Saturday, June 30, 2007

Up Close with People Whose Money Changes Things

I am a big fan of M.P Dunleavey's Biweekly column in the New York Times, Basic Instincts; I always find her writing about people's financial behavior and the psychology of money intriguing.
Today's column focused on how sudden wealth acquisition changes life style (as opposed to gradually earning it or inheriting it). She interviewed Carol Saal, who with her husband Harry, a professor, came into a huge windfall when he sold his company, Network General. According to Mrs. Saal, "The one thing that doesn't change with money is who you are. If you saved paper clips before you had money, you'll still save paper clips." I like this so well I've added it to my quotations section.
The Saals splurged on a large second home, but made a point of maintaining their old friendships. One of the goals of the vacation home, in fact, was to have a place to spend time with friends. The Saals spend a great deal of time discussing what they can afford vs. what they choose to afford; their consumption is still values driven. They have devoted a great deal of time and energy, as well as much of their fortune, to philanthropic causes. Carol and Harry Saal have figured out that happiness flows from meaning and connection, not from luxury living:

IT has taken constant thought and effort to stay grounded in their financial and emotional lives, the Saals say, but money did make one thing easier. The two had always leaned toward the philanthropic; now they could give money in such quantities, “the grants and gifts we make are transformational,” Mr. Saal said.

Although he was referring to the impact of their donations, some of them in the millions of dollars, there was an intimation of something more personal. The Saals describe an immense sense of satisfaction and joy that comes from giving to the many causes that matter to them, like helping to establish a Center for Clinical Immunology at the Stanford University School of Medicine.

It was a 15-year labor of love, partly inspired by their daughter Jessica, who suffered from severe juvenile rheumatoid arthritis, an autoimmune disorder. Their daughter died of complications from the disease in early 2004, on her 34th birthday. “Money does not protect you from the vicissitudes of life,” Mrs. Saal said, and her voice sounded heavy.

Nonetheless, they both maintain that their wealth has been a great and continuing blessing. “Money inhibits you. It’s a worry. It looms large when you don’t have enough,” Mrs. Saal said. “But when you do, it removes all that, and then you can focus on other things.”

Studies of happiness show that moving from grinding poverty to financial security ups one's happiness quotient significantly, but beyond that, additional wealth is no longer correlated to happiness. No matter how many bathrooms you might have, you only use one at a time. So the excess doesn't really improve your quality of life much, it just adds points to your standard of living. Big difference. The Saals use the privilege of money for transformative philanthropy - they are wonderful examplars of the central thesis of this blog: their money changes things!

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