Being financially happy is an elusive goal for many people. It seems like everyone wants to be rich, but few people actually achieve happiness. If you want to be financially happy, then you need to start thinking differently about your finances.
It would help if you never were afraid to ask questions. The more you learn about money, the better off you will be. When you improve your relationship with money, you have a better chance of improving your financial situation.
I had my share of money mistakes. Most of them stemmed from a belief I would be happier once I spent X and got Y. In this pursuit of happiness, I fell for bogus credit card incentives, spent way more than I should on a car, and amassed over $110,000 in student loan debt. None of which made me happier, just more stressed.
Eventually, I learned I needed better money management skills and shift my feelings towards money. It started when I read a book by Stephen R. Covey called “The Seven Habits of Highly Effective People.” The self-help book focused on mindset and elaborated on the concept of different perspectives. The idea is that two people can go through the same thing but experience it differently. I was curious about people who had the same amounts of money but drastically different relationships with money.
In the book, Covey explores 7 habits that make people highly effective individuals.
And with my own personal quest for happiness and financial independence, I’ve learned to apply these 7 habits to help me live a richer happier life.
In this article, I share the 7 habits of financially happy people.
1. Lifestyle Focused
Financially happy people set clear life goals. It’s important to have a clearly defined lifestyle goal. These aren’t financial goals like debt pay off or having an emergency fund. A lifestyle goal is how you envision the type of life you want to live. We can talk about setting financial goals, but money only provides the avenue to live a certain lifestyle. If you cannot articulate the type of lifestyle you want to live, then getting it is arguably impossible.
Imagine being given all the tools needed to drive cross-country from the east coast to the west coast. You feel the excitement of the journey ahead, knowing you have the resources to make it 3000 miles across. What happens when you make it to Seattle, but you were really aiming for Los Angeles? You’d be surprised that the cloudy overcast may impede your sun-soaking lifestyle.
We might think we are proactive about the majority of things important to us. But, I’ve found when it comes to money issues, the opposite is true. People tend to wait to pull credit reports until they’ve been denied credit or start thinking about savings when money is needed to pay for bills.
Proactive people ask questions and read the fine print before signing loan agreements. They monitor credit reports and proactively call their creditors when a situation arises that impacts their ability to make payments.
Use apps like Credit Karma to monitor your credit report and Truebill to alert you of deposits and withdrawals across your checking and savings accounts.
A step in controlling your money situation is to know where everything is, how long you need to hold onto documents and when to shred them. It’s so much easier to be happy when you’re not running around looking for documents.
Organization means a money management system that makes things easier to track, store and find when needed. It means organizing your time, home, computer desktop, and online accounts.
Financial minimalism is about simplicity. Be happier when you’re not tracking dozens of financial accounts. Financially happy people have primary and secondary bank accounts along with a money management system to track and monitor their entire financial life.
Use apps that aggregate your financial accounts like Personal Capital. Get a top-level overview of your accounts in one place.
Seek financial knowledge. Curiosity isn’t seen as a liability but an asset in growing knowledge. It sounds less stressful to be told what to do, but that hands the control of your money to someone else. A person who constantly seeks financial understanding has more power than those who completely depend on others to make financial decisions.
There is a saying that “ignorance is bliss.” But, when it comes to your money, ignorance is stress. The more you know about money, the better decisions you make. It lessens the amount of future stress.
It’s important to communicate with your partner, creditors, employers, and others who have a direct impact on your financial well-being. Often we under-communicate, and that leads to misunderstandings and arguments about money.
Have money conversations. Choose to be open about your financial goals and challenges. You will be surprised by the people that can provide expertise and resources.
7. Emotional intelligence
Let’s face it; emotions are a part of who we are as human beings. Happiness is an emotion. Were you happy when you bought your car, home, or any item you wanted? What happens when bills are due or unexpected expenses arrive?
Emotions are a powerful thing. It affects your relationship with money. And so much so marketing executives have learned to use it to compel us to buy goods we don’t need. Becoming financially happy requires emotional intelligence. Become aware of the feelings that compel you to spend, whether to keep up with the Joneses or as retail therapy.
Do you have what it takes to be financially happy? Financial happiness is about having enough money to live comfortably without worrying about money. It takes a different set of habits to achieve your goals that also contribute to your overall well-being.
Take time to assess your financial situation and money habits. And now you can think about these 7 traits of financially happy people too.
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