Money Obedience

I posted about the connection between income/net worth and happiness previously. This is the second part of this post. I want to focus on this question. How do I think personal finance influences my state of happiness?

I think uncertainty makes us feel uneasy. If we don’t know what is happening to us and what is going to happen in our lives, our anxiety rises. Life unfortunately is full of uncertainties, but some are worse than others. When it comes down to finances we face the many types of uncertainties. It begins right where comprehensive personal financial planning starts: knowing where you stand, i.e. knowing your net worth, your debt situation, and so on. I think having knowledge about your current state of financial affairs is the first step. I can see the proof in some of the blogs to which I subscribe such as Happiness is Better, No Debt Plan, Budgets Are Sexy, I've Paid For This Twice Already , Being Frugal , Moolanomy , and Get Rich Slowly . All these bloggers approach their finances with a certain self-confidence knowing where they stand. That does not mean every one of them has the best financial situation going, it only means that they are all fully aware of their current financial state. And that is why I think I can’t find much anxiety in their posts.

Another way to lower uncertainties surrounding one’s personal finances is to set personal financial goals. When I work towards a goal I feel much better. Hopefully I will be able to have the desire to reach another goal when I am done with one. I know that my oldest daughter was happier once she decided to get her masters degree. She did not like her job that had nothing to do with her interests. Now, going back to school, she has a degree towards she is working which makes her feel really good. It works the same way with financial goals. Each step you take to reach your goal, makes you feel good until you get the final financial reward: debt paid off, a new car paid in cash, done with the mortgage, retirement.

Finally I think that being well organized lowers one’s anxieties, too. This is kind of related to the first point, but it goes a little beyond that. It includes paying bills on time, putting money away for various financial goals, knowing where one’s hard earned income goes every months, balancing one’s bank accounts, etc. Being well organized gives us purpose in our financial lives the same way as setting financial goals do. What qualifies as “being well organized”? My blogger friend suggested that once a certain level of organization is reached, “being well organized” is in the eye of the beholder. I agree with that. If your level of organization makes you feel good and of it gets things done, you are doing the right thing.

My wife and I try to focus on all three of these things, because it lowers our financial anxiety and, thus, makes us happier overall. Why else would be alive? Is our happiness not the ultimate appreciation for having received our precious lives?