The connection between money and happiness is tenuous but real.

    It's safe to assume that most individuals would rather be wealthy than poor. But wealth, and to some extent happiness, are subjective terms with different meanings to different people. The naturalist John Muir is purported to have once snidely remarked about the avaricious railroad baron E.H. Harriman: "I am richer than Harriman. I have all the money I want and he hasn't."

The relationship between money and happiness has been debated by philosophers, studied by psychologists and increasingly considered by financial advisors when it comes to handling clients. "I think the planner must begin by answering the question of what matters most to the client," says Susan Galvan, co-founder of the Kinder Institute of Life Planning. "If you haven't listened well enough to hear what matters most, the connection between money and happiness in the financial plan won't ever be met."

The so-called science of happiness, or well-being, is a buzz phrase that's been fodder for magazine covers, radio discussion panels and numerous books that opine on what makes people happy. Those who study such things find that happy people generally have strong relationships with family and friends, devote themselves to a favorite pursuit or charity or engage in new and challenging activities that stimulate the mind. Spiritual matters can also play a role.

Of course, money can be part of the equation by providing the means, if not the freedom, enabling people to pursue things that lead to fulfillment and create happiness. If used wisely, money can be a beautiful thing indeed. But as many advisors know, money can also engender bad habits and negative mindsets that make happiness an elusive goal.

"Happiness could be correlated with not being poor," says Ellen Siegel, a fee-based certified financial planner in Miami. "What does poor mean? It depends. I don't have any poor clients, but I have clients who feel that they're poor because they can't have what they want. "

Siegel believes most of her clients are happy, especially those who have the funds to follow their hearts by traveling, helping family members or giving to charities. But some clients lack an attitude of gratitude for what they have. They're pushing their mid-fifties or early sixties and are cranky because they feel they're financially behind where they thought they'd be at that point in their lives.

Siegel works in tandem with a psychotherapist to create what she calls "mindful money" workshops. "Money is more than just trading beads," she explains. "If it wasn't, there wouldn't be so much angst surrounding it." Her workshops try to address and overcome money-centric issues from the past that negatively impact how people view and interact with their finances. Siegel says the program can help people forge more powerful relationships with money that redirects their focus and enables them to use it for things that make them happy.

Perhaps Siegel's crankier clients could take a cue from the Masai, an East African tribe of traditional herders who lead a primitive existence and live in dung huts. A 1985 survey by two researchers, Ed Diener of the University of Illinois and Martin E.P. Seligman of the University of Pennsylvania, found that the Masai and respondents from the Forbes list of the 400 wealthiest Americans exhibited similar levels of satisfaction and well-being.

The money-and-happiness issue begs the chicken-and-egg question: Which comes first? Diener, a psychology professor who specializes in well-being issues and whose personal Web site features a row of nine smiley faces on the home page, finds that happy people generally have higher incomes later in life. This suggests that being happy might be a trait that helps people earn fatter paychecks because they're more sociable, are well-liked by others and do well in leadership positions.

Are We Happy Yet?

By most economic measures, the United States is wealthier than it ever has been. At the same time, some studies suggest that our sense of well-being hasn't kept pace. David Myers, a social psychologist at Hope College in Holland, Mich., writes that the real income of Americans has doubled since 1957, the year that economist John Kenneth Galbraith labeled the U.S. as The Affluent Society. By and large, we're now awash in a surfeit of toys, gadgets and consumer goods. But Myers says the number of Americans who say they are "very happy" has declined slightly, from 35% to 30%. "We are twice as rich and no happier," he writes. "Meanwhile, the divorce rate has doubled, the teen suicide rate has more than doubled and increasingly our teens and young adults are plagued by depression."