Money Doesn’t Buy Happiness - But Financial Control Does
Happiness, wellbeing and overall self esteem are influenced by our sense of financial control and not by what we earn, according to a study published today by Aviva.
Aviva’s Feel-Good Insight Study, produced in conjunction with a leading psychologist at City University, London, indicates a strong link between financial behaviour and self esteem - but proves money doesn’t buy happiness.
In short, those with sensible financial plans in place are happier overall and have a stronger sense of ‘financial wellbeing’, regardless of their salary.
In fact, more people earning over £50k have below-average self esteem (22%) than high self esteem (12%). Similarly, the study shows that good health is seen as twice as important (85%) as earning more money (42%).
Currently two thirds of people in the UK have good or high self-esteem. Through the study it was discovered that 85% of those with high self-esteem also feel in control of their finances, and nearly half are happy about their financial situation.
In contrast, 70% of those suffering from poor self esteem, don’t feel in control of their finances and consequently, no one in this group feels happy about their financial situation. In essence, the link is conclusive:
Financial Planning + Control = Improved Self Esteem and Happiness
· Around two thirds (68%) of people with high self esteem are good at planning their day-to-day finances, and a similar number (62%) have set themselves clear financial goals for the long term
· Over three quarters (76%) of people with poor self esteem fail to plan for the long term and as many as 69% worry about managing their finances on a daily basis
· 85% of people feel being able to afford the essentials in life is very important to achieve happiness
· 42% of people with low self esteem say they fail to stick to a budget
Money issues playing on our minds: the study also looked at levels of understanding, frequency of thinking about money, and sources of help and advice. It found:
· The majority of people (86%) worry about money at some point
· One in three (34%) think about their financial situation at least once a day and 2% every minute of the day
· Half of all women (52%) feel overwhelmed by the quantity of financial information they see and only 12% say they understand complex financial products (e.g. pensions and investments)
· 5% of UK adults admit they don’t have any understanding of financial products, rising to 16% of those with poor self-esteem
· A quarter (25%) of people who have a credit card do not know their outstanding balance and feel out of control with their debt
· Nearly a third (30%) of people who have a pension do not feel confident that they have the right pension provision in place
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.
"Through this study, we now know that there is a direct correlation between money and self esteem, and one that is unrelated to salary, employment status or age.
"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."
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!"
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