Can money buy you happiness?

Share This:

• 

Text size: A A A

By Luke Jovetic
Know Your Money Editor

A number of people who are currently unhappy might feel all their problems could be solved if they had more money.

But is having access to vast sums of money the only way to achieve happiness? Some people might believe that it would certainly help but is there another, far easier, way of feeling content with life for those who are unlikely to hit the jackpot anytime soon?

Money worries?

People who regularly find themselves worrying about money are certainly not alone, if recent findings are anything to go by.

A Feel-Good Insight Study, produced by Aviva in conjunction with a leading psychologist at City University, London has revealed that 86 per cent of people worry about money at some point.

It discovered that one in three - 34 per cent - think about their financial situation at least once every day and two per cent stated they find their thoughts drifting to money worries every minute.

Is financial understanding the key?

The study tends to suggest that financial stress - of varying degrees - is the norm for most Britons but is there a reason behind it?

Aviva also found that 52 per cent of females feel overwhelmed by the quantity of financial information in the public domain and just 12 per cent said they have an understanding of more complex financial products such as pensions and investments.

But it is not just a problem limited to women, as five per cent of British adults overall confessed to having no understanding of financial products.

However, this figure rises to 16 per cent for those with poor self-esteem.

This possible link between finance and happiness is further suggested by statistics showing that 42 per cent of people with low self esteem admit they fail to work to a budget.

Of those who have high self-esteem 68 per cent said they are good at planning their finances on a day-to-day basis, while 62 per cent have long-term financial goals in place to work towards.

In comparison to this, more than three-quarters of those with poor esteem fail to have any long term plans in place and 69 per cent are concerned about looking after their money each day.

Commenting on the study, Dr. Malcolm Cross, Reader in Psychology at City University London, said: "It's a widely held belief that financial stress has an impact on overall health and happiness.

"Having the financial services industry understand the causes of fear, stress and anxiety around money is a key step to improving people's financial situations and in turn, their self-esteem and happiness."

He added the study shows there is a direct correlation between money and self esteem and that it is indiscriminative of salary, employment status or age.

Time to make a change?

The findings could give people the encouragement to take a look at their own financial situation a little more closely.

Gary Price, marketing director for Aviva, says: "It's long been said that money doesn't buy happiness, but there's been little evidence to prove it. This study shows a strong link between financial behaviour, self esteem and happiness and proves that those with sensible financial plans in place are happier overall.

"By understanding the psychological impact of money and by helping people to face their financial fears, we can hopefully pave the way to happiness - whatever their bank balance says!"

Simple measures such as working towards goals - like keeping regular savings for the future - and sticking to a weekly or monthly budget can be adhered to by people everywhere, regardless of what they earn.

If the research is correct then feeling happier with life could be a target that is fairly simple to achieve and does not require a large windfall of cash.

Consumers may wish to shop around for a savings account and ensure they keep money aside that could benefit them in case of a future emergency or simply provide them with a treat that might have previously felt unattainable.

The current low base-rate saving can prove a challenge, but it could also be more important than ever to look for the best possible return on your cash.

In addition to this finding the lowest possible price when buying has arguably never been simpler, with websites such as mysupermarket.com allowing shoppers to scout out offers and compare prices.

Important Notice
This guide is intended for general information only and is not intended as, and does not constitute, any form of advice, recommendation or endorsement by us of any particular product(s) or services and you should rely on your own further research and professional advice in relation to your specific requirements and circumstances before purchasing any products or services. Use of this guide is subject to the Terms of Use of the KnowYourMoney site.