The other day I was watching a current-events/political talk-show and a great point was made.
One of the individuals on the show said “Happiness isn’t only about what you have, it’s also about what you don’t have to worry about.”
The panel wasn’t discussing finance, but this quote immediately made me think of some of my conversations around wealth-building.
Maybe it has something to do with being a Certified Financial Planner, but all roads lead back to finance… haha
THE CONNECTION BETWEEN MONEY & HAPPINESS
Many studies have been conducted to evaluate if there is any connection between income and happiness.
In a study performed by Daniel Kahneman and Angus Deaton, they found that around $75,000/year, there is a leveling off of how much your happiness increases in correlation to your income. Basically, all-else-equal, you won’t be any happier if you make $100,000 versus if you make $75,000/year.
The interesting part of the study is that if you look below the $75,000/year level of earnings, there is a drastic increase in misery as you go further and further down.
The reason for this is thought to be that as you go closer to levels of poverty, and below, you deal with much more stress around money issues, which causes anxiety and has a negative impact on your happiness.
Reaching $75,000/year isn’t necessarily about obtaining happiness as much as it is eliminating a base level of stress around money, which allows you to enjoy life without certain concerns.
It’s pretty easy to imagine that one person who is stressing out about money isn’t going to say they are as “happy” as someone who doesn’t have those same issues.
AREAS IMPACTED BY MONEY ISSUES
Almost every aspect of our lives is in some way impacted by our financial situation. But here are a couple big areas that have been proven to be profoundly impacted by money problems.
One of the top causes of divorces in the U.S. has be found to be money issues.
Whether it’s a lack of communication on wants and desires around money, or “financial infidelity,” money issues can create a huge strain on a relationship, and ultimately cause its downfall.
In a Magnify Money survey, they found that 21% of divorcees cite money as the cause of their divorce. The only cause that ranked higher was infidelity.
Divorce rates have been increasing for several decades. When seeing studies like this, it’s hard not to imagine what type of impact a strong financial foundation would have on many of these failed relationships.
Health & Healthcare
The next area that money can play a huge role in is your health and healthcare.
In recent years, the #1 cause of bankruptcies in the US have been medical bills.
Unless you have been hibernating, one of the biggest debates going on in our country is over our healthcare system. Whether the government decides to overhaul the current system or replace it with a new one, many believe that there is a better way. But until anything happens, one way you can make sure to protect yourself is by building up your own financial resiliency.
The sad and ironic part about this is that studies have shown money issues to be one of the biggest causes of stress. Stress has also been found to be one of the biggest causes of health-related issues.
So, those medical bills that are piling up can end up causing you more stress, which in turn could cause additional medical issues.
It’s a vicious cycle to get caught in…
YOU HAVE CONTROL OVER YOUR OWN SITUATION
At the end of the day, we can debate all of the policies we’d like to see our government roll out or get rid of, and maybe some of that will or won’t happen. But there is one thing you can absolutely have a direct impact on, and that is your own financial situation.
You are in control of your own wealth-building (Or lack thereof). The moment you truly realize this, you will no longer have anyone else to blame but yourself.
Sure, there might be hurdles in your way, but none that others before you haven’t already overcome.
Instead of stressing over all of the issues that arise with being in a poor financial situation, make the decision to positively change your financial picture and eliminate the vast majority of the stresses that accompany poverty.
As Bill Gates once said, “If you are born poor, it’s not your fault. If you stay poor, shame on you.”