Why financial planning is more about happiness than money

A few days ago, on 20 March, the world celebrated International Day of Happiness. It’s an annual awareness campaign organised by the United Nations to remind everyone that we all deserve happiness – in fact, happiness might be as important as economic growth in developing a productive society.

When you think of the things you could do to increase your own happiness, financial planning might not be the first thing that pops into your head. After all, many people consider financial planning to be solely about growing wealth, concerned with facts and figures, investment returns, inflation, and interest rates.

But dig a little deeper and you’ll find that the money side of things is purely incidental. At its core, financial planning is about happiness.

In honour of International Day of Happiness, read on to learn more about the role that happiness plays in your financial plan.

Saving money makes financial sense, but a goal is key

You may have learnt at an early age that saving money is an important part of building financial security.

This is a helpful financial habit to adopt, but there is a key ingredient that many of us overlook: what exactly are you saving this money for?

Without having a goal and savings target in mind, you can end up saving more and more money with the sole intention of accumulating more wealth. But wealth on its own doesn’t create happiness – it’s what you use your money to buy or achieve that can help you to build a truly fulfilling life.

Research shows that experiences tend to bring more happiness than material possessions

When you build up your savings, you might start to think about how you’d like to spend your funds. This is a great opportunity to use your wealth to create a happy and meaningful life.

You might have a list of material purchases in mind that you’re saving towards – a new car, designer clothes, or maybe a new watch – but it’s worth taking the time to reflect on what it is that brings you the most joy before deciding how to spend your money.

Research conducted by the American Psychology Association has revealed that experiences tend to make people happier than material purchases. They asked a group of participants to think about a recent material and experiential purchase, and reported that the purchases made to gain a life experience usually brought more joy.

By being selective about how and where you spend your money, you could use your wealth to increase your own happiness through enriching life experiences.

By first considering what makes you happiest, you can create a more effective financial plan

As you can see, creating a financial plan that simply aims to help you accumulate more wealth without a goal may not lead to contentment. Instead, it’s likely to be more effective to begin by narrowing down the lifestyle and life experiences that will bring you the most joy.

By putting these things at the centre of your financial plan, you can take practical steps towards building a happier life.

This is why your planner will rarely ask you about money in your first meeting. Instead, they’ll probably spend more time asking you a lot of questions about your goals, priorities, and ideas about the future.

When your planner understands what you are hoping to achieve in the future, they can help you to decide on a suitable way to manage your pension, investments, savings, and other financial matters. Everything in your plan will be designed to help you move closer to these goals, which is why your financial plan and investment portfolio is likely to look quite different from those of your friends or colleagues.

This is how your planner can help you to make sound financial decisions that enable you to live a life of happiness and contentment.

Get in touch

If you’d like to know more about how we can help you to use your wealth to build a fulfilling and happy life, both now and in the future, please get in touch. You can email us at info@harperlees.co.uk or call 01277 350560. We’ll be very happy to help.

Please note

This article is for information only. Please do not act based on anything you might read in this article. All contents are based on our understanding of HMRC legislation, which is subject to change.