Understanding investment approaches: DIY, DIWM, and DIFM explained
Introduction In today’s digital age, investment platforms have become a cornersto...
Life planning with no sense of financial reality or financial advice with no link to your dreams and aspirations are both equally meaningless. Proper financial planning joins the two together and attempts to answer one essential question: ‘what is enough?
Effective wealth management is only one side of the equation. What about the other, just as important, aspect of financial planning: how do you spend your money once you have it?
You must devote some time to thinking about your spending habits, otherwise, how can you be sure that you’re not wasting money on things that don’t improve your life?
Beyond a modest threshold, studies show that high income and material wealth have no measurable effect on your happiness. Also, taking out a bigger mortgage, commuting further to a higher-paid job, or working longer hours to fund the lifestyle you’ve always aspired to can even reduce your happiness, health and well-being.
So, how do you adjust your spending to maximise your contentment with life? A new book ‘Happy Money: The New Science of Smarter Spending’ contains some useful guidance. The authors propose five key principles which could help you get the highest happiness bang for your buck:
Some of these insights are pretty obvious, but do we put them into practice? When it comes to financial planning, perhaps we should all focus as much time and effort on efficient spending, as we do on efficient saving and investment.
Ian Thomas is authorised and regulated by the FCA. This article is intended to provide helpful information of a general nature and does not constitute financial advice.