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The secret to happiness? Financial planning

The secret to happiness? Financial planning

Category: Money

Updated: 16/06/2010
First Published: 16/06/2010

This article was correct at the time of publication. It is now over 6 months old so the content may be out of date.
For years, it has been said that money can't make you happy, but new research suggests that financial planning can.

A strong link has been established between financial behaviour and self esteem, a report by Aviva in conjunction with a leading psychologist at City University, London, has found.

It found that those with sensible financial plans in place are happier overall and have a stronger sense of financial wellbeing, regardless of the salary they earn.

In fact, it was found that good health is seen as twice as important as earning more money, with 85% and 42% saying they considered the factors to be crucial to them.

Figures show that 85% of Britons with high self esteem also feel in control of their finances, and nearly half said they were happy about their financial situation.

By contrast, 70% of those with low self esteem said they don't feel as if they have control over their financial situation, and none claimed to feel happy about the state of their finances.

It was also found that almost seven in ten (68%) with high self esteem are good at planning their day-to-day finances, while a similar proportion have set themselves defined, long term financial goals.

In comparison, some 76% of people with poor self esteem fail to plan for the long term and 69% worry about managing their money on a daily basis.

Commenting on the study, Dr. Malcolm Cross, Reader in Psychology at City University London said: "It's a widely held belief that financial stress has an impact on overall health and happiness.

"Through this study, we now know that there is a direct correlation between money and self esteem, and one that is unrelated to salary, employment status or age."

If you would like to swot up on how to improve you day-to-day financial management, feel free to peruse our money saving tips section, which is crammed full of handy pointers.

If you feel you have lost control, looking for debt help may be your best course of action.

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