The Science behind Money and Happiness
It's the age-old question. Can money buy happiness? While conventional wisdom says no, researchers are upending traditional thinking here.
It turns out how you spend your money can impact your happiness levels, according to research from Harvard Business school professor Michael Norton. People who spend money on experiences - not things - brought higher levels of happiness.
Adding in another layer of research, the further that people think and plan ahead for their future, the higher levels of power and happiness they feel in their lives, according to a Morningstar report by behavioral economist Sarah Newcomb Ph.D.
The key takeaway: Creating economic stability now and in the future helps people achieve higher levels of emotional well-being.
"According to the American Psychological Association, year over year, money is the number one source of stress in U.S. households, regardless of the economic climate. Given that stress leads to health problems, lost productivity, relationship problems, and an overall loss in quality of life, it’s clear that the emotional aspects of a person’s financial life are a critical part of their overall financial health," the Morningstar report said.
Here are key findings from the Morningstar report:
- Time is money - The further ahead a person thinks in time and the clearer their picture of the future, the better their behavior in terms of cash, credit, and savings management. This effect was significant even when controlling for income, age, education, and gender.
- Power is happiness - Across all income levels, people who believe they create their own financial destiny experience, on average, display more positive emotions with respect to money than their peers who believe they do not have power in their financial lives. The effect of perceived power on emotional wellbeing was greater than that of income, age, education, and gender.
Focus On What You Can Control
When it comes to finances and investments there are aspects that you can control and variables that you cannot control. Focus on what you can control. Here are some examples of factors you can control:
- The $ amount that you save each month.
- The types of assets that you buy.
- How well you diversify your portfolio.
Financial advisers suggest saving and investing different percentages of your income. Some may point to 5%, while others may say saving 20% of your income is a better target. When it comes to building long-term wealth and saving for retirement, you probably won't run into the problem of saving too much.
Take the time now to think about your long-term financial goals. Write them down in detail. Then, develop a plan to help you get there. There are investors who purchase a set amount of gold and silver assets each month, as part of a dollar-cost-averaging plan. Just as you might divert a certain amount of your income to the stock market each month, diversify your portfolio with investments into gold and silver.
Gold and silver are proven portfolio diversifiers and also act as a vehicle for long-term wealth building. Boost your happiness levels now and in the future by taking control of your financial life and building an investment plan. A Blanchard portfolio manager would be happy to work with you to discuss your long-term goals, your level of risk tolerance and help you create a plan to move your closer toward your dreams.