How Our Personal Finances Can Make Us Happy

The idea that money generally, and the state of our finances, in particular, should be an essential contributor to our happiness seems obvious. When we handle money wisely give it an appropriate amount of significance in our lives—not too little, not too much, it makes us happy and contributes to our fulfillment and contentment.

However, if you read much of the psychological research on the financial well-being of consumers, you would not think so. Early on, researchers used an individual’s income, spending pattern, amount of debt, net worth, or even debt to income ratio as objective indicators of their financial well-being (link is external). The logic was that having more money or net worth, and lower debt is indicative of greater money happiness.

Recent research uses a different approach. Here’s how the Consumer Financial Protection Bureau (CFPB) defines financial well-being(link is external):

“Financial well-being can be defined as a state of being wherein a person can fully meet current and ongoing financial obligations, can feel secure in their financial future and is able to make choices that allow enjoyment of life.”

Continue reading the full article: Psychologytoday

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