The Key to Financial Happiness

April 10, 2014
Laura Joszt

Although the majority of Americans are concerned and stressed about their finances, a little discipline might be the road to future happiness.

Although the majority of Americans are concerned and stressed about their finances, particularly retirement savings, a little discipline might be the road to future happiness.

Northwestern Mutual’s 2014 Planning and Progress Study, which explores Americans’ attitudes and behaviors toward finances and planning, found that 70% of highly disciplined planners feel “very financially secure.” In contrast, only half of disciplined planners feel the same, just a third of informal planners, and only 17% of non-planners.

"The links between discipline, financial security and happiness are quite distinct,” Greg Oberland, Northwestern Mutual executive vice president, said in a statement. “There's some powerful evidence to suggest that the small steps you take today can make a real difference tomorrow."

Retired highly disciplined planners are also far more likely (91%) than non-planners (61%) to say they are “happy in retirement.”

Overall, though, the level of discipline Americans bring to their finances is low, according to Oberland. Just 18% of adults fall into the category of a highly disciplined financial planner, someone who knows his or her exact goals, has developed specific plans to meet them, and rarely deviates from the plan.

Nearly half (46%) of US adults consider themselves informal planners or non-planners.

Adults between the ages of 18 and 39 and those over the age of 60 are the most likely to be disciplined financial planners. Six in 10 of adults in the youngest age group and 54% of seniors consider themselves disciplined financial planners. In contrast, 51% of adults between the ages of 40 and 59 identify as informal or non-planners.

A quarter of young baby boomers (ages 50 to 59) admit that the biggest barrier to becoming financially disciplined is a simple lack of interest. Furthermore, 70% don’t use a financial advisor.

"It's interesting to see the differences in discipline among age groups, and whether they signal a pronounced shift in attitudes toward financial security in America," said Oberland. "It's worth noting that both young adults and seniors have experienced tough economic cycles during formative periods of their financial lives. Regardless of the explanation, we see the return to realistic expectations, prudent decision making and disciplined patience as a very positive trend."