More money can mean more stress, says business owner

Wednesday, 14 August 2019

Does money make us happy?

Business owner Laurel never thought she would know what it was like to be 'rich'.

She grew up poor, with a family living pay cheque-to-pay cheque. The power would go out because there had been no money to pay the bill.

It was not until the family business that she started with her husband 10 years ago started to experience some success that she got the first taste of what it might be like to not live so precariously.

As the business grew, she says, there have been two distinct 'levelling up' events. The first happened when their income from the business gave them enough to clear all their bills on time each month and even put aside a bit extra to save.

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'Definitely not enough extra but we had enough money to cover everything. I remember distinctly the time I was able to fill the car up completely.'

She said, with a sensible budget, they were able to feel fully in control. 'That was great. That was a really noticeable improvement in happiness. The daily fear was gone.'

Over time, they were able to buy a first home and had children. Then, the business had a 'year of really good press' and they levelled up again.

Mark says the system is designed to drag people into poverty and keep them there. (File photo)

The couple had been distracted in the day-to-day running of the business, sticking to their usual budgets, and didn't realise they were making a lot more money all of a sudden. 'At the end of the year we thought 'wow we have this huge excess'.'

They were able to pay off their mortgage and, for the first time, really had more than they needed.

'It presented its own set of challenges which I had never anticipated. Obviously it was great to have the money to do the things we wanted to and I feel so privileged that I don't have the day-to-day worry of will we have enough .. our anxiety levels have dropped hugely.'

But it was replaced with concerns about how much they should really be spending or how the family's new income would affect the kids. 'That was something we'd never even thought about before, keeping them in check and reminding them that even though we can afford something we can't just buy things all the time.'

She also worried about what would happen if they became used to the new way of living and something happened that took it away. 'That didn't exist when we were just doing fine.'

While getting out of the day-to-day grind of not having quite enough was a big boost to happiness, there was a point where a bit extra didn't make a lot of difference.

The family had moved into a new, bigger house and Laurel said she always felt as if she had to tell anyone who came to visit how lucky she felt, 'almost like I have to apologise'.

Data from Statistics NZ shows that happiness does increase with household income, but perhaps not as much as you might expect.

Households earning $30,000 a year rated their overall life satisfaction at 7.3 out of 10, on average. Those earning $30,000 and $70,000 came in at 7.6, between $700,000 and $150,000 7.7 and, above that, eight out of 10.

But 19.4 per cent of $30,000 households said life was ten-out-of-ten, compared to just 15.6 per cent of the highest-earners.

People who were earning more also felt they had more worthwhile lives and their family wellbeing rated higher.

Higher-earning households rated their health status as 'excellent' much more often – at 23.3 per cent compared to 11.8 per cent of the lowest earners. This may reflect the fact that some of the lowest-earning households are people on the pension.

Pushpa Wood, director of the Financial Education and Research Centre at Massey University said money would provide comfort but not necessarily happiness.

Having money could make it easier to live even if the circumstances were difficult, she said. 'But money is not the only source of happiness. Having said that, it depends on people's attitude to money. People who have a highly materialistic view of life – money has a prominent place. They judge themselves and others by that.'

Others would put more importance on things such as relationships with family or generosity as a sign of happiness sand success.

'How do we measure success? In New Zealand we fall more towards the western style of thinking, that success is still measured by materialistic achievements whereas if you go into Asian countries success is often measured by your status in society and that is not necessarily related to money.'

She said people placed too much importance on money and did not differentiate between needs and wants. 'That can cause unnecessary stress in life. A car is a need but not necessarily a Mercedes.'

Mark experienced the opposite of Laurel when he went from a $130,000-a-year public sector job to being the at-home carer of his bedridden wife.

'I went from six figures to next to nothing, going to food banks. It replaces one stress with another. I get to be home with my kids growing up … you have to pick those moments with them and dwell on them to the full extent, despite looking at the things you can't have as well'

The family had bought a house with a view to doing it up but now do not have the money to do so. Now it's half-renovated 'and falling apart' needing a replacement water tank and sewage tank. The family is in line for social housing but there is nothing suitable.

He said there was a growing number of frustrations from the lack of control that being at the mercy of the Government system created. 'The system is really stacked against you. It drags you into a poverty trap and keeps you there.'

The system was not designed to help people out, he said. You could get money for a car loan, but not car insurance. But you cannot get a loan without insurance. Housing support was based on the previous year's maintenance costs, so if you went into the system not having kept on top of it, there was no way to catch up.

The family had had to cancel every payment possible to streamline their budget.

The last thing to go was Mark's wife's life insurance policy when they did not have enough for food.

They later found out that they were meant to have been receiving more in the benefit, which would have enabled them to cover the premiums.

But because it was cancelled, they could not get it back without her illness being added as a pre-existing condition. 'We've had the opportunity to get on with our lives with a bit of money if my wife were the depart early taken away from us.'

He said it was a 'different type of happiness. You've got to choose a different direction and realign your purpose, what your goals will be. Now we're more focused on ensuring the children don't end up being victims of the circumstances and are trying to get the best for them, looking around for opportunities for them for things they can take part it. For me, it's a lot more hands-on. Before, I was working anything up to 12 hours a day, five days a week, on call at the weekends.

'We just try to get our kids to focus on what we do have rather than what we haven't got.'

His wife will not recover but could still live for decades. Mark said he was in it for the long haul. 'There's no way out for me.'

He said happiness had to be a state of mind. 'There's very little choice in anything in our lives other than how we look at things and how we react to them.'

* This article is part of the Good Life Guide, an editorial project sponsored by Skoda. We have produced it independently, to the same standards applied to the rest of our journalism. Read more about our partnership content here