Original article byINGDirect Road to Saving
It’s an age-old adage: Money can’t buy happiness.
Or can it?
A recent Princeton University study on the link between money and life satisfaction showed that those people who were fiscally responsible and didn’t worry about making ends meet (and who were also on course with saving for retirement and college tuition) reported being the happiest. Conversely, those who concentrated much of their thinking on financial matters were much less likely to be happy. Interestingly enough, this applied across all income levels. As the lead researcher said, “Even if you are making a hundred grand a year, if you are constantly worried that you are going to get fired, that you are going to lose your health insurance or that you are simply not sure you are going to ‘make it,’ you are not going to be happy.”
So while the material goods that money can buy—the new clothes, the import car with a twin-turbocharged V-12 engine—won’t bring us eternal fulfillment, there’s something that money can buy that IS fulfilling: Financial security.
We think the intangible benefits of this security are far better than any flashy sports car money can buy, even if it does have awesome pickup.
Here are a few of our favorite benefits:
Don’t worry, be happy.
Having money in the bank means that you don’t have to worry about it. If you’re smart about saving and spend responsibly, thinking about finances should only take up a minimal part of your day. Sure, you may check your online account to make sure all is correct, but short of that, most smart Savers give money only a cursory thought. The absence of financial worry gives you the freedom to stay happy.
Now turn that around. If you’re in well over your head financially, the credit card companies keep calling and you’re dodging the phone, money is most likely all you think about. It can literally consume your every thought and bleed into almost every aspect of your life. Not too many people who are up staring at the ceiling at 3am trying to figure out how to pay the bills will be happy campers the next day.
And it’s been proven that the hormones produced by chronic worrying can have not-so-pretty physical manifestations. Grey hair (check out the in-office follicular progression of our past presidents—all who presumably had a lot to worry about), muscle aches, digestive disorders, and trembling and twitching all can be the result of stress. Doesn’t sound like much fun, does it?
Keep your great expectations in check.
Those who are financially responsible know that the comfort of money in the bank beats the quick rush you get from a big bucks purchase any day. Savers inherently lower their expectations and embrace the notion that no, they don’t necessarily deserve to indulge in every financial whim. And this lack of entitlement allows them to be happy with what they have rather than unhappily pine away for what they don’t.
Unfortunately, too many Americans are driven by keeping up with the Joneses. There’s a constant comparison to others, a never ending striving for more. After all, we work hard, we deserve the expensive toys too, right? But in reality, how can we be happy when nothing is ever enough and the hunger to fulfill these high expectations can never be satiated?
It all comes down to experience.
It’s been proven that experiential purchases can actually buy you happiness. Money affords you the freedom to indulge in certain experiences, whether it’s going to dinner with friends, catching a Broadway show with your spouse or even allowing yourself to take that dream vacation with your family. Studies have proven that our positive perceptions of these types of purchases are more powerful and far more memorable than the fleeting feelings you get from material purchases.
Of course, this only applies if you’re spending money wisely. Maxing out your credit card to fund a cruise around the world won’t bring about long-term happiness if all positive feelings are negated by sheer panic once the bill arrives. However, if you’re financially secure and fiscally responsible, having money to spend on things that can form long-lasting memories can actually afford you a great degree of happiness.