There’s no question about it. Money is a necessary ingredient for happiness. We need it to meet our basic needs on a daily basis.
Interestingly, though, research shows that the actual amount of money you have is not nearly as important to your overall happiness and wellbeing as financial security, which has more to do with how you actually manage and spend the money you have.
In their book Wellbeing, authors Tom Rath and Jim Harter outline what they call “The Five Essential Elements” of wellbeing: Career Wellbeing; Social Wellbeing; Financial Wellbeing; Physical Wellbeing; and Community Wellbeing. The five elements overlap and impact each other to create a person’s overall happiness and wellbeing.
Not surprisingly, Rath and Harter found that people with high levels of Financial Wellbeing are satisfied with their standard of living, don’t worry about money in their everyday lives, and have confidence in their financial future.
However, how and why people gain thriving Financial Wellbeing may surprise you.
For example, Harvard researchers found that spending money on others seems to be as important to people’s happiness as the amount of money they make. Also, spending money on oneself does not increase happiness.
Giving money away increases happiness. In addition to increasing Financial Wellbeing, giving money away also increases a person’s Community Wellbeing.
The authors also found that buying material items (i.e. retail therapy) does not create higher levels of happiness over the long-term. In fact, research shows that spending money on experiences with loved ones as opposed to material purchases produces two to three times the levels of wellbeing, boosting both your Financial and Social Wellbeing.
Though money cannot directly buy happiness, it does have an impact. People want to do what they want when they want to do it, and managing money well creates the financial security to achieve that freedom. It is incredibly important to put good systems in place to help minimize stress and maximize financial security.
TRY THIS:
1. Do an inventory of your current money habits (share save spend).
2. Are your money decisions in alignment with your values?
3. Create auto-deductions for sharing, saving and spending to ensure maximum wellbeing.
GOTTA HAVE IT NOW!
Wellbeing Ranking by Gallup, Inc.:
1. Denmark
2. Finland
3. Ireland
4. Norway
5. Sweden
6. Netherlands
7. Canada
16. Mexico
19. United States
MONEY TALKS
What 1 or 2 things can you do to improve your financial wellbeing?