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While it's widely acknowledged that money alone doesn't guarantee happiness, the way you manage your finances can significantly influence your overall well-being. A psychologist who explores the connection between spending habits and happiness has shared insights into the ideal budget for those who report greater satisfaction with their spending.
LearnVest interviewed Dr. Ryan T. Howell, an assistant professor of psychology at San Francisco State University, who also created a website called Beyond the Purchase, dedicated to understanding the psychology behind our spending choices.
When asked about the characteristics of people who are content with their spending, Howell offered the following response:
To boost happiness, the most important step is to eliminate credit card debt...
Secondly, our research shows that individuals who are happy with their spending tend to follow a specific approach once their basic needs are met: They allocate roughly 25% of their income to savings or investments, set aside about 12% for charitable donations, religious groups, or gifts for others, and use around 40% for enriching life experiences. These are the three key traits of satisfied spenders.
While this 'ideal budget' might be a broad summary drawn from research, it still provides valuable financial advice and serves as a solid foundation for anyone looking to set financial goals. Overall, Howell seems to have concluded that joyful savers strike a balance between indulgence, generosity, and wise saving.
For further insights, be sure to read the complete post.
Image courtesy of David Fulmer.
