Key Points:

Wealth means different things to different people. To some, it is simply being financially secure or living a rich and rewarding life. To others, it means having all the material trappings of success that the modern world offers or being termed a millionaire simply because one has a million dollars.

Society is now wealthier than ever, providing an array of choices that were not available to our parents, let alone our grandparents. We have more of everything, be it houses, cars, fridges and possessions generally. We have more investment opportunities which, if used sensibly, will make our savings work harder and help maintain our living standards in retirement.

The opportunities to live a longer, healthier and wealthier life, on our own terms, are unprecedented.

Yet what we don't seem to have more of is happiness.

In recent years, rising affluence has had a transformative impact on New Zealand. However, an outward focus on material possessions has also brought with it a financial flu called affluenza. This is a condition in which sufferers become addicted to having or consuming.

However, as the legions of unhappy rich can tell you, the pursuit of wealth for its own sake is unlikely to yield anything more significant than a bigger house, car or boat. Despite far greater opportunities to pursue what makes us truly happy, we fill our houses with more stuff, treat celebrities as gods and keep up with the Joneses at any cost while ignoring what really makes us happy.

Although more wealth can make a significant contribution to wellbeing, the real difference between the happy rich and the unhappy rich seems to be that the former see money as a means to an end, a contributor to the achievement of personal goals that are consistent with their personal values, rather than an end in itself. The unhappy rich are often those who pursue wealth without regard to wellbeing.

For 25 years as a financial planner, I have been asked by people: "How much is enough? How much do I need for a happy life and retirement?" But the answer to this question is not a number. Rather, it requires us to work out what is really important to our wellbeing.

Understanding and living consistently with our personal values is the key to a practical rather than a slavish approach to possessions. Instead of asking, "how much money do I need to be happy?", we should first ask, "how can I be happy?", and then determine the contribution that money can make to our lives.

Psychologist Martin Seligman has developed a comprehensive understanding of what happiness really is.

He distinguishes between pleasures, such as a good wine, that tend to be momentary, and gratifications, or things which engage us, such as painting, or dancing, that evoke a sense of flow and are longer-lasting. By organising your life for an abundance of both, you can enjoy the good life.

The distinction between what gives us pleasure and what engages us is worth understanding in some detail.

There are shortcuts to the pleasures, such as drugs or casual sex. While they may produce a high, we quickly get used to them - and so the impact on our long-term wellbeing is limited.

There are no shortcuts to the gratifications. They are powerful because they draw on our strengths and engage us in activities that are challenging, requiring skill and concentration. When we are in the midst of the activity, we may not feel a sense of pleasure but, when we look back on it, we feel: "That was really fun."

Think of a child at play; it's that feeling we are trying to recapture.

If we can build what engages us into our daily lives, into how we make a living and into our family lives, we are on the path to greater wellbeing. The psychological research shows that if what engages us also has a positive impact on others, then our wellbeing is greatly increased.

Think of people who become teachers or nurses because they have a passion for these professions and enjoy helping others. They are not well paid but their wellbeing is far greater than that of, say, highly paid commercial lawyers or investment bankers, whose lives, while stimulating, involve much more adversarial, win-lose relationships. Interestingly, commercial lawyers have one of the highest rates of clinical depression of any profession.

Pursuing our passions though, does not always have to come at the cost of making money. There is increasing evidence that people who go into a business because they are passionate about what they are doing end up doing much better on average than those who pursue opportunities purely for the money.

Bill Gates and Steve Jobs, who dropped out of university to pursue their passions and ended up founding Microsoft and Apple respectively, are some of the more spectacular examples of this.

A local example is that of Sam Morgan, who after a short and unsuccessful stint at university started as a computer consultant. His passion for customers and finding ways to connect with them led to Trade Me becoming New Zealand's most successful internet business, which was subsequently sold to Fairfax for $700 million.

Or Peter Maire, who from his Auckland garage developed the capability to make sophisticated navigation equipment. His passion for the consumer saw the business under the Navman brand develop into a wide array of GPS chart plotters, fish finders and navigation devices. Maire sold Navman to Brunswick for $108 million.

In this day and age, we should have the confidence to lead full and authentic lives - but first it's important to look inwards and develop your own answers to the fundamental question: how much is enough?


New Friday Business columnist Arun Abey has been an academic, an entrepreneur and a top executive, and has long had a passion for ideas that help people enjoy happier, more meaningful and financially secure lives.

A co-founder of the financial planning firm ipac, he is now executive chairman of that company, head of strategy for AXA in the Asia Pacific and, in New Zealand, is a director and advisory board member of Spicers Portfolio Management.

He is also an author - his latest book, How Much is Enough?, looks at the links between money, success and happiness - and is involved in several philanthropic activities.