Podcast Summary: The Long View – Episode with Dr. Preston Cherry: ‘Money Can Indeed Buy Happiness’

Podcast Information

• Title: The Long View
• Host/Authors: Christine Benz and Amy Arnott, Morningstar
• Description: Expanding investing horizons with discussions on long-term strategies, asset allocation, balancing risk and return, and more, featuring influential leaders in investing, personal finance, and related fields.
• Episode: Preston Cherry: ‘Money Can Indeed Buy Happiness’
• Release Date: February 18, 2025

Introduction

In this insightful episode of The Long View, hosts Christine Benz and Amy Arnott engage in a profound conversation with Dr. Preston Cherry, a noted financial expert and the author of the book "Wealth in the Key of Life: Finding Your Financial Harmony."

Christine Benz introduces Dr. Cherry, highlighting his extensive background in finance, academia, and personal financial planning. Her introduction sets the stage for a deep dive into the relationship between money, happiness, and personal well-being.

Book Overview: Wealth in the Key of Life

Dr. Cherry's new book, "Wealth in the Key of Life," serves as a central topic of discussion. The book aims to offer a fresh perspective on aligning personal finances with individual values and life goals, a concept that Dr. Cherry refers to as Financial Harmony.

Dr. Preston Cherry [01:45]: "Financial harmony in a nutshell is about alignment. It is aligning your life and your money and having experienced Christine disconnect between life and money before in my own life and with the people I've served..."

The subtitle, "Finding Your Financial Harmony," is a nod to Stevie Wonder's iconic album "Songs in the Key of Life," symbolizing a harmonious journey through personal and financial life.

Financial Harmony: Aligning Life and Money

Dr. Cherry introduces the concept of Financial Harmony as the alignment between one's life and financial resources. He emphasizes that this alignment goes beyond the typical discussions about financial planning, delving into personal values, preferences, and aspirations.

Dr. Preston Cherry [03:19]: "It is an ode to life. And when he said life and money, I say very powerfully that wealth and wellbeing are two distinct domains, and you use your wealth through life."

This perspective challenges the conventional dichotomy between wealth accumulation and personal fulfillment, proposing that money, when aligned correctly, can significantly enhance one's quality of life and well-being.

Challenging the 'Money Can't Buy Happiness' Myth

One of the pivotal discussions in the episode revolves around debunking the cliché that "money can't buy happiness." Dr. Cherry provides a nuanced argument, supported by economic theories and personal anecdotes, to assert that money can indeed contribute to happiness when utilized effectively.

Dr. Preston Cherry [06:13]: "The first one is about happiness. It's like money can't buy happiness. And I have a fundamental issue with that... money can, in fact, I wouldn't say in fact, it can indeed buy happiness."

He references studies suggesting that beyond a certain income threshold (often cited as around $75,000), additional income continues to contribute to increased happiness and well-being. Dr. Cherry explains that this increased happiness comes from the ability to purchase "units of happiness" by funding one's well-being domains.

Dr. Preston Cherry [10:16]: "...you can buy units of happiness. And where that comes from is consumer utility theory, to put a fancy name on it. But you have preferences inside utility."

This argument hinges on the idea that well-being is multifaceted, and money can provide the means to enhance various aspects of life that contribute to overall happiness, such as health, personal development, and meaningful experiences.

Personal Journey: Overcoming Adversity with Financial Alignment

Dr. Cherry shares a deeply personal story about his struggle with alcohol addiction and how financial resources played a crucial role in his recovery and overall well-being.

Dr. Preston Cherry [10:55]: "I had enough money in my bank account to where I could invest in stopping doing what I did not want to do anymore... I could buy units of happiness."

He emphasizes that money alone wasn't the solution; it was the alignment of his financial resources with his personal goals and values that facilitated his healing process. This example serves to illustrate the book's central thesis: money, when aligned with personal well-being, can indeed be a powerful tool for achieving happiness.

The 6A Alignment System

Central to Dr. Cherry's philosophy is the 6A Alignment System, a framework he introduces to help individuals align their financial strategies with their personal values and life goals. This system consists of six components, each designed to guide individuals through self-assessment and strategic planning.

1. Honest Self Audit
2. Align
3. Aspire
4. Achieve

Dr. Preston Cherry [12:38]: "Honest self audit... the other three is called align, aspire and achieve."

Honest Self Audit involves a deep, introspective examination of one's current financial standing, values, and emotional relationship with money. Dr. Cherry stresses the importance of confronting one's financial realities without shame or judgment.

Align, Aspire, Achieve are the subsequent steps where individuals align their financial planning with their personal aspirations, set meaningful goals, and take actionable steps towards achieving financial harmony.

Impact of Parenthood on Financial Perspectives

A significant pivot point in Dr. Cherry's life, as discussed in the episode, is the recent birth of his son. This life event has profoundly influenced his perspectives on money and financial planning.

Dr. Preston Cherry [17:49]: "We want to assign our dollars in a way that not only helps us live right now a nice lifestyle because we're in our vitality years and also fund our retirement for later... assign our dollars in a way that helps him experience what we experience and even 10 or 20 fold."

Becoming a parent has heightened his awareness of generational wealth and the importance of passing down not just financial resources but also values and lessons about money management. Dr. Cherry discusses the role reversal that occurs when children take on the responsibility of helping their parents manage retirements and financial well-being.

Generational Wealth and Family Financial Dynamics

Dr. Cherry delves into the dynamics of managing his parents' retirements, highlighting the emotional and financial intricacies involved in this role reversal.

Dr. Preston Cherry [29:20]: "...helping them with that as some sort of offering. When you talk about role reversal. So it felt good."

He shares anecdotes illustrating how he navigates the balance between providing financial support and respecting his parents' autonomy. This discussion underscores the importance of financial planning within the family unit and the delicate balance of power and responsibility that can emerge.

Redefining Retirement: Beyond Financial Independence

The conversation shifts to the concept of retirement, where Dr. Cherry offers a redefinition that challenges traditional perceptions. He argues that retirement should not be viewed as an end to productivity but rather as a transition to new forms of engagement and fulfillment.

Dr. Preston Cherry [32:48]: "Retirement is simply stopping your must do and moving on to what you want to do. And it doesn't mean that you're stopped being productive in life."

Dr. Cherry criticizes the stigmas associated with retirement, such as the notion that one must cease all forms of productive activity. He introduces the idea that retirement can be a period of transformation and continued personal growth, aligning financial freedom with the pursuit of meaningful activities.

Critique of the FIRE Movement and Frugality

A significant portion of the discussion critiques the Financial Independence, Retire Early (FIRE) movement's emphasis on extreme frugality. Dr. Cherry argues that while frugality can be beneficial, the FIRE movement may sometimes promote an unhealthy relationship with money.

Dr. Preston Cherry [38:32]: "I call it false frugality, you know, syndrome a little bit... you don't have to live below your means, but you have to live within your means."

He distinguishes between living within one's means versus living below one's means, advocating for a balanced approach that prioritizes personal well-being alongside financial prudence. Dr. Cherry emphasizes that financial strategies should be personalized, reflecting individual values and life stages rather than adhering to rigid paradigms.

Dr. Preston Cherry [39:01]: "Nobody's self made, because that's some bull as well... If you have means and you have an abundance of means, then you have resources to have more of now and also invest in later."

By promoting the idea of permission to prosper, Dr. Cherry encourages listeners to embrace financial success without guilt or societal pressure to conform to minimalist ideals. He underscores the importance of gratitude and recognizing the broader context of one's financial journey.

Balancing Experiences and Materialism

The episode also addresses the common personal finance adage that suggests prioritizing experiences over material possessions. Dr. Cherry provides a critical analysis, arguing that such binary thinking overlooks the nuanced ways in which money can enhance different aspects of life.

Dr. Preston Cherry [43:59]: "Just because you invest in materials doesn't mean that you don't value experiences... Both require money and are influenced by life stage and values."

He challenges the notion that spending on experiences necessarily detracts from valuing material possessions, emphasizing that both can coexist harmoniously within a well-aligned financial plan. Dr. Cherry illustrates this with examples from his own life, contrasting high-end camping equipment with simple, cost-effective alternatives, to highlight how experiences are often shaped by personal choices and financial capabilities.

Life Money Balance Wheel: Three Utility Domains

Introducing the Life Money Balance Wheel, Dr. Cherry outlines three primary utility domains where individuals allocate their financial resources:

1. Life-Centered Utility: Focused on fulfillment and meaning.
2. Money Psychology Utility: Pertaining to wholeness and self-actualization.
3. Lifestyle Utility: Covering tangible goods and services that provide internal value.

Dr. Preston Cherry [44:15]: "The three domains in the book are... life centered utility... money psychology utility... lifestyle utility..."

This triadic framework serves as a tool for listeners to evaluate and balance their financial decisions across different areas of life, ensuring that money is used in ways that align with personal values and contribute to overall well-being.

Conclusion: Embracing Financial Harmony

As the episode wraps up, Dr. Cherry reiterates the core message of his book: financial harmony is achievable through alignment, self-awareness, and strategic financial planning. He advocates for a personalized approach to money management that respects individual preferences and life stages, moving away from one-size-fits-all financial doctrines.

Dr. Preston Cherry [50:56]: "Nobody should be in your business and for sure shouldn't be judging value systems... Keep your eye on your own luggage."

Dr. Cherry encourages listeners to define their own financial success, free from societal judgments and restrictive financial ideologies. By fostering an intimate and honest relationship with money, individuals can unlock its potential to enhance their lives meaningfully and sustainably.

Notable Quotes

• Dr. Preston Cherry [06:13]: "Money can, in fact, I wouldn't say in fact, it can indeed buy happiness."

• Dr. Preston Cherry [10:16]: "You can buy units of happiness."

• Dr. Preston Cherry [32:48]: "Retirement is simply stopping your must do and moving on to what you want to do."

• Dr. Preston Cherry [38:32]: "You don't have to live below your means, but you have to live within your means."

• Dr. Preston Cherry [44:15]: "Just because you invest in materials doesn't mean that you don't value experiences."

Final Thoughts

This episode of The Long View offers a refreshing and comprehensive perspective on the complex interplay between money and happiness. Dr. Preston Cherry's insights challenge conventional wisdom, urging listeners to rethink their financial strategies in ways that promote personal fulfillment and well-being. By advocating for Financial Harmony, Dr. Cherry provides a roadmap for individuals seeking to align their financial lives with their deepest values and aspirations.

Whether you're navigating the early stages of your career, planning for retirement, or re-evaluating your financial priorities post-parenthood, this episode provides valuable frameworks and philosophical underpinnings to guide your financial journey.