1 March 2021
However, this is qualitative data that we are talking about, and there are lots of caveats and misconceptions that can be construed. Making heaps of cash will not automatically increase our happiness. How we spend, save and think about money will ultimately determine how happy we are at the end of the day.
For example, a study done in the UK found that the amount of money people saw in their bank accounts impacted their happiness more than their income. This led to a phenomenon in middle-income households where money that would better serve being prudently invested was sitting idly in their bank accounts. It is speculated that when invested, you don’t see that balance very often, whereas you see your bank balance so often that it shapes your sense of financial stability and wellness.
Another prime example is social comparison. More or less, if you are better off than the people you are comparing yourself to, then you feel wealthy. One study found that the reference group’s income is about as important as your own income for individual happiness. Neighbourhoods that are more economically diverse can leave some people feeling perpetually behind whilst others feel further ahead. Where we choose to live has underlying psychosocial consequences tied to our financial wellbeing that we may not have considered before.
Many people assume that if they just got a raise or started a side hustle and increased their income, everything would magically get better. But even when their income is raised, they remain equally worn out and still feel like they live paycheque to paycheque.
Generally, the people who feel the best about their financial situation are the people with financial clarity. This includes a thorough accounting of where your money is going each month. It’s more about using money with intention than having a large income figure.
If you feel that you may be falling into bad habits of social comparison and letting money sit idly by, then speak to your financial adviser about navigating your relationship with your finances. Through the extensive network and group strength of SFP, your adviser is well-equipped to help you leverage your wealth strategy and work alongside you to create a happier you today, that benefits a happier you tomorrow.
We are here to help – let’s have a chat.