But what are the other issues that loom large? Newly released findings from a 2014 study by Northwestern Mutual Life Inusrance Co. suggest discipline plays a big part. Researchers asked: When it comes to planning your finances, are you a highly disciplined planner (meaning that you have exact goals and have developed a specific road map to meet them), a disciplined planner (you have goals and plans but sometimes deviate along the way), an informal planner (you have goals but no plans to achieve them) or a nonplanner (you have no goals and no plans). They then correlated the results with happiness.
Just over half of respondents indicated that they're planning in a disciplined or highly disciplined way; 46 percent are largely flying by the seat of their pants. But the more specific your approach is, the more satisfaction you seem to get from it. Nearly three-quarters of the highly disciplined folks say they feel "very financially secure." Just 17 percent of nonplanners say the same. As for happiness in retirement? Ninety-one percent of highly disciplined folks report they are happy in retirement; nonplanners, just 63 percent.
I was particularly interested in this survey because it dovetails with what I found when I worked with Money magazine (where I was then editor-at-large) to commission a survey on money and happiness. The results were chronicled in a book called The Ten Commandments of Financial Happiness. We, too, found it's not how much you have — it's how you handle it, and having a plan is one of the factors that boosts financial morale. But there are others. Among them:
Although financial planners often advocate saving at least 10 percent of whatever you're bringing in (and 15 percent if you're getting a late start), crossing the 5 percent line is enough to boost your mood — as long as you do it habitually.
Pay your bills as they come in
People who do are significantly happier. The question is why, and I have two answers. First, seeing a huge sum of your money move out of your hands and into the hands of your creditors — as happens when you pay your bills monthly — is demoralizing. It's just not fun. Paying them piecemeal is a lot less painful. Second, when you pay in real time you have even more control. If you get an electric bill that's larger than you thought it would be, you can adjust and spend less on other things so that you don't dig yourself into a hole.
Being charitable provides a boost to your psyche that is tough to replicate in any other way. But note that although any charity will happily take your money, you can give in other ways and still reap the same happiness reward. Volunteering and donating your old or unused belongings have the same result.
Finally, none of these things work if you've got a spouse or partner aiming in the opposite direction. So, when you sit down to make your plan — make an effort to do it together.
Jean Chatzky, best-selling author, journalist and money editor at NBC's Today, is AARP's financial ambassador.
Also of Interest
- Take charge of your money at 50, 60 and 70
- 10 budget-friendly trips
- Find great volunteer opportunities in your community
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