“Personal and economic growth are often seen to be directly correlated – in a nutshell the more money you have the happier you are. But today’s figures from the ONS remind us it’s far from that simple. It’s statistical evidence of old adages that health is wealth and money can’t buy you happiness. Self-reported health has the largest effect on life satisfaction, while household spending and house income impact have a significantly less impact than other personal and household circumstances.
“However, these stats are not saying – it’s not about money – what they are saying is it’s about money to a certain extent. The extent that you feel financially secure. After that point it’s about how you spend that money. And that point is crucial, it’s not saving, it’s spending. The figures from the ONS highlight that you are more likely to report higher life satisfaction if you have higher household spending, and spending appears to matter more than household income to people’s life satisfaction. So for someone with twice the level of household spending, their odds of reporting higher life satisfaction are 1.22 times greater.
“It’s important to be careful about what this is showing. It’s satisfaction at a point in time and says immediate satisfaction comes from spending money on hotels and restaurants or household furnishing (spending that leads to the highest satisfaction). What it’s not revealing is how that day to day spending, instead of saving, impacts your later life satisfaction. Currently retirees have the most life satisfaction, but that would be far from the case if they weren’t able to fund their lifestyles. What the ONS figures don’t show, and we hope they will look to capture in the future, is the impact of saving and having a financial plan on how the population feel about their lives.
“Research from Old Mutual Wealth* shows that over half of 30-45 year olds surveyed felt pessimistic about their financial future and nearly two thirds were concerned they won’t be able to afford a decent standard of living. However, having a financial plan in place made a significant positive impact on sentiment with 63% citing a positive description.
“Your current self may be feel better if you eat out every evening, but how would your future self-feel about it?”
* Over 3,000 adults aged 30 to 45 surveyed in 2017 https://www.oldmutualwealth.co.uk/globalassets/documents/retirement1/13469-in-betweeners-report.pdf