A study by an Australian research group has discovered that being responsible with money makes you feel happier. I’m not sure who couldn’t figure that out anyway.
Ask one person with no debts how anxious they feel about money, and another with crippling repayemnts, and you will have the same outcome as the Australina researchers wasted their time on. Their tediously long research paper, named Understanding the Effect of Financial Behaviour on Mental Health: Evidence From Australia, looked at 20,000 different people.
What they found was that a 1% uptick in saving habits was linked to a 0.475% improvement in mental health scores, while a 1% increase in consistent credit card payments led to a 0.507% boost. These improvements may seem minor, because they are.
I would be interested to see the happiness uptick of the person who didn’t care about spending money on a little treat every day. I can guarantee it’s bigger than 0.475%. Throwing savings to the dogs and enjoying a cool summer beer outstrips financial responsibility.
The Sad Dominoes Of Financial Insecurity
Whenever someone wins the lottery in countries that run off debt, they say they will do one thing first. Almost every single one, without fail, plans to pay their debts. These can be credit cards, medical, or school. Whatever they are, freeing themselves from debt servitude is the first thing on their mind.
It has been shown that the happiness that comes with clever money management is a domino effect. Constantly worrying about debt bleeds into the rest of a person’s life. Sleep is lost, free time is sacrificed for work, and self-worth is damaged.
People who pay their debts on time and behave responsibly receive a few simple emotional boosts. Paying off a debt, even gradually, gives a sense of achievement. It’s a subliminal progress bar in life.
As a result of being debt-free, people are beholden to no one. It’s the kind of freedom people work their whole lives to achieve, but it’s no easy task in the US.
So, sure, being 0.5% happier can be achieved by being responsible with money. But three cold beers in the sun, money be damned, brings significantly more. Spend away.