High incomes and net worth don’t guarantee financial happiness and peace of mind.
This Atlantic article finds people with $5 million in net worth say they don’t feel rich in today’s economy. And even a $350,000 salary isn’t necessarily enough to feel secure, at least according to this budget methodology.
But certain things lead people to feel satisfied and happy about their money.
1. Awareness of one’s financial situation is perhaps the #1 factor for money satisfaction.
For most people, true awareness of their financial situation brings the greatest peace of mind.
As noted by financial coach Maggie Germano, “the people who feel the best about their financial situation … are people who are fully aware of what their financial situation is.”
We’ve seen this here at Tiller Money. Even people with large amounts of debt and limited income feel better when they’re tracking their money and they know where it’s coming and going. A habit as simple as looking at ones bank balance once per day or week can help.
Financial fear and anxiety grow from lack of engagement and awareness.
2. Certain kinds of spending can make people feel better.
It’s well documented that people feel better – and more financially secure – when they spend in certain areas. These areas include spending on charity, memorable experiences, and paying others to handle tedious and dreaded tasks, like bookkeeping or house chores. (More to come on this.)
3. The size of ones bank balance (distinct from total net worth) is “of unique importance to life satisfaction.”
Having money close at hand gives people financial confidence (even with very low savings account interest rates).
In the Atlantic article, author and happiness researcher Elizabeth Dunn noted “One reason why middle-income people might feel pretty good about their level of income is if they just happen to be living their lives in such a way that even if they don’t actually have a lot of net worth, but they always have 8,000 bucks in the bank.”
4. Talking to others about money is proven to help people feel better.
Financial coaches agree: despite social taboos around talking about money, you will feel much better about your money situation if you talk about it.
“I think it’s really important to be talkative and honest about your finances with friends and family. Because then you can see what other people are struggling with and that you’re not the only one who feels discontent with their finances.”Maggie Germano, Financial coach
5. Defining clear and concrete goals brings financial peace of mind.
Setting goals can ease financial stress. However, to be successful they should be specific and concrete. “I want to save more” is a wish. “I want to save $50 per week until I have $2500 in my rainy day fund” is a goal with a measurable outcome.
Read more about setting successful financial goals here.
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