Why Financial Literacy Is Vital for Happiness
The role of financial literacy in truly feeling good about yourself.
Posted Feb 06, 2021 | Reviewed by Abigail Fagan
I have been coaching parents of struggling children, teens, and adult children for over 30 years. Some of the biggest concerns I have seen are the many children of all ages, especially teens and young adults, who don't understand how money really works. They often have well-meaning but short-sighted parents who enable them to not be aware of how to manage their money. I have also seen the same "enabler/chronic struggler dynamic" in couples where one partner handles all the "money stuff," leaving the other partner oblivious to what is really going on.
When it comes to financial literacy, the popular saying, "Give a person a fish, they will have dinner, teach them to fish and they will never go hungry," really does apply. And, when it comes to money and happiness, how about this quote by Natasha Munson: "Money, like emotions, is something you must control to keep your life on the right track.”
In my book, 10 Days to a Less Defiant Child, I explain how parents may find themselves enabling their children. The way out of enabling is learning to be calm, firm, and non-controlling so that parents can bypass fruitless power struggles. This applies to managing conflicts over how money is provided, earned, or spent. The stakes are high because overall happiness is linked to feeling good about how we value and manage money.
Sound Money Management Means Strong Emotional Health
If you are lacking in financial literacy and are prone to impulsive spending, then you are living an emotionally challenging life of being under chronic stress and potentially feeling miserable. For what it’s worth, I’ve been on both sides of the coin (double pun intended). I’ve had times in my life where I wasn’t tuned into, or respectful enough of, the value of a dollar.
While I’ve tended to generally be on the more planful side of financial awareness throughout my life, this was not always the case. I was not good at financial management in times I wish I had been. In fact, there were certainly periods where I was clueless about the financial repercussions of my spending actions. Fortunately, years ago I learned valuable lessons in that financial school of hard knocks.
Financial Health Does Not Have To Mean Wealth
Let’s be clear, I’m very aware of people who are less fortunate and who have had unpredictable life catastrophes that rendered them to be close to, or in, poverty. Let me add as well, that as we are in the throes of this pandemic, I am very mindful of people who have lost jobs and now have food security issues, or who are homeless or bordering on it. I truly feel for everybody in these types of tragic situations.
I’m also not speaking about net worth when it comes to financial health. I know of people who earn far more than I do who struggle to manage their finances. And I know many people with more modest incomes who live within their means and are very happy content.
My main point is this: If you hold the view, “I don’t think (or concern myself) about money," then you may put your financial security at risk, as well as your emotional health. Often those who say they don't think about money have someone else in their life supporting them who does think about it. Or, if you obsess about money, that will put you on the expressway to Stress City, as well.
Balanced Financial Awareness Means Greater Happiness
Here are my take away points about the relationship between financial awareness and happiness:
- The less stressed you are over money, the happier you will feel. No one can argue otherwise.
- The more mindful you are of your financial management capabilities, the less incapable you will feel when it comes to facing financial pressures and managing them.
- The more you have a growth mindset (to learn from mistakes and setbacks) when it comes to managing your money, the less negative you will be when you face obstacles.
- The less you are consumed with the amount you earn being a statement of your true value, the more you will unconditionally value yourself.