When Are You Happiest?

“Clap along if you know what happiness is to you.“ -Pharrell Williams

Happiness.

It’s not a word you hear all that often in the world of personal finance.

My fellow money nerds and I love to talk numbers. How much should you be saving? Do you have enough insurance? What’s the right asset allocation for your 401(k)?

The numbers are important. If you think of personal finance like a human body, the numbers are the muscles. They do the hard work of moving us from where we are now to where we want to be.

But our muscles don’t act alone. Before they do a thing, our central nervous system evaluates our environment, responds to stimuli, decides on the path we want to take, and tells our muscles what to do.

It’s our central nervous system that sets our purpose and direction. Our muscles are just there to execute whatever it is our brain decides to do.

But when it comes to money, we often toss the idea of a central nervous system out the window. We skip right past the question of “why?” and dive straight into the question of “what?”.

And while that type of approach can lead to good outcomes from a numbers perspective, good numbers do not guarantee a happy life.

And if happiness isn’t the end goal, then what IS the point of all these financial decisions?

When are you happiest?

A little while back I listened to my good friend Kate Holmes give a fantastic talk to a room full of financial planners (read: money nerds). She urged us to stop talking about the numbers and start asking our clients one simple question:

When are you happiest?

Not “what are your financial goals?”

Not “what do you want to achieve in the next 5 years?”

Not “when do you want to retire?”

When are you happiest?

It’s a powerful question. It takes the focus off the numbers and puts it on your life. It allows you to let go of the idea that you always have to be racing ahead to the next thing. It makes it okay to simply enjoy where you are right now.

And your answer to that question acts as the central nervous system for your financial plan.

If you know which parts of your life make you happiest, you can make spending and saving decisions that allow you to experience those parts more often. The number-crunching becomes an exercise in accumulating more happiness rather than accumulating more money.

Your happiness becomes the purpose behind your financial plan. The numbers are just the muscle that helps you get there.

Now, this doesn’t mean that you throw caution to the wind and spend all of your money today on immediate pleasure. While there IS happiness to be gained from certain types of spending, especially on experiences, there is also a lot of freedom that comes with building long-term financial security, and that freedom can lead to happiness as well.

There’s still a balance to be struck between enjoying the moment and planning for the future.

But when those decisions are made with the broader goal of maximizing happiness rather than maximizing money, you’re more likely to end up with a life you actually enjoy.

Happiness IS the goal

As you go about creating your own financial plan, I would encourage you to ask yourself this same question:

When are you happiest?

Or maybe it’s “what things have you done in the past that made you happy?” If those things aren’t part of your life anymore, it may be time to bring them back in.

Above all, remember that the end goal of all this financial stuff really IS to create a life you enjoy.

And while smart financial decisions can help you get there, it’s your personal values and your personal happiness that define what “there” is.

When are you happiest? How can you use your money to create more of that happiness in your life?