Last month, I was out of the office for a few days visiting the Christmas markets in Vienna (absolutely lovely, incidentally – highly recommended!).
Whilst wandering around the markets I saw one of those stalls which sell motivational fridge magnets. While there were plenty of cheesy statements (you know the sort of thing: ‘Only Prosecco in here’, and so on), my attention was drawn to a more serious quote.
It read: ‘Do more things that make you happy’.
This got me thinking about financial wellbeing and how we should use our finances not just to buy ‘stuff’ but to enable us to do things that really make us happy. But, does this work?
Financial wellbeing = general wellbeing
Before we look at whether you should be spending your money on experiences, here are some stats from a 2019 Salary Finance study about how financial wellbeing affects you.
Two in five people (40%) are worried about money. These people are:
- 880% more likely to have sleepless nights
- 600% more likely to have a lower quality of work
- 220% more likely to be looking for a new job.
The research found that financial wellbeing has a major influence on overall wellbeing, as well as a significant impact on mental health. The findings from the 2018/19 survey revealed that those with financial worries are:
- 380% more likely to suffer from anxiety and panic attacks
- 470% more likely to be depressed.
And, interestingly, the study found that these issues had little to do with the amount of wealth a person has. The survey found that it was the lowest and highest earners that had the most financial stress and that financial wellbeing is directly linked to your borrowing, saving and spending habits, not your earnings.
The conclusion to draw from this is that if you’re less worried about money, your general wellbeing is likely to be greater. A financial planner can help you to create a tailored financial plan for you to assuage your money concerns, and act as a sounding board when you do have worries.
Do more things that make you happy
Returning to Vienna for a moment, what are the things we can do that will make us happy? And what role do your finances play in this?
Researchers often present wildly different findings when asked the question ‘does money buy happiness?’
What is generally true is that it’s not the amount of wealth you have, or the level of income you earn, but the way in which you direct your income to the things that are likely to bring you joy and satisfaction.
These ‘things’ may be ‘things’ – a new car might make you very happy – but often using your resources to afford experiential purchases can bring greater satisfaction.
A poll by Harris Group found that 72% of millennials prefer spending on experiences over material objects, while a series of studies from Cornell have also found that subjects were happier spending their money this way.
‘Experiential’ purchases might include:
- Golf club membership (as long as you go)
- Payment for services that free up more time to do what you like (cleaning, garden care etc.)
A study published by the Journal of Consumer Psychology concluded that, as money can buy things that make us feel happy, money can therefore buy happiness.
Here are 5 reasons that support this thinking.
1. Buy experiences not things
People are often happier when they spend their money on experiences rather than material goods. It is possible to both anticipate and remember a great experience, unlike buying an item in which the happiness can often be fleeting.
2. Help others
Humans are social beings and we’re dependent on social relationships for happiness. If you spend your money on improving your social connections, you are, in turn, creating a happier social circle.
3. Think about what makes you happy
Happiness is often in the doing. Consider buying a new car. It’s not the colour of the car or the leather of the seats that typically makes you happy – it’s the drive in the countryside with your family.
The same is true of a house. It’s the birthday party you host for your children in your garden that you’ll remember, not the colour of your bathroom tiles.
4. If you must buy things, buy lots of little ones
Research has shown that spreading your money over lots of smaller items provides more happiness than buying one more expensive item. Spread the happy feeling over many purchases!
5. Don’t over-compare
If you spend hours poring over comparison sites to try and get the very best deal on a product, you lose sight of what it is about the item that makes you feel happy. The issue becomes about the price, not the joy you’ll receive from the item.
Get in touch
Getting a strong financial plan in place can reduce your money concerns and, consequently, improve your general wellbeing. We can help you with this. Please email email@example.com or call 01454 416 653 to find out how.