Personal relationships and wealth are interconnected

relationships wealth and risk www.wealthandrisk.nz

Our personal relationships are important. 

They're important in all their incarnations: whether they relate to our most intimate relationships, our friendships, or even our "weak ties".

Personal relationships are worthy of serious attention. It's a topic I keep returning to on this blog.

Given the main themes of this blog (wealth and risk), this might seem unusual.

You wouldn't, for example, see the blog of a financial advice firm or a law firm narrowing in on personal relationships. 

But relationships are very relevant to the themes of wealth and risk. I'd go as far as saying that not covering this area does a profound disservice to these themes.

Think about it:

  • Wealth, defined broadly, is not restricted to financial matters. There is a common saying that "your health is your wealth". I'd also add that your "social capital" is ultimately a more important, and deeper, form of wealth than your financial capital. 

Interestingly, there might be a degree to which you can quantify the importance of being in a good quality relationship. Using regression analysis, economists Andrew Oswald and David Branchflower suggests that in terms of generating happiness, being married is worth an annual salary somewhere around $100,000. More intuitively, I recall asking myself (long before I met my wife) the following hypothetical question  - would I prefer to have $2 million or a fantastic relationship with a fantastic woman? To me, the answer was clear, and it shifted my priorities for a long period of time.

It's common to think about risks from a financial perspective - and in fact, insurance advisers often refer to themselves as "risk advisers". But in many ways, this is a myopic view. 

It's valuable to think about the risks (and opportunities) to which we are exposed in a broader sense. This includes socially, and especially in relation to our most important relationships.

It's a fact that many marriages fail. Divorce is an expensive, messy business. Especially where children are involved. It's best to avoid it if at all possible. 

Also, people and relationships evolve. Many couples who stay together don't have fantastic relationships. If you can work towards the relationship evolving positively rather than negatively, then that is likely to increase the quality of your life, your partner's life, and the lives of your children.

More broadly, having a good set of close friends can have a profound impact on the quality of your life - your health and your happiness

In short: relationships are important. Perhaps the most important thing. I like the concept of "ubuntu" - a person is only a person through other people. In other words: without other people we are nothing.

For this reason alone, it's worth putting the time into fleshing out my thoughts on this topic, whether it fits the themes of this blog or not.

However, as I've explained above, it not only touches on these themes but is central to the themes of wealth and risk.

Sonnie Bailey

Sonnie is the founder and principal of Fairhaven Wealth.

Before founding Fairhaven Wealth, Sonnie worked in the legal and financial services industries for over a decade.

Sonnie first became involved with financial advice as a specialist financial services lawyer. For many years, he was an “adviser of advisers”, reviewing thousands of advice files prepared by hundreds of financial advisers, and providing feedback in relation to the quality and appropriateness of advice; industry best practice; risk management; and regulatory compliance. He has published work in industry publications and spoken at various financial advice conferences.

Sonnie has also worked with banks, investment management firms, insurers, and derivatives providers.

Sonnie has worked as a private client lawyer, focusing on succession, estate planning and trusts. He ran his own legal firm in Australia before relocating to New Zealand. He has also acted in independent trustee and company director positions.

Sonnie is passionate about helping people achieve their goals and manage the risks to which they are exposed.

He has written extensively on his blog, New Zealand Wealth and Risk, which can be found at www.wealthandrisk.nz.

Sonnie is married to his wonderful wife Chrissy, and has two young children, Ben and Anna.