The short answer is ‘yes’, but only up to a point. People in richer countries are, collectively, happier than people in poor countries. Within countries, people with higher incomes are generally happier than people on low incomes. Surprisingly, once basic living needs are met, the amount of happiness gained from each additional dollar of income rapidly declines.
What is ‘happiness’?
What is it about money that contributes to happiness? And what does happiness even mean? Perhaps what people are really expressing is contentment or satisfaction with their lives.
Rather than putting us into a perpetual state of bliss, money is more likely to contribute to a sense of security, better health, less stress and, perhaps above all, choice.
It’s interesting to see what choices boost happiness. For example, in something of a paradox, giving money away makes people feel happier than spending it on themselves.
“The best way to cheer yourself up is to cheer somebody else up” – Mark Twain
And experiences such as travel or skydiving, or even just going to a movie, provide more enduring satisfaction than material purchases. Good memories, it seems, provide better value than physical possessions.
Happiness planning or financial planning?
What does this have to do with financial planning?
Well, for many people, their financial plan is all about milestones: buying a house, meeting school fees and funding retirement. Important as these things may be, what’s missing is the journey – and no, that doesn’t mean the insurance premiums, super contributions and mortgage repayments. It means Santorini sunsets, sand between the toes and, perhaps more important than anything, time spent with family and friends.
On that basis, instead of financial planning maybe we should call it ‘happiness planning’?
Of course, your plan will have a financial component, but it will be focused on the journey of life, rather than financial destinations; on achieving a balance and knowing what’s ‘enough’. It will be more about experiences, bucket lists and relationships than annuities, tax refunds and superannuation.
Putting it into perspective
Yes, money is important in providing choices and experiences, and that’s probably a major reason why richer people report higher levels of happiness.
More people are happily rejecting the idea of a conventional retirement. Technology is helping to blur the lines between work and play, and Millennials are opting to pursue experiences now with the expectation that they will work in some form well beyond today’s typical retirement age.
So ask yourself:
- What makes you happy?
- What sort of choices do you want to be able to make?
Then share the answers with your financial planner, and ask for a plan that will not only meet your long-term needs but also allow you to indulge your shorter-term whims and desires.
If you would like to look at setting up a personal financial plan, contact us today.
Dee (Dewi) Chan is an authorised representative and credit representative of AMP Financial Planning. Blueprint Planning Pty Ltd (ABN 78 097 264 554), trading as Blueprint Wealth, is an authorised representative and credit representative of AMP Financial Planning, Australian Financial Services Licensee and Australian Credit Licensee (AFSL / ACL 232 706).
This article contains information that is general in nature. It does not take into account the objectives, financial situation or needs of any particular person. You need to consider your financial situation and needs before making any decisions based on this information.