There’s a Mega-Millions lottery winner. The winner’s taking is $1.537 billion. With that South Carolina just doubled its number of billionaires. Now there are two.
To put the winners’ winnings in perspective, the state’s chief operating officer Tony Cooper said, “An exceedingly generous winner could shower roughly $307 on each of the state’s five million people,” adding that the state will get some $80 million in taxes as a result. “It’s a big, big win for South Carolina,” he said.
While the nation’s next billionaire, which Wealth-X estimates to number 737 in the U.S. out of the world’s 2,754, has not been identified, and who can remain anonymous, he or she will face enormous challenges adapting to the windfall.
After the initial thrill of winning wanes and taxes are paid, the question remains whether it will make him or her happy?
That all depends, says David Friedman, co-founder of WealthQuotient, a training and strategy platform that helps sales and fundraising professionals engage and serve ultra-high-net-worth individuals and families. Friedman previously was president and co-founder of Wealth-X, which compiles data about the UHNW individuals for the wealth management, private banking, multi-family office and luxury brand industries.
Wealth is an amplifier
Wealth is but a magnifier for the character, personality and set point that one has before becoming wealthy. “ Wealth takes whatever you are underneath and amplifies it. If you are an insecure, prickly person, then wealth will take that and blow that out. If you are a giving, generous person, it will be amplified through philanthropy and generosity,” Friedman says.
Wealth adds stress and complications to life
There is no question that financial stress is prevalent in America today. In a recent survey, Varo Money found that 85% of the 1,000 adults polled say they “sometimes or constantly” feel stressed about money, with about one-third in the constantly-stressed group.
Having more money can take away that stress, but probably less than most people think. For example, there are plenty of people who make lots of money and have a lot of assets but who are what Friedman calls “cash-poor.” Their mortgages, loans and day-to-day expenditures required to maintain their luxury lifestyle push them to the limit.
In addition, wealthy individuals have stresses all their own due to the complications of managing their wealth and the many assets that come along with it.
“The more things you own, the more complicated your life becomes and frankly the more unhappy you can become,” Friedman shares. “If by your very nature you are a controlling person, which is what most people are who are wealthy – that’s what got them there and what drives them – there is an impulse to be in control of everything.”
“So the more things they have, the more they have to control and understand them,” Friedman continues. “They have to think about every house they buy, every piece of property they own, all the money they have invested. Each takes a part of their mind. It ends up sucking their emotions. It adds stress.”
The fact is money doesn’t buy happiness, never did and never will. “People think having more money will alleviate the pressure because most people feel financial pressure, but it is not going to make you happy. If you can’t figure out how to be happy before, more money won’t make you happy after ,” Friedman says.
People are limited, wealth can be limitless
Wealth can give people almost unlimited possibilities, including buying resources and support staff to deal with many daily tasks, but at the end of the day, people are people limited in time, energy, emotional and physical well being. All the money in the world can’t change the individual, just their surroundings.
To understand the basis of happiness, we have to look to the psychological research.
Chicken or the egg?
One of the nation’s preeminent researchers on happiness, Ed Diener Ph.D. and author of numerous studies and books including Happiness: Unlocking the Mysteries of Psychological Wealth, finds little correlation between wealth and happiness. Further, as income rises there is a diminishing return in terms of happiness.
Diener writes, “…over the past 50 years, income has climbed steadily in the United States, with the gross domestic product (GDP) per capita tripling, and yet life satisfaction has been virtually flat. Since World War II there has been a dramatic divergence between real income (after taxes and inflation) and life satisfaction in the United States.”
While Diener finds that people he describes as “well-off” are generally happier than poor people, he postulates that may be because “cheerful people are likely to make more money than unhappy people.”
Diener further points to cheerful people having a stronger social network of friends and family that has a far higher correlation to happiness than income and wealth.
“Quality of well-being [i.e. happiness] may be more influenced by the strength of a person’s relationships than by money,” Diener continues.
Numerous studies have shown how people use their money, whether they have lots or little, directly effects the spenders’ level of happiness.
Research led by Elizabeth W. Dunn, University of British Columbia, found that spending money on other people, such as giving gifts or donating to charity – what the researchers described as “prosocial behavior”– experienced measurably greater happiness than those who spent money on themselves.
Interestingly, a Wealth-X study of UHNW individual’s interests, passions and hobbies found philanthropy virtually tied as North American’s number one personal interest. The other being business. But it also finds that interest in philanthropic-prosocial giving increases with age and is of greater importance to UHNW women than men.
Check out the full article on Forbes, click here!