The debate about whether money can buy you happiness has been raging for years, with philosophers, economists, and social scientists all attempting to find the answer.
Many people believe that having plenty of money helps you enjoy a fulfilling life, and science has borne this out.
In fact, a US study, carried out by economists Daniel Kahneman and Angus Deaton in 2010, found that people's overall happiness generally increased according to the amount of money they earned. They found that someone's joy tended to level out when their income hit the $75,000 mark.
Then, in 2021, another study found that happiness didn't plateau at $75,000 – indeed, wellbeing continued to rise for those with incomes of $200,000 and beyond.
Whether you believe that money can buy you happiness or not, there's little doubt that money can provide peace of mind. And this is where financial planning could make a significant difference.
With World Financial Planning Day coming up on Saturday 1 October, read on to find out how working with an experienced financial planner could boost your happiness.
Financial wellbeing underpins happiness
There has been a growing focus on financial wellbeing in recent years and the topic has become ever more popular in the wake of the Covid-19 pandemic.
Ultimately, financial wellbeing relies on two key things:
- Having security around money – now and in the future
- Knowing what makes us happy, and having financial goals in place to achieve that happiness.
For example, having a household budget can give you confidence that you have a handle on what money you have coming in, and what you are spending each month. Knowing that you are living within your means is one less thing to worry about.
To attain true financial wellbeing, and resulting happiness, a study from Royal London revealed that it's necessary to take a balanced approach to managing your money.
While you can't plan for every single eventuality in life, here are 10 guidelines to think about when managing your money:
- Aim to earn a “good enough” income that allows you to maintain a healthy work-life balance.
- Live your life in a way that allows time to appreciate simple everyday moments, making life more enjoyable and meaningful.
- Think about the lifestyle you’d like when you retire and save accordingly.
- Try to imagine your future self, or your best life by embracing curiosity and asking probing questions.
- Have an emergency fund, giving you a financial safety net for a rainy day.
- Create a financial plan and review it regularly.
- Keep a handle on the amount of debt so it remains manageable on your income.
- Make better comparisons by understanding what it is about someone else's situation that you'd like to enjoy.
- Aim to pay off a mortgage before you retire.
- Stay calm in a crisis – a crucial mantra for investors in times of economic or financial turbulence.
Connect money and happiness with a financial plan
Whether a lot of wealth directly contributes to how happy you are, it is possible to use your money to enhance your happiness, fulfilment, and peace of mind. That is why having a financial plan can play a large part in achieving emotional wellbeing.
When you work with Alexander Peter, your financial planner will always start by sitting down with you to talk about your life goals and aspirations.
We'll use these conversations to understand more about you, your life, your worries and concerns, and learn what drives you. Then, we’ll help you make the most of the money you have now and devise a plan to ensure you have enough to achieve your future aspirations.
However much money you have at your disposal, a bespoke financial plan could provide invaluable reassurance. Knowing that you have enough wealth to enjoy your desired lifestyle and protect your family and loved ones could bring immeasurable peace of mind.
Get in touch
Our advisers provide specialist advice to British expats and international employees living around the world. We put your long-term goals at the centre of the financial plan we create for you, helping you to make your dreams a reality.
If you’d like some help understanding how to improve your own financial wellbeing and reach your long-term goals, please get in touch. Email enquiries@alexanderpeter.com or give us a call on +44 1689 493455.
Please note
This blog is for general information only and does not constitute advice. The information is aimed at retail clients only.
