I have been pondering a bit lately about happiness and in particular what does pursuing contentment and happiness have to do with money? Can money buy you happiness and if so, why are there miserable millionaires? How do we pursue contentment and happiness? What are the core elements we need in our life to maintain a positive sense of well-being?
Well lucky for me, Deakin University and Australian Unity have been pondering and studying these very question for the past 15 years and have surveyed over 60,000 Australians during this time. The results have led Professor Robert Cummins (the author of the survey) to develop the “Golden Triangle of Happiness” which identifies 3 core elements that need to be present in our lives if we want to maintain a positive sense of well-being. These are:
So, money may not make you happy, but not being in control of your finances WILL make you very unhappy. A 5-year study from the Australian Psychological Society has confirmed this, showing that personal financial issues have consistently been voted a top stressor in the lives of Australians (APS Stress and Wellbeing in Australia Survey, 2015).
I believe there are 4 steps to help us get control (or regain control) of our finances:
Step 1. Make a REALISTIC Money Plan.
Step 2. Get rid of consumer Debt
Step 3. Save and Invest
Step 4. Put protection around your finances
No one would try and build a house without blueprints or try to run a business without knowing their expenses or income, but for some reason many of us think that we can wing our way into financial security. The reality is that we all need to make a plan for our money. A plan will allow us to spend on purpose rather than by crisis and make sure that we are spending less than we earn.
When I talk about making a realistic Money Plan, I am not talking about some budget you write at the beginning of the year and then never look at (much like a failed New Year’s resolution). I am talking about a real plan for your money that you can stick with because just like a diet, it’s not going to do you any good if you don’t actually follow through with it.
For a Money Plan to work for you, and your lifestyle, it needs to take into consideration 3 factors:
In our piece on “Let’s talk about money” we explored the importance of identifying our values and beliefs about money as this will “tint” how we see, understand, interpret and interact when it comes to our finances.
Our personality will also influence how we approach money.
Some of us have an eye for detail and order, love spreadsheets and to-do lists, and will find working within the boundaries of a traditional budget easy. Others of us are great with seeing the big picture, being spontaneous and thinking out of the box. Some of us are a mix of the two.
If you have never done a personality profile, we highly recommend you do as it is a great tool to give you (and your loved ones) insight into your personality. It can also be a great opportunity to start a conversation with your partner and get to know each other even better. We particularly like Flag Pages (www.flagpage.com) as it is an incredibly easy and short online assessment but also amazingly effective in identifying not just your personality but also what motivates you.
It is important to work with, and not against, your personality when it comes to making and monitoring your Money Plan. If one member of a relationship is more detail oriented than the other, they are probably more suited to taking the lead and taking on the role of “Family Treasurer”. If you know that spreadsheets and flowcharts are not going to work for you, find a system that will work (envelopes, jars, or different bank accounts for different expenses etc.). The important thing is not how you do it, but that you do it!
Once you have identified your values, your beliefs and your personality it’s time to get to the nuts and bolts of doing up your Money Plan and we will get to that in our piece “Making a Realistic Money Plan”.