John Maher: Hi, I’m John Maher. Today, I’m here with Rick McDonald, President of the US Advisory Group – a family wealth management company in Massachusetts. Today, we’re talking about the idea of “Can Money Buy You Happiness?”. Welcome, Rick.
Rick McDonald: Hi, John. How are you?
The Role of Money in our Lives
John Maher: Good. So, what is the role of money in your life, Rick?
Rick McDonald: That’s a great question. As money managers,Â we manage money, we build portfolios. We try to grow the portfolios in a thoughtful manner on a risk-return basis. But in a deeper sense though, we need to, as individuals, have a clearer sense of what the role of money is, what the purpose of money is.
Because most of us have this — We’re stuck on defining ourselves by our money, our wealth, our possessions. And that’s just not really accurate. And it really leads to a lot of dysfunctionality.
The Paradoxes of Money
John Maher: And I’ve heard you talk about the paradoxes of money. What is that?
Rick McDonald: Well, it goes back to the whole issue of the dysfunctionality we all have with regard to our relationship to money. When we’re young, we’re told that being successful is important. We had to go to school, we had to learn to be successful.
John Maher: Right. You want to go out. You want to get a good job. You want to make money.
Rick McDonald: Absolutely. Who had the biggest house? Who had the most lavish vacations, and all of that stuff. At the same token, we’re also told that money is the root of all evil. And we have this dichotomy, this back and forth, and you wonder why people are confused.
Today, we have all of live in the large house, live in the right town, driving the right car, having a country club or golf or yacht, all of that stuff, is all ‘good’. Maybe it is, maybe it isn’t. On the other hand, we have this whole issue of — And so, movement of evil one percenters of the world.
Forget the fact that the one percenters may not be most.. Truth in perception with regard to money is a very, very, very confusing, mysterious space. And as a consequence, there are many, many paradoxes that make us very confused and unsettled when we think about money.
And then, we have to take that from the greater world to ourselves and we look within ourselves in who are we, what are we. We define so oftentimes our personal success by our net worth. All of these are very, very, very damaging or certainly challenging to being happy.
Money and Happiness
John Maher: Right, right. So we hear that all the time: ‘Money can’t buy you happiness,’ ‘Money can’t buy you love,’ all of those kinds of things. So how does money relate to happiness in your life?
Rick McDonald: You’re right. That’s the core of the question. Money can’t buy you love. Are you happy because you’re wealthy or you’re happy because you’re poor? All of this stuff. It’s nonsense. It’s just you who gets in the way of clearer thinking, and it gets in a way as a consequence of us living with a sense of peace of mind and being happy.
At core, we need to know who we are. We need to know what’s important to us. And we need to have a self-confidence of knowing that what we’ve got – the resources we’ve got, whether it’s family, intellectual, spiritual, financial, all of the various resources we have are being put to work in a way that are in alignment with what matters most to us. That’s where we get peace of mind.
Peace of mind isn’t a function of how wealthy you are. We all deep down know that. Now, we might crave for something, a larger car. We might crave for a boat that we don’t own. We might crave for being on those beautiful beaches we see on television commercials that we otherwise aren’t in our city here in Boston, with 18 inches of snow on the ground.
John Maher: Right.
Rick McDonald: But that’s not necessarily who we are. That’s the imagery. That’s the misconception of what money can be for you. As money managers, we work constantly with people to better understand and help them better understand what matters most and what is the purpose of money, what is the role of money in their lives, and how do we utilize that in the way that’s thoughtful, and purposeful, and efficient so that they can live a good life under their terms that will give them the comfort, the peace of mind that matters.
It’s not how big your stock is. We do a fine job managing money. Our portfolios grow wonderfully. That’s just not — It’s so ridiculous. That’s not what’s important.
John Maher: Right. So it’s not just a matter of looking at the numbers and saying, ‘All right, my stocks went up 10% this year,’ or something like that. That’s not what it’s all about.
Rick McDonald: Absolutely not. I might walk into a room and say, ‘So how’s your 401K doing? I’m just throwing a question out just because I like to be toying with people [laughter]. Because what I hear is on and on and on about stuff that makes no sense, has no conception, no basis in reality to what really matters most.
What I really kind of wonder about is ‘I understand I know you’re 64 years old. I saw the wonder when you’re retiring, I don’t know whether you’re going to retire soon or not. Maybe you’re going to work forever because you love your job. I don’t really know, I don’t have to know. But my question was how are you doing with regard to being able to retire on your terms? And are you in position to be able to do that when the day comes? I’m kind of curious. And if you’re not, what are you doing about that?
John Maher: Right.
Rick McDonald: That’s really what matters.
John Maher: So when you ask somebody how’s your 401K doing, have you ever had somebody turn around and say, ‘We’ll, it got me x percentage closer to my retirement goal,’ or something like that.
Rick McDonald: Usually, the answer as people listen to that — they’ll not — Usually, what they’re going to do is tell me how they perform based upon some benchmark —
John Maher: Right.
Rick McDonald: — that has no bearing on who they are as a person. ‘Well, the market was up 22% last year. I was only — got 14%. Well, maybe that’s appropriate given how many bonds you had in the position because volatility is an issue and you’re going to close it to retirement.
I have no idea. And if you don’t know, then what you feel is you feel robbed. You didn’t get the benchmark, whatever. That’s such a silly thing to say.
John Maher: Right..
Rick McDonald: You’re now living with a sense of anxiety or disappointment —
John Maher: That you’re not doing as well as you could have done?
Rick McDonald: Right.
John Maher: Yeah.
Rick McDonald: So, the self-esteem is lowered. Your self-confidence is lowered, and you feel like you’re a second class citizen.
John Maher: Right.
Rick McDonald: Is that appropriate? Probably not.
John Maher: Right.
Rick McDonald: Maybe it is. I don’t know. But if no one has grounded basis for what it is they’re trying to get accomplished, and therefore, they’re robbed of happiness.
John Maher: Right. So you need to know what your goals are. So that when you only get that safe 14% instead of 22%, you can say, ‘Hey, that’s good enough for me. It just gets me that much closer to my goal and I’m on target with what I’m trying to do here and so, I’m okay with that.
Rick McDonald: Right. And that’s what it boils down to. Money, by itself is not a goal. Having a large bank account is unnecessary. We need to understand. Money does only three things. Money, first of all, provides us lifestyle. So define your lifestyle and do you have enough money to support your lifestyle? Terrific.
Number 2, one person’s lifestyle is completely different from the next person’s. So, they’re by definition means that whatever you’re trying to do with money, is different person to person. So the second thing that money does is help you take care of, protect, enhance the life of those you love – your kids, your grand kids, family members in general, whatever it may be.
So, to the extent that you can do that or that’s important to you, again, money is a tool to enable you to feel good about what you’re doing and enhancing the life of those around you. Everyone’s different with regard to what that means.
And at last and the third thing that money does, is just make you feel like your role in this world was — You were here with a purpose, that you added value. You did something that mattered in this world. And that means your world. Well, your world could be your church. Your world could be your community. Your world could be the greater family – extended family.
With the term ‘world’ is unique for every individual that we talk about. So, you need to understand what matters to you, what is your lifestyle, who you care about, and what your purpose for being here in life, and what do you really want to do when you’re gone? How do you want people to remember you?
And then, to the extent that you can use money in a way that addresses those issues, so you have satisfaction, you feel self-esteemed that you accomplished your highest aspirations for being here. That’s what gives us happiness, not chasing some ubiquitous benchmark. That’s not the right answer. The right answer is that my money is working in the way that supports the things that matter to me, so I feel good about who I am, taking care of those around me, and that I’m able to turn around and change the world, to better the world in a way that makes me feel like I had purpose, I had a reason for being here in the first place. That is how we become happy or use money to feel or create happiness.
John Maher: Great. I think that’s really important to keep in mind, Rick. And thanks very much for speaking with us today.
Rick McDonald: My pleasure. Thank you.
John Maher: And for more information, you can visit the US Advisory Group website at usadvisory.com or call 781-246-0222.