A Wealth of Well-Being: A Holistic Approach to Behavioral Finance

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A few years ago, I was speaking to financial advisors about saving, spending, financial well-being, and life well-being. I noted the reluctance of many people possessing abundant financial well-being to spend some of their ample savings on themselves, their families, and their communities to enhance their life well-being by more than they sacrifice in financial well-being.

Advisors approached me after my presentation, describing the critical need to curtail spending and increase saving, the hazards of giving adult children money without asking them to pay it back, and the recklessness of widows splurging irresponsibly soon after their husbands die.

One advisor stood aside, however, waiting until the others had left. She said, “I burst out crying when you said, ‘It is better to give with a warm hand than a cold one.’” Indeed, she had tears in her eyes when she spoke to me.

It turned out that she had lent her son some $27,000 for college tuition and now insisted that he pay her by the agreed schedule. The mother had more than enough savings to forgive the loan without imperiling her financial well-being, but she reasoned that paying by schedule would benefit her son, increasing his future financial well-being by teaching him financial responsibility. Yet the son was financially strapped now, at the beginning of his career, lacking even money to buy his girlfriend an engagement ring, and his mother’s demand had soured their relationship.

Financial well-being comes when we can meet current and future financial obligations, absorb financial setbacks, and keep driving toward financial goals, such as adequate retirement income. Life well-being comes when we live satisfying lives, full of meaning and purpose.