Money matters

Here in NABM land we’ve inadvertently been doing a spot of social research. It wasn’t an experiment we set out to conduct but we did and the results are so compelling that I feel compelled to share them with you. Now I realise it’s impolite and dull to talk about money but money is, alas, part of life and because this blog is based on my life it falls into the explorable subject matter. So bear with me and I promise I’ll try not to be crass or dull. At least no more than usual.

I’m not sure if you’re familiar with various pieces of actual academic research showing the correlation between money and happiness but I will summarise. Up until a point happiness and money do correlate; essentially if you’re in financial stress money does limit your happiness. Understandably not being able to pay your rent, buy groceries or meet your basic needs is stressful and unpleasant enough that it detracts from your enjoyment of life. But once you reach a point where you can meet your basic financial requirements, and this point is modest, there is no longer any correlation between your bank balance and your happiness. So. In a nutshell a modest amount of money can buy you happiness but after that you’re on your own. Having a tonne of money is no guarantee of tonnes of happiness. Gina Reinhart is an apt case in point.

Anyway. I have recently tested this theory and I can say with certainty that the research is spot on. The start of this financial year marked the start of a much better time for us in pure dollar terms. Two small pay rises, some additional casual income and a significant reduction in childcare fees (because the government rebate* re-started) all conspired in our favour. 

Let me be clear; the difference in real dollars is not substantial. You won’t find me shopping with abandon, planning overseas holidays, servicing a large mortgage or becoming a regular at a luxury day spa any time soon. But the difference, in actual real life terms, is substantial. We can now meet our monthly expenses without concern and no longer fear unexpected bills. And, let me say, the difference that makes is HUGE.

It wasn’t that finances consumed my every waking thought but there were several times each month where I was anxious about money. And not in the broader sense of long-term security but in the day-to-day practical sense. And until that changed a few months ago, I hadn’t realised quite how heavy a burden it was. Now that I don’t spend any time fretting our day to day expenses I feel quite liberated. And that’s when it occurred to me that we had crossed that tipping point on the graph. It didn’t take much but we moved from a point where money was a genuine concern to a point where it genuinely isn’t. At least, not in the day to day sense. And I’m genuinely happier for it.

I should make a few disclaimers here. We were not drowning in debt or sitting on the brink of bankruptcy. We were by no means living below the breadline and I wouldn’t suggest for a minute that we encountered genuine financial hardship. It would be insulting and disingenuous to say that. Aside from anything else we have a huge psychological buffer in the form of supportive people in our lives whom would never let us starve. And between us, in our different jobs, there is earning potential on the horizon. Both of those factors make us extremely lucky so please don’t think I’m crying poor in that sense. We’re just not. But equally I am sincere in saying that when household income only just covers the essential household expenses it is a tense equation.

I raised this with Mr G the other night and he agreed that the past two months, without the mental constraint of finance-related fears, have been much more enjoyable. He also made the point that the household equation that made us both uncomfortable can apply at any income level. I agree to a point. Financial stress is described as a situation where your income doesn’t cover your expenses. If your expenses include a three million dollar mortgage and five European holidays each year and you’re struggling to accommodate those with your earnings, on top of the essentials, my sympathy for the ‘stress’ in that situation is limited. 

On the other hand, my sympathy for any person or family whose earnings only just cover the basics is unlimited. It doesn’t take much but even just a small margin in your favour at the end of each month makes such a psychological difference. At least it did for me.

What do you think? How do you describe the relationship between money and happiness?

*Ah the government’s “50 percent” childcare rebate which is sadly only “50 percent” to a point. A point that is reached very, very quickly when the only childcare position available to your toddler in the entire city sits in the “Maserati/Ferrari” price bracket. Which would be fantastic if you were in the “Maserati/Ferrari” income bracket. It is less fantastic when you’re not because it will then turn out that for nine months out of twelve you will essentially work just to pay childcare fees. In which case it’s quite important to love your job or, at the very least, love office clothes, which incidentally I do.