I often note that the biggest risks in life are not in the stock market. If you want real risk, I say, get married. And if you want more risk, have children. People laugh because the point is obvious. Yet that point is regularly lost when we speak about financial well-being, neglecting life well-being.
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. We need financial well-being to enjoy life well-being, but it is life well-being that we seek.
Life well-being has many life domains, including finances, marriage, parents and children, friends, health, work, education, religion, and society. We can think of life well-being as a portfolio of life domains resembling the common portfolio of investments. Each domain, like each investment, offers returns and imposes risks, and each has correlations with other domains, resembling the correlations among investments.
Returns and Risks in Well-Being Portfolios
The well-being return of each domain is the difference between its benefits and costs, and its risk reflects the range of possible returns. The benefits and costs of each domain are utilitarian, expressive, and emotional.
For example, the benefits of the work domain include the utilitarian benefits of salary, the expressive benefits of an identity as a lawyer, doctor, or adviser, and the emotional benefits of accomplishments and the joy of coworkers as a happy family. The costs include commuting expenses, time away from family, and possibly the pain of a dysfunctional family.
Few investors enjoy superb returns in each of their investments, and few people enjoy superb well-being in all life domains. The return of the marriage domain might be exhilarating, uplifted by love and respect. Still, the return of the finances domain might be disappointing, diminished by frequent unemployment and high expenses. Yet the overall return of a well-being portfolio, like that of an investment portfolio, reflects the returns of all its domains.
Returns, Risks, and Correlations in the Domain of Parents and Children
Children deliver returns to their parents in utilitarian, expressive, and emotional benefits, but they also impose costs. The utilitarian costs of a child born in 2015 to a middle-class family with two children have been estimated at $310,605. The risk of children to their parents is reflected in the range of returns — from love, smiles, and success that bring parents pride to disability, estrangement, and failure that bring parents shame.
Parents enhance the well-being of children by providing the utilitarian benefits of food and housing. Children reciprocate with utilitarian support as necessary when parents grow old, providing money and care in their parents’ homes or their own. Parents and children enhance the well-being of one another through the expressive and emotional benefits of security, support, and love.
Sociologists Rachel Margolis and Mikko Myrskylä found that parents’ well-being increases before the first birth, likely reflecting the process of formation of partnership and the increase in its quality, but well-being soon decreases to its pre-birth levels. Journalist Jason Stanford rejected these findings based on his experience and that of his friends.
“Of course, having young children is hard,” Stanford admitted. “Having a newborn in the house feels like a permanent hangover without ever having fun in the first place.” Yet, he recalled a friend’s counsel: “Don’t worry, wait till he smiles at you.”
“To this day,” Stanford wrote, “there is nothing that makes me happier when my first son forgets he’s a teenager and smiles, taking me back to when his soft head fit into the palm of my hand and the rest of his body rested along my forearm. … When I fell, I fell hard.”
The sacrifices of parents of children with disabilities reflect children’s risk. Children’s disabilities can be physical, such as muscular dystrophy or multiple sclerosis; developmental, such as Down syndrome or autism; behavioral, such as attention deficit hyperactivity disorder (ADHD) or bipolar illness; and sensory, such as blindness or deafness.
Parents at wit’s end come to emergency rooms with children who have severe behavioral problems, but the visits may offer little long-term benefit. “Their child’s behavior may be a danger to themselves, but also to the parents, to the other children in the home,” said Anna Cushing, a pediatric emergency room physician. “They really don’t have anywhere else to go.”
Well-being in the domain of parents and children correlates with well-being in the domain of marriage. Having a child with a disability increases by 10 percentage points the likelihood that parents will separate in the following 12 to 18 months. If parents continue to live together, the quality of their relationship decreases by 6 percentage points.
Well-Being in the Domain of Parents and Children Also Correlates with Well-Being in the Domains of Work and Finances
Parents of kids with disabilities are three times more likely to make job sacrifices than other parents, and their earnings trajectories show a sharp break when a child becomes disabled. Both mothers and fathers make job sacrifices, but the sacrifices of mothers are often greater because they are usually the primary caregivers.
Livie, the daughter of James and Lindsay Sulzer, was almost 4 when a falling tree branch devastated her brain. James devoted his career to repairing damaged nervous systems, and Lindsay once worked on ways to treat traumatic brain injuries. They have access to all possible treatments, yet Livie cannot speak or walk unaided, and her cognitive disabilities are profound.
Lindsay assumed the immense tasks of arranging Livie’s care, hiring nurses and personal attendants, getting equipment such as wheelchairs, and setting a cycle of feedings, medicine, and exercise. At lunch, a nurse put Livie in a stander and set up an iPad for her entertainment while a pouch of chickpea formula was placed into her feeding tube. Watching videos of Livie before the accident, James said, “Now it’s like I have two daughters, in a way. One that passed away, and now this one.”
Thinking Holistically
Investors often dwell on particular investments in their portfolios, sometimes on winning investments but more often on losing ones. They struggle to accept that it is the overall portfolio return that matters. Similarly, people often dwell on particular life domains in their life well-being portfolios, sometimes on winning domains such as professional success in their work domain, but more often on losing domains such as a child with a disability in the parents and children domain.
Seeking support from others, such as a financial advisor, may help enhance our lives. They are often better suited to helping us accept that it is our overall well-being in our life well-being portfolios that matters.
