Over the past two weeks we’ve been talking about somewhat of a strange topic for a personal finance site: happiness.
Specifically, I encouraged you to start your financial plan by asking yourself a specific question: “when are you happiest?” I also suggested some specific ways in which you could use your money to increase your daily happiness, based on the research explained in the book Happy Money.
Now, happiness is a fantastic goal, and I really DO believe that it should be the end goal of all your financial decisions.
But when you’re starting a family there are also some very real financial responsibilities you need to handle. Many of these new responsibilities won’t be much fun, and it may even feel like they’re detracting from your happiness, at least in the short term.
So how do you balance the need to handle those financial responsibilities with the goal of working towards a happier life?
It’s a challenge I face with almost every single client, most of whom come to me with some big and awesome personal goals they want to accomplish, along with some holes in their planning that we need to address.
And today I’d like to share my approach for balancing happiness with responsibility when I work with clients, so that you can consider taking a similar approach with your own situation.
Start with balance
My overall philosophy is very simple: pick one happiness goal and one responsibility goal and get them both on track before moving on to anything else.
I’ve found this simple approach to be effective for a few reasons:
- Most people feel like there are a million things they’re supposed to be doing, which is not only stressful but makes it hard to know where to start. But when we focus on just two things, the process becomes a lot less overwhelming and it’s easy to see what the next action steps are.
- By focusing on one happiness goal right from the start, my clients see right away how this planning process will empower them to live a life they enjoy, which increases the motivation to get things done.
- With that happiness goal in place, the responsibility goal feel less like a chore and more like a helpful part of building long-term happiness.
We start with balance, which means that we will end with balance too.
Now let’s talk about how to actually pick those goals and get them on track.
How to get your happiness goal on track
Happiness means something different to everyone, so I can’t tell you what goal to set. But I do have some specific steps you can follow to figure it out AND get it on track.
First, re-read this post and think about what role you want happiness to play in your financial plan.
Second, work through the 6-step process outlined in this post to get some specific ideas for the big life goals you’d like to be working towards.
Third, pick one of those big life goals and set a specific dollar amount you will need to accomplish it (your savings goal) and a specific date you’d like to have that money by. Don’t worry about getting these numbers exactly right. A ballpark estimate will allow you to get started and you can always make adjustments along the way.
Fourth, calculate the number of months between today and the deadline you’ve set, and divide your savings goal by this number. The result is the monthly savings needed to reach this goal along your desired timeline. (If it’s a long-term goal like financial independence, you can use this calculator instead.)
Fifth, set up an automatic monthly contribution to a savings account for that amount. If you can’t save that full amount now, start with what you CAN save and then work on making small changes that allow you to increase it over time.
That’s it! If you follow these five steps you will not only have 1/2 of this process in place, but your money will now be actively working to create a happier life for you and your family.
How to get your responsibility goal on track
Now that you have your happiness goal in place, it’s time to get your responsibility on.
The easy way to do this is to start with my financial order of operations. You can take that list, cross off anything you already have in place, and then get to work on the highest priority item that isn’t crossed off.
That order of operations even contains links to other posts that explain exactly HOW to get each piece in place, so you can really follow it step-by-step.
It’s as simple as that. The trick here is to really focus on just one of these things at a time instead of trying to handle all of them at once.
Keeping the focus small will actually help you accomplish more in a shorter amount of time by making sure that each item is handled right the first time around.
What to do next
Once you have both of those goals on track, take a minute to give yourself some credit. You’ve taken a big step forward in building your family’s financial security AND you’ve started using your money purposefully to create a happier life.
You have successfully struck a balance between happiness and responsibility. Nice work!
Of course, it’s likely that you still have more personal goals you’d like to achieve and more responsibilities you need to handle.
And the good news is that you can follow the exact same process to take the next step forward. And the next one. And the next one. Until you’re living the good life and sipping champagne out of a sippy cup (or something like that).
It’s a simple but powerful process for creating a financial plan that successfully balances happiness and responsibility.
So let me know: what two goals will you focus on next?