Money and Happiness - The Key to a Balanced Life

Many of us dream of a happy, carefree life, and financial success is often regarded as a key factor. But in what ways does money contribute to our overall happiness? Let us explore this connection and see how it can help us make more conscious financial decisions.

Financial Well-being: More Than Just Numbers

Research shows that the link between income and happiness tends to diminish once we have reached an annual income of around $75,000. Beyond that level, higher earnings have little effect on our overall happiness (1). Despite a comfortable financial situation, many people still worry about managing their money wisely and making sound financial decisions. Financial expert Morgan Housel further argues that wealth is not just about the amount of money one has, but about feeling secure and at peace with one's financial situation.

This highlights that financial well-being is about achieving a sense of security and contentment, not just accumulating wealth. When you feel confident and calm about your finances, you are more likely to experience joy and contentment.

Emotions and Financial Success

It is also important to understand our motivations and emotional triggers to reduce the stress associated with money (2). Our financial success is shaped by how we respond to various situations, but making good decisions in an unpredictable market can be challenging. We are also often influenced by experts who urge quick action to maximize investments and profits. In such an environment, it is easy to act impulsively and let emotions override reason. The stress of managing our finances can therefore negatively impact our well-being, leading us to make hasty or poorly informed choices.

From Uncertainty to Strategy: Manage Your Finances with Awareness

So how can we use money to achieve our goals and live a happier life? The answer lies in developing greater awareness around both our finances and emotions.

When we consciously align our values and goals with our financial planning, we create a foundation for better decisions. A thoughtfully constructed long-term plan connects our dreams to specific financial targets while guiding our resource allocation. Like a compass, this plan provides financial stability and security, fostering peace of mind and enhanced well-being. Understanding our emotional triggers further helps us make more thoughtful, balanced decisions and manage financial stress with more confidence. This holistic approach enables us to use our financial resources in ways that truly enrich our lives.

Lyra's Approach: Holistic Planning for Financial Well-being

At Lyra, the core of our business is to support clients through this process. Together, we create a holistic plan tailored to your personal goals and dreams, laying the foundation for future investments and financial decisions. Throughout your journey, we help you apply discipline to follow your plan, make rational decisions through the ups and downs and feel peace of mind. By focusing on the bigger picture, we help you realize your dreams and achieve a more carefree, prosperous life.

Want to learn more about how we can help you align financial success with personal well-being? Contact us for an initial conversation.

References:

(1)   Kahneman, D., & Deaton, A. (2010). High income improves evaluation of life but not emotional well-being. Proceedings of the National Academy of Sciences, 107(38), 16489–16493.

(2)   Housel, M. (2020). The psychology of money: Timeless lessons on wealth, greed, and happiness. Harriman House.