They say that money doesn’t buy happiness, which I think is largely true. But, I also know that Financial Planning can and does create happiness for the people who thoughtfully develop and implement their plan. Here are ten specific ways that financial planning has contributed to making me a happier person…
ENJOYING THE UPSIDE
1) I’m able to create my own vision for the future
Being able to take the time and thoughtfully consider a variety of options for my family’s future is a tremendous benefit of financial planning. My family is able to dream together and create a vision for our current and future happiness. We can begin by thinking about various end-goals and then working backward to set the specific milestones in place with actionable objectives along the journey. One of my favorite aspects of personal finance is that much of it is just “doing the math” to make a plan to arrive at your goals. If you have a clear plan with a strategy that considers the risks, returns, allocations, and timelines … then all you have to do is execute the plan. I’ve spent time with my family thinking about what our “dream life” looks like and what steps we want to take to get there. Now we’re faithfully and diligently executing on this plan … and this makes me happy!
2) I’m able to go on vacation without worrying about our spending
One of our favorite things to do as a family is travel. We love exploring new places, cultures, geographies, food, architecture, music, language, history and so much more. It’s fun to learn something new and create lasting memories with your loved-ones on an adventure together. Like all our expense categories, we set our travel budget as a percentage of our annual expected income. One of our favorite days of the year is January 1st, because on that day our travel expenses incurred for the year gets reset to ZERO, and we have the full balance of our budget to plan for great vacations in the year ahead! Then as we take holidays and trips throughout the year we monitor our spending … and I’ve found that this tracking actually makes it easier to spend on travel, rather than harder. We know our annual travel budget in advance and we are able to plan amazing vacations that will maximize our family fun together … and this makes me happy!
3) I’m able to give better gifts to my family and friends
I really enjoy giving good gifts to people I care about. When you give something to someone and their eyes light up because it’s perfect for them or it’s just the thing they wanted … wow, that’s a great feeling. We have a generous annual budget for gifts, that is set as a percentage of our annual income. We do privately track our gift giving (birthdays, holidays, other special events) throughout the year and ensure that we don’t over or under-spend on the budget. I’ve found that having an annual budget number in mind actually makes me less concerned about the sticker-price of individual gifts and I’m able to focus more on the thought, intention, and meaning behind the gifts I give … and this makes me happy!
4) I’m able to donate more to causes I care about
Giving is a cornerstone of our financial plan, and one of the primary categories for our “uses of cash”. We plan to give a set percentage of our annual income to charities and causes that we are passionate about each year, and we faithfully follow-through on this plan. We reserve a portion of our “Giving Budget” each year for ad-hoc requests from friends, colleagues, and family, but the majority of the funds are already earmarked for specific charities at the beginning of the year. By intentionally and thoughtfully planning where we want to donate our money each year, I feel like our impact is maximized … and this makes me happy!
PROTECTING THE DOWNSIDE
5) I don’t have to stress about covering my living expenses
Creating an annual budget is not rocket science, it’s actually pretty simple. All of our family budget expense categories are percentage based, which means that I plan to incur a set amount for each expense category as a percentage of our total income for the year. Therefore, if our total income gets reduced for any reason, then all of the planned budgets for our expenses will be reduced proportionately. If we’ve already overspent on a particular expense category by accident, then we freeze all of our spending in that area until the end of the year, with no questions asked. In this way, I’m confident that we can adjust our living expenses and our lifestyle to our income and that we shouldn’t be in a position where our expenses are greater than our earnings … and this makes me happy!
6) I’m able to deal with uncertainty
One of the first things you have to do when getting your personal finances in order is to establish an Emergency Fund. For our family, we’ve set this at 12 months of annual living expenses in Dubai (excluding housing and education costs, which are typically paid in advance). Knowing that I have this stash of easily accessible cash in case I lose my employment or incur a major unexpected expense definitely reduces anxiety around money. I’m confident that our family should be able to make a plan and take action to remedy almost any situation within the 12-month window of our emergency fund. So this helps us live without fear of uncertainty … and this makes me happy!
7) I’m confident that I won’t ever have to live under a mountain of debt
This is a touchy subject because life is tough and many people find themselves in debt when they never planned for it. This is exactly why I think a financial education and financial planning is so critical and vital to a life well-lived. For my family, I just know that I’ll do my best never to make a financial decision that will put us at risk of living under a mountain of debt and struggling to repay it. This is why Health Insurance is critical. This is why Emergency Funds are important. This is why planning in advance for large expenses (housing, education) is so important, and taking on personal loans for these can be a bad idea. I will try to manage my lifestyle expectations to match my earnings ability and won’t finance my purchases through credit or debt when it doesn’t make sense. Managing your expenses to live without debt is a smart way to go … and this makes me happy!
8) I know my family’s needs will be met, even if I’m gone
It’s tough to talk about, but having a plan in place to cover your family’s living expenses in the event of your incapacitation or death is an absolute must. This would include all your Savings and Investment assets, as well as a Life Insurance policy. Having the right insurance policy in place to provide for your family’s expenses if the primary earner in your family is ever incapacitated or passes away is critical. This way, you can ensure that your family won’t have to deal with financial worries at the same time they are mourning the loss of a family member. I have this plan in place, which is clearly communicated with my wife, and it helps us both sleep soundly at night … and this makes me happy!
ENGAGING WITH THE COMMUNITY
9) I’m a thoughtful and active participant in the global economy
As an interested and engaged investor, I’m always watching the news and the financial markets. It’s true that a “down day” can be depressing when I take a look at the impact to our investment accounts, but I understand the difference between volatility and market risk … and we make informed decisions about asset allocation to balance risk and return. Learning about global, regional and local markets and participating in them as an investor is a great way to stay connected with current events and the important things that are happening around the world … and this makes me happy!
10) I’m able to share my financial education with others to help them realize their goals
Being able to share my personal finance knowledge and expertise with others is something I love doing. Talking to people about their goals and helping them think through creating an actionable plan to improve their finances is hugely rewarding. When I meet with someone who has always thought that money management was either too boring or confusing, and I share with them how they can take control of their finances with processes and tools that are not overly complicated or time-consuming … and it just “clicks” with them … that’s a great moment! I know that the content and resources I’ve created for Dubai Personal Finance are helping people achieve their money goals … and that makes me very happy!
Matt Nobles is the founder of Dubai Personal Finance. In addition to being a certified Personal Finance Education Instructor, Matt also has 10 years of Corporate Finance experience, working for a large multi-national company. Matt is passionate about helping people like you learn how to make wise money management choices, so you can achieve Financial Independence and focus on living the life you've always wanted.
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(Disclaimer: This article contains information for your reference and explains options you may have, but it is not intended to be specific advice or a personal recommendation. DubaiPersonalFinance.com exists to provide general guidance and education, but your situation may vary from the one discussed here, so please seek a licensed professional for tax, legal, financial planning or investment advice.)
What do you think? Have I convinced you that financial planning can and does create tons of happiness for anyone who makes the effort to do it? Comment below...