Why a big salary won’t make you happy

Why a big salary won’t make you happy
by Jane Baker on 17 July 2010

Find out why having control over your finances is far more important than a fat pay cheque.

Happiness and self esteem are influenced by our sense of financial control and not what we earn. That’s according to the recent Feel-Good Insight study by Aviva which proves that money really doesn’t buy you happiness. In fact, people with a sensible financial plan in place are happier regardless of their salary.

The stats
The study revealed that 85% of people with high self esteem said they also felt in control of their finances. By contrast, 70% of those with low self esteem haven’t got to grips with their finances and no one in this particular group feels happy about their financial situation. Interestingly, the study revealed that 22% of people earning more than £50K suffer below average self esteem.

How do you take control of your finances?
If your finances are causing you stress, it’s time to do something about it. Quite simply, this means drawing up a good budget, identifying your financial goals and putting a plan in place to achieve them. Then, after you’ve done all that, all you need to do is keep an eye on your finances to make sure everything is ticking over nicely.

Draw up a budget
If you have no idea where your money goes or, you’re running short before pay day arrives you’ll need to take the budgeting bull by the horns. Everyone needs a budget regardless of how much they earn as this is the only way to guard against spending more than you should.

We tend to raise our spending aspirations the higher our income, so good budgeting is important even if you have a healthy salary. I can assure you that people with six figures earnings who haven’t accumulated any savings whatsoever are more common than you might realise.

Aviva’s study revealed that 42% of people with low self esteem fail to stick to a budget, but it’s easy to take control if you have the right tools at your disposal.

There are five simple steps to good budgeting. I’ll run through them briefly here, but read Five simple steps to good budgeting for more details.

The first step is to get together all your paper work including your bank statements, bills, credit card statements, pay slips and so on. Get into the habit of filing them away properly every time a new one arrives.

The next step is to start a spending diary where you simply record every single purchase you make. This will help you build up an initial picture of your spending behaviour. You may be surprised by the results.

After that, it’s time to make a list of your earnings and outgoings. This will immediately identify your surplus income which you can use a base figure to calculate a weekly or monthly spending budget once all your essential expenditure has been paid. If this exercise shows you have an income shortfall then you’ll need to make urgent cutbacks to avoid mounting debt.

And finally, if you have a surplus after you’ve worked out your regular budget, you should think about starting to save. You can choose a market-leading savings account at the lovemoney.com savings centre.

http://www.lovemoney.com/news/debt/improve-your-finances/5174/why-a-big-salary-wont-make-you-happy