of gratitude. This will change how you feel, and maybe even improve your financial happiness.

Steve Booren

Steve Booren is the Owner and Founder of Prosperion Financial Advisors, located in Greenwood Village, Colo. He is the author of Blind Spots: The Mental Mistakes Investors Make and Intelligent Investing: Your Guide to a Growing Retirement Income and a regular columnist in The Denver Post. He was recently named a Barron's Top Financial Advisor and recognized as a Forbes Top Wealth Advisor in Colorado.

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