The Not-So-Subtle Link Between Financial Planning and Happiness

As a rule, we typically like to avoid making sweeping generalizations. But when it comes to the topic of happiness – how to attain it and maintain it – we don’t think it’s inaccurate to suggest most people are at least somewhat invested. The popularity of the ideas that we can be ten percent happier via mindfulness or by subtly saying no to the things that don’t serve us, are proof of this.  

In truth, it is easy to avoid things that make us feel uncomfortable or exposed, especially when it pertains to finances. But, as many of us are also aware, tackling the difficult and uncomfortable tasks often have the biggest, wellness-boosting payoff. The Northwestern Mutual 2022 Planning & Progress Study found “people who work with a financial advisor and those who self-identify as disciplined financial planners not only report lower levels of financial anxiety in their lives, but higher levels of happiness and better sleep.”

Building a financial plan is one of the most important investments in our and our family’s collective happiness and overall sense of well-being. It is important to put in the time and commitment into building a comprehensive plan, as the pay-off is immeasurable when it comes to overall preparedness and comfort in knowing what our financial future looks like.

Before diving into the numbers, start by reflecting on your hopes, dreams and expectations. Have you taken proper time to define them? Are others aware of what you want your financial future to look like? Consider questions like:

• What does retirement look like for us? Will we travel?
• What are our current lifestyle needs? How will they change over time?
• What do we need to save to sustain our lifestyle needs during retirement?
• What are our financial obligations – dependent children or grandchildren?
• What do we want our legacy to be? What do we need to achieve this goal?

Once you have identified your goals, the next step is to determine any obstacles in the way and solutions to overcome them. Your financial advisor will develop a plan with various recommendations including contingencies for your review. A good plan will be tax efficient, manage any risks you may have, and consider your investment style all while allowing you to live comfortably today.

You and your financial advisor will review and evaluate the recommendations made in the plan to choose the solutions and strategies to help you achieve your goals. Once these decisions are made, the plan can be implemented.

As we know, life happens, whether we’re ready or not. Our lives change, our families grow, there are unexpected financial emergencies or windfalls and dreams evolve. That said, a good financial plan is kept up-to-date and accounts for these myriad developments. Make sure to review your financial plan on a regular basis to ensure it accurately reflects your current goals and is structured to help you achieve them.

The comfort a financial plan brings is not dependent on net worth and annual income. Financial wellness is tied to overall wellness, regardless of age, which means everyone can benefit from feeling in charge of their finances. In fact, the earlier we learn money management skills, the more confident and adept we’ll be at making it work for us rather than against us, later in life.

If you have any questions about your existing financial plan or how to find a financial advisor to work with you to develop yours, connect with us.