According to research published by Gallup¹ in 2010, there are five areas that make up a life of wellbeing:

1. Social
2. Community
3. Physical
4. Career
5. Financial

Let’s take a look at each of these and consider whether our relationship with money helps or hinders each aspect of our wellbeing. We’ll then finish by looking at which one of these areas is the most important.

Social

A lengthy study by Harvard University (April 2017) found that a major impact on long-term wellbeing is the quality of our social relationships.

Note: not the quantity, but the quality.

Money can make a big difference to this – or it can make no difference at all. It might pay for a trip to Canada to see relatives. It can pay for an evening at a restaurant with friends. However, it costs nothing to invite someone to join you for a walk on a Sunday morning.

Community

Feeling useful, having some purpose in life, is a source of wellbeing. This could be playing a team sport, helping to coach the youth section, or perhaps being involved in running the local Scouts or charity organisation.

This is a double win, as it also increases social contact.

Doing something for the joy of doing it. Not for financial return – that’s work!

Physical

Feeling healthy and getting physical exercise releases ‘happy chemicals’ into our bodies that make us feel good.

When we are low, we are often tempted to buy something – a process that is called ‘retail therapy’.

Next time you put something in an online basket as an impulse purchase, pause for a moment. Before you click the ‘buy’ button, perhaps go out for a stroll or take some other form of exercise. Maybe just stand outside to get some sun on your skin. When you return to that basket, ask yourself if you still want to buy it.

Career

The word ‘sinecure’ means a well-paid job which serves little purpose.

Wellbeing comes from doing work at which we have competence, we have some control and that we can see the purpose of. The more that these are present in the work we do, the more we are motivated to do that work.

If we have to work, but these things are not in place, then this will make us unhappy. A sinecure job, therefore, is unlikely to bring much in the way of wellbeing.

Financial

Financial wellbeing isn’t about how much money you have. It is about your relationship with money.

A person who sees the accumulation of wealth as one of their objectives in life is likely to be less happy than they would otherwise be³.

A healthy relationship with money, then, is one where money acts as our servant, rather than as our master.

The most important element

Which, then, of these five is the most important contributor to our wellbeing?

On the one hand, the Harvard study would suggest that it is the quality of our social relationships. It’s certainly fair to say that, according to their research, this does provide the biggest contribution.

However, the research from Gallup tells us that it is actually the balance between all five that is key to a life of wellbeing. We could, for example, score very highly on the quality of social relationships, but have terrible spending habits, which causes us to be in debt. Our overall wellbeing would therefore be low.

We could have a very high score on career wellbeing, but this would mean working 12-hour days, 6 days a week, leaving no time to spend with a young family.

Spending some time with your financial planner on these areas will help you build a plan that will make you happier, not just wealthier.

¹Wellbeing: The Five Essential Elements by Tom Rath and James Harter, Gallup Press, 2010

²The Financial Wellbeing, Episode 42 – Hyper Capitalism with Professor Tim Kasser, April 2018

Please note:

This article is for general information only and does not constitute advice. The information is aimed at individuals only.

All information is correct at the time of writing and is subject to change in the future.