Finance
DOES MONEY MAKE US HAPPY?
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Andrew Fort B.A. (Econ.) CFPcm Chartered MCSI APFS, Certified and Chartered Financial Planner, Fort Financial Planning inancial wellbeing is the study and application of how money can be used to increase our happiness and fulfilment.
There are five parts to financial wellbeing: • A clear path to identifiable objectives • Control of daily finances • Ability to cope with financial shocks • Having financial options • Clarity and security for those we leave behind A great deal of research has been done on the subject, revealing two universal truths. Firstly, money itself does not make us happy, it is how we use it that matters. For example, Professor Tim Kasser of Knox College has produced research that shows the value of accumulating wealth for its own sake is in direct contradiction with happiness. Secondly, and best highlighted by the Harvard study on happiness, the largest contributor to our wellbeing is the quality of our social relationships. Therefore, in many ways financial wellbeing is about how we use our money to support the other areas of wellbeing. Know Thyself
The first of those parts, a clear path to identifiable objectives, is financial planning. One way of summing up financial planning,
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therefore, would be: work out what you want from life, then spend your money on that. This aspect is often much more difficult than it at first appears. Most of us have been too busy with ‘life’ to really consider what we want. For some it is simply more of the same, a reassurance that their lives can continue without having to worry about money. For others it is about considering and identifying what is important for them, discovering their purpose. This might be identifying what their life will look like when work is no longer taking up most of their time. It might be a life of travelling or a life dedicated to helping others. The most fulfilling part is, perhaps, discovering how to live the life that you want to live; the life that will make you happy. Financial planning then becomes essential to identify what steps need to be taken to enable you to live this life. It helps you to become financially well organised, to identify threats to this future and to remove those threats where possible. It helps you to identify how much you need to invest for the future; it helps you to identify how much risk you are comfortable with and how much risk you need to take. Be aware that not all financial planners will take the time to help you to identify what you really want, they may only want to sell you a pension. Make sure you engage with a real financial planner who puts your financial wellbeing first (and not theirs!). ffp.org.uk
