As the holiday season rolls around, it’s a time of joy, family, and—let’s face it—a bit of financial stress. Between gift-giving, festive meals, and those end-of-year sales, the question often arises: does money truly buy happiness? At Wallis-Smith Financial Planning, we’ve been pondering this age-old query, and Christmas seems like the perfect moment to unpack it.
The Link Between Money and Happiness
It’s no secret that financial stability can alleviate a lot of life’s pressures.
Studies, such as those explored in the "Easterlin Paradox," suggest that having enough money to cover your basic needs and some discretionary spending does contribute to happiness. After all, it’s hard to feel festive when you’re worried about paying the next electricity bill or covering school fees.
But here’s the twist: beyond a certain point, the returns diminish.
Research shows that once you’ve reached a comfortable income level, more money doesn’t significantly boost happiness. Insights from Elizabeth Dunn and Michael Norton’s Happy Money: The Science of Happier Spending emphasise that it’s how you use your money that matters.
Spending That Brings Joy
Experiences Over Things: Investing in experiences like family holidays, outings, or even a fancy Christmas dinner often brings more lasting joy than material possessions. Memories last; gadgets don’t.
Giving Is Receiving: The holiday season is a prime time to see this in action. Studies reveal that spending on others—whether through thoughtful gifts or charitable donations—can increase your own happiness. So, that warm glow you feel after donating to a toy drive? It’s backed by science.
Time, Not Just Money: Sometimes, the best “purchase” isn’t something you buy at all. Using your money to free up time—like hiring a cleaner or ordering pre-made holiday meals—can reduce stress and let you focus on what really matters.
Financial Health Equals Mental Wealth
A big part of happiness is peace of mind, and financial planning plays a key role in achieving that. When you have a clear budget, manageable debt, and savings for the future, you’re free to enjoy life’s little (and big) moments.
So, while money might not be the secret to happiness, managing it wisely certainly helps. And isn’t that what the holidays are all about? Finding joy in the present while preparing for the future?
A Wallis-Smith Holiday Wish
This Christmas, we encourage you to reflect on what truly brings you happiness. Is it seeing your (grand) kids’ faces light up when they open their gifts? Sharing a laugh with friends over a glass of wine? Or maybe, it’s the quiet satisfaction of knowing you’re on the right financial path.
From all of us at Wallis-Smith Financial Planning, we wish you a holiday season filled with joy, love, and just the right amount of financial cheer.