Many people think that the more money they have, the more they can buy, and therefore the happier they will be. True wealth, however, is not just about living standards.
Being wealthy is as much a mindset as it is a measure of what you have in your bank account. It is about understanding that money is really about giving you the freedom and security to live the life you want.
Practically, that means being committed to living below your means, setting aside sufficient emergency savings and investing in assets that will grow and compound over time. More than that, it’s about appreciating that money is an enabler that should work for you and should not dictate how you live your life.
While wealth can include material possessions and financial assets, it also means enjoying good health, strong relationships, and having a sense of purpose. Studies have found that those who prioritise these non-material aspects of wealth tend to be happier and more fulfilled than people who are only concerned about accumulating money.
Research published in the Harvard Business Review in 2019 that found that people willing to give up money to gain more free time have higher levels of life satisfaction, more fulfilling relationships and live happier lives overall.
“Research shows that those who feel time-poor experience lower levels of happiness and higher levels of anxiety, depression, and stress,” the head researcher, Ashley Whillans wrote. “They experience less joy. They laugh less. They exercise less and are less healthy. Their productivity at work is diminished. They are more likely to get divorced. And in our analysis of the Gallup survey data, my team and I even found that time stress had a stronger negative effect on happiness than being unemployed did.”
Living a wealthy life is therefore actually about how you use your money to support your wellbeing. This is true financial freedom – the ability to live the life you want without being constrained by financial concerns.
That doesn’t necessarily mean having so much money that you never have to work for more. You can have financial freedom while still earning an income, provided you know that your earnings more than cover your expenses and you have enough emergency savings to bail you out if things go terribly wrong.
Put another way, financial freedom means not constantly worrying about money. And research has shown that this is a key factor in overall life satisfaction.
Wealth and Worry
Princeton University psychologist Talya Miron-Shatz published a study in 2009 that found that women who spent a lot of time worrying about their finances were less likely to be happy with their lives than those that weren’t always concerned about money. And this was even true of women who had significant incomes.
“Even if you are making a hundred grand a year, if you are constantly worried that you are going to get fired, that you are going to lose your health insurance or that you are simply not sure you are going to ‘make it,’ you are not going to be happy,” Miron-Shatz said.
The women in her study who didn’t fixate on their finances were more likely to be happy. That is because they enjoyed a sense of financial stability. This wasn’t just about how much money they had, but rather how secure they felt about their ability to keep living their current lifestyle.
The lessons for anyone who wants to achieve real worth are, therefore:
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