Today's Sunday • 9 mins read
If you think that financially happy people buy a lot of expensive stuff all the time, then you are wrong.
Most Americans believe that material possessions improve personal happiness and social well-being.
However, contrary to this belief, studies show that materialists have lower social and personal well-being.
Then, what are the secrets of financially happy people?
For starters, happy and rich people do not wake up every morning to “buy things.” They know exactly how money can buy happiness.
Take a look at how happy people habitually interact with money.
7 Enviable Habits of Financially Happy People
How do you improve your financial well-being while remaining happy? Financially happy people have certain habits that keep them happy as well as wealthy.
Here are the 7 habits of happy and successful people:
1. Happy people know how to manage their money outflow well.
Happy and rich people know how to manage their money outflow in two ways: set a budget and track their spending.
First, they always make a budget and follow it strictly. A budget enables them to plan and monitor the outflow of money in relation to their income, resulting in financial stability.
A budget is simply a spending plan that balances your current and future expenses against your present and projected income. It keeps your spending in check and your savings plan on track.
A budget allows us to identify and work toward our long-term goals. A budget, in fact, encourages us to lay out our goals, save money, keep track of our savings and investments, and turn our goals into reality.
You, too, may create weekly or monthly budgets by following their lead. Creating budgets is so simple, in fact, that even children with pocket money should make it a habit.
The second thing is that they keep a record of their daily spending. This tracking of daily expenses helps them avoid impulsive purchases. When they want to buy something, they check to see if the amount is allowed in their budget.
The average credit card debt per household reached $5,525, according to the State of Credit report 2021. A budget can help people avoid overspending and debt buildup.
• It is simple: if you handle your money outflow better today, you will be financially happier tomorrow.
2. Happy people spend their money on life experiences rather than material objects.
Research over the decades has investigated how money affects our well-being when we invest in life experiences, as against material things.
We’re happy when we spend our money on life experiences rather than on material objects.
People who spend money on experiences are happier. Why? Because essentially, we get to re-live our happy moments and share those memories with others.
Financially happy people habitually spend their money to buy life experiences (experiential purchases) rather than buying material items (material purchases).
Being constantly preoccupied with how to make more money is also a counterproductive activity. There is now compelling evidence showing people are happier when they are optimally busy.
Material objects give us less and less joy over time as we get used to them and start to take them for granted (a phenomenon called hedonic adaptation).
Because of hedonic adaptation, neither money nor relationship status nor anything else can provide lasting happiness. But happiness is within our power to create for ourselves.
– Dr. Sonja Lyubomirsky, Professor of Psychology. author of How of Happiness (read the book summary)
• Money can help you find happiness as long as you know how to spend it.
3. Happy people fondly reflect on the positive moments from their past.
Humans, maybe uniquely among other animals, can mentally travel back in time. That’s a skill we can use to raise our happiness.
Research suggests that people who look back on their past with fond memories are happier than those who dwell on negative memories and regrets.
So, happy people seem to live more in the glories of their past, re-experiencing the blissful moments from their past while dismissing the pains.
When happy people reminisce about their past, they tend to focus on the positive memories rather than the unpleasant parts of their past.
• The takeaway is this: the more pleasant experiences you buy when you’re young, the more joy you will have when you recall them when you are old.
4. Happy people make it a habit of “catching” the positive emotions of others.
Some people are more vulnerable to profoundly experiencing the emotions of others.
They are sensitive to what others around them feel and easily “catch” their emotions during their happy and sad times. These people tend to be happier, especially when they make it a habit of being around joyful people.
Research shows that when people smile warmly at happy people, they are more likely to smile back and feel warm on the inside.
So, paying greater attention to the positive emotions of others is an easy way to boost your happiness. You can do this by asking your friends to pool their money and spend it on group vacations.
5. Happy people live in a caring and thriving community.
A person is at their happiest when their three basic psychological needs are met: autonomy, competence, and relatedness.
Thousands of studies show that this psychological need fulfillment has a favorable effect on happiness.
Data from research suggests that living in a supportive community can help you meet your psychological needs.
• Happy people have a sense of belongingness where they live and look forward to returning to their home community after a trip.
6. Happy people have goals to reach for.
Goals are important to have a happy life. They are often part of our personal milestones, like getting married, moving to college, getting a new job, and having children.
Goals give us a purpose, and they keep us focused on what we want to accomplish. They motivate us and make us stay productive.
People manage their money better when they have set clear goals, like paying off a loan, investing for a peaceful retirement, or saving for an emergency fund.
Without financial goals, we just drift along, spending rashly on whatever we feel like in the heat of the moment.
Without money goals, your life might not result in a financially stable one.
Having several types of goals in our lives, like achievement goals, relationship goals, social goals, and personal growth goals, can improve our overall happiness.
One thing here, remember to carve out a personal definition of success before you set your goals.
• A simple thing to go away with is this: Set the right goals at the right time, from daily to monthly to yearly, to put yourself on the right track to financial happiness and success.
7. Happy people savor what they have.
People who are financially happy find happiness in what they have rather than spending money on things that other people have. They understand that authentic financial happiness can never come from keeping up with the Joneses.
Savoring in positive psychology is defined as the process of increasing positive feelings by remembering and lingering on happy experiences from the past. To savor is to appreciate, intensify, and prolong the pleasant memories of a past event.
Financially happy people do exactly that.
They savor their earlier financial successes, acts of charity and altruism, and occasions when others were generous to them.
They also have the habit of appreciating and valuing what they already have. Finally, their spending is mostly on the necessities, with an occasional indulgence in the exotic.
• A simple idea to boost your savoring power: Practice mindfulness to appreciate the present moment rather than hopping between the past and the future.
• Find out how being happier can lead you to financial success: Can Money Buy Happiness: What Psychology Says On Happy Money?
What does it mean to be financially happy?
Financial happiness comes from achieving financial stability and reducing financial stress.
“Financial well-being” means being free of major financial stressors, like constant money worries, inability to meet basic needs, or lack of planning for the future. It means a person can fulfill their current financial obligations, feel secure about their future, and make money-based choices that enhance life, like taking vacations.
Financial stress reduces your ability to reach life goals and harms your health and relationships. An APA report (2015) found about 72% of Americans feel stressed about money at some point.
That said, don’t prioritize making money at the cost of time with friends, hobbies, or family trips.
If you are experiencing severe financial stress and having thoughts of self-harm, contact your mental health provider or emergency services immediately.
Final Words
In a nutshell, financially happy people:
- Value purchasing experiences over material possessions.
- Save for financial emergencies and plan their retirement early on.
- Stick to a budget, avoid impulsive spending, and pay credit bills on time.
- Donate to charitable causes and do not waste their money on extravagances.
It seems that most people equate having financial freedom with having financial happiness. But, really, are they not the same thing?
- Financial freedom is being able to live comfortably without having to take out money from your savings or sell something valuable.
- Financial happiness comes from realizing that money is a tool, not an end in itself. You spend within your means to avoid the stress of poverty or debt, and you manage your finances in a way that you can still enjoy life even if you don’t have everything others around you have.
Let’s close this with this famous quote on money and happiness:
If you want to feel rich, just count the things you have that money can’t buy.
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√ Also Read: 3 R’s of Habit Building: How Are Habits Formed In The Brain
√ Please share this if you found it helpful.