When you create or review your financial plan, it’s natural to emphasise goals such as wealth accumulation and securing a stable financial future.
While these goals are undeniably important, it’s equally vital to factor in your personal happiness and how your financial decisions could shape a fulfilling future for your family.
While the idea that “money can’t buy happiness” is widely acknowledged, a happiness study reported by Reuters highlights the link between positive emotions and wealth.
It shows that, when used thoughtfully, your wealth can act as a tool to earn security, safety, and a sense of control over your life, ultimately contributing to greater happiness.
As such, it’s worth creating a well-rounded financial plan centred around both your financial security, and your emotional wellbeing. Continue reading to discover why this is the case, and how a well-rounded financial plan could contribute to your happiness.
Financial stability in retirement is a priority for most
For many, the primary goal of financial planning is to ensure financial stability both now and in later life. To illustrate this, a recent study by Legal & General revealed that 94% of people aged 50 or over say their most important retirement dream is to feel financially secure for the rest of their life.
While striving for financial stability is important, it’s equally crucial to consider the activities and experiences that would bring you happiness throughout your life.
The same study also asked respondents what they were most looking forward to about retirement. This question elicited answers such as:
- Spending quality time with family
- Travelling
- Funding family events such as weddings and holidays.
Integrating your desires for fulfilment into your financial plan could help you to set realistic savings goals and provide you with positive experiences to enjoy both now and in the future.
It may be worth including dream experiences in your financial plan, not just purchases
Even though you may have a list of material goals in mind when you create your financial plan – perhaps a second home or a new car – it’s worth remembering that experiences can often make you happier than material possessions.
In a study reported by the American Psychology Association, respondents were asked to consider both a material purchase and an experiential one.
The study found that experiential purchases made people happier than material ones. What’s more, people reportedly felt happier after being reminded of their experiential purchases compared to their material ones.
This shows that it’s important to consider the experiences you’re looking forward to both now and in the future alongside your financial milestones. This is likely to help you feel more fulfilled than focusing on income or assets.
There is a difference between “extrinsic” and “intrinsic” goals in your financial plan
To realise the experiences that would leave you feeling fulfilled, it’s worth distinguishing between your “extrinsic” and “intrinsic” goals.
- Your extrinsic goals involve seeking approval and rewards from external sources, such as financial gain or recognition.
- Your intrinsic goals tend to come from within, and revolve more around personal growth and developing strong relationships.
If you centre your financial plan around your extrinsic goals and focus only on building wealth, this may ultimately leave you unsatisfied. But letting your intrinsic goals guide how you save for retirement could increase your happiness, reduce your stress, and lead to greater satisfaction with your life.
A financial planner could help you figure out your dream lifestyle and how much you need to save
When you’re creating your financial plan, balancing wealth accumulation and your own personal happiness can be tricky.
This is where a lifestyle financial planner can be a helpful person to speak to. Your planner can help you to focus on the goals that will help you to build a life of happiness and fulfilment. This is the starting point for creating a financial plan that will enable you to realise those dreams.
Remember: financial planning is about more than money. It’s also about ensuring that you and your loved ones will be happy and content throughout your life.
Get in touch
If you want to create a financial plan that enables you to achieve your happiness goals now and in the future, we can help.
Either contact your financial planner directly, email us at hello@ascentawealth.com or fill in our online contact form to organise a meeting and we’ll get in touch.
