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ACCORDING TO THE World Happiness Report, Finland ranks as the happiest nation in the world, a title it’s held for eight years in a row.
Each time this report is updated, it makes the news for a day or two but then fades. That’s for good reason, I think. As much as Finland might be a nice place, it isn’t necessarily practical to suggest that anyone pick up and move.
The good news, though, is that there are many other, more practical ways to boost financial happiness. Here are five that I’ve observed over the years.
Connection
What’s the number one recommendation of happiness researchers? It’s something that doesn’t cost anything at all: social connection. But it isn’t always easy. Whether you’re in your working years or in retirement, day-to-day life can get in the way. That’s why one busy doctor I know tells me he maps out weekday lunches with friends, and he does this several months in advance.
Another fellow tells me that he plans out vacations up to two years in advance. That might sound extreme, but it makes good sense. Indeed, it’s a point that Jonathan Clements often emphasized. “One of life’s great joys is anticipation,” he wrote. If you’re thinking about a vacation, for example, don’t plan it at the last minute; book it well in advance so you have it to look forward to.
Simplicity
A recommendation of a more financial nature: Take some time to audit the complexity level in your portfolio. Why focus on complexity? In my experience, investors whose portfolios are complicated—especially those holding individual stocks—find themselves worrying more. That’s for a few reasons.
First, if you own a collection of individual stocks, you’re more likely to follow the news about each company. And because no stock ever goes up in a perfectly straight line, there will invariably be news from time to time that will cause some amount of worry.
It’s also harder to achieve broad diversification when you’re choosing individual investments. If, on the other hand, your portfolio consists of a set of simple index funds, it’s much easier to be diversified. And the value of diversification can’t be overstated.
Consider, for example, an event that occurred back in 2001. After years of impressive gains, the energy company Enron was exposed as a fraud and filed for bankruptcy. It was, at the time, one of the market’s most popular stocks, but investors saw their shares fall nearly to zero. Those who simply owned the S&P 500, on the other hand, were barely affected, because Enron’s weighting in the index at the time was less than 1%.
That would have been the first benefit to an index fund investor. There’s an even more powerful lesson in what came next: When Enron was delisted and removed from the S&P index, it was replaced by a company that, at the time, was relatively unknown: Nvidia. In the 25 years since it was added to the index, Nvidia has gained approximately 150,000%.
Individuality
Another key principle in personal finance is that there’s no need to see things in all-or-nothing terms. A fellow in my town lives in a home so large that it used to be a school building. But where does he go for his coffee each morning? Dunkin’ Donuts. Financial author Ramit Sethi addresses this phenomenon in his work. He refers to “money dials,” which is the idea that we should feel free to spend more on the things that are most important to us and to economize everywhere else. This probably seems like common sense. I mention it, though, because there are many textbook “rules” out there for financial happiness. But because we’re all different, we should feel free, in Sethi’s terms, to turn the dials as we see fit.
Surplus
In the book The Happiness Project, author Gretchen Rubin includes this unusual recommendation: Keep a shelf in your home completely empty. Why? She explained that when she did this in her otherwise cramped New York City apartment, seeing that bit of extra space gave her a peace-of-mind boost.
How can you apply this idea to your personal finances? Consider your checking account. Most people hold just enough to cover perhaps a month or two of expenses. More than that might feel wasteful if it isn’t earning interest. But I’d encourage you to think about this differently. Think about it like Rubin’s empty shelf. If you have some surplus funds, leave those dollars in your checking account. Even if they could be earning a higher return elsewhere, I think there’s an intangible benefit to having that margin for error.
Housekeeping
I apologize if my last recommendation seems a little morbid, but I see it as another effective way to boost peace of mind. When it comes to estate planning, the most basic document is a will. Other documents, including a healthcare proxy, are also important. But there’s an additional step you can take. I suggest writing up a document with further details that would be helpful to your family in case something were to happen. I suggest including the following:
I suggest stowing this with your formal estate planning documents. Then communicate the location of that information to family members or trusted friends.
Adam M. Grossman is the founder of Mayport, a fixed-fee wealth management firm. Sign up for Adam’s Daily Ideas email, follow him on X @AdamMGrossman and check out his earlier articles.
Your suggestion on planning ahead, simplicity, connection, and individuality combined for us last week.
Our daughter has been a fan of the globally famous k-pop group BTS for a decade, and has managed to get my wife to love them too.
Me, not so much.
BTS is playing in a small number of huge stadiums in the US in September.
My daughter’s job was to procure the tickets, and we told her that this was probably the only time my wife would go, so we were all in: get best available tickets, VIP, whatever was possible, and to use our credit card (daughter does not have enough credit).
Daughter miraculously secured amazing tickets.
The Simplicity was to just get tickets,whatever the cost.
I immediately booked the flights to Los Angeles and an Airbnb in Manhattan Beach for the entire week.
I am certain that the flights were not the cheapest, and the Beach Airbnb is also not, but they are locked in.
Simplicity.
With BTS tickets in hand, and flights and accommodation secured, there has been much time spent looking forward to the experience.
My daughter lives in Portland and we live in Montana, so this is a chance for my wife and daughter to connect over a shared passion.
Connection.
I get to not have to go to a BTS concert.
Individuality.
There has been an excessive amount of happiness in our home this week!
I will add a few non-financial steps to Adam’s “morbid” suggestions:
I think anticipation is very underrated. It’s companion, budgeting is frequently misunderstood.
For example, in 1994 I was broke with the children entering college. I made a multiyear spreadsheet with all projected bills and future savings. Initially it showed $0 saved after meeting monthly obligations. Eventually the spreadsheet indicated that bills would decline and savings would increase. It was a difficult nine years, but all of the college bills were paid, etc.
In 2002 I was able to upgrade from an apartment and purchased a condominium for cash.
In 2002, at age 56 I began thinking seriously about retirement. I began researching RVs because that was something I decided I’d like to do in retirement. Eleven years later G agreed to a rental as an experiment, and we hit the National Parks. Shortly thereafter we purchased a well-equipped Class B RV and G and I began glamping. At first, it was only a few weeks at a time as I was working. But at age 69 I began a phased, gradual retirement.
In 2015 we began setting up “lily pads” with stationary RVs from which to base our travels. We anticipated escaping winter cold and summer heat. Eventually we lived in RVs most of the year, travelling thousands of miles and staying sometimes for months in two locations. The condo became something to scratch G’s nesting instinct.
I have quite a few other examples, some earlier. But planning led to preparation and with it came anticipation. I tell stories about our adventures (and my mis-adventures) and some roll their eyes at another one of Norm’s tall tales. But it is all true.
My medical conditions have dampened this somewhat, and dialysis seems inevitable. So, I’m looking into the possibility of portable dialysis as we plan 2026 and 2027. I’m moving toward life’s exit, but I anticipate doing a few more things until I walk through that door.
Thanks, Adam. I love the Jonathanesque flavor of this article. Of planning vacations, along with the fun of it, he would point out that it cost no money. Family responsibilities keep my wife and me home at present, but we sit down to share a cup of coffee and dream and research about where we’ll go if we ever get free.
Your “housekeeping” ideas may be morbid to some folks, but for others of us, being organized to the point of death does indeed bring happiness. Included in my papers is a writing for my wife that lists little remembrances of our life together. I think of it from time to time and enjoy the feeling of anticipating her reaction.
Thanks Adam, just keep these meaningful articles coming, we all appreciate your dedication and efforts. I might add, make sure you keep the smartphone of someone who passes away working, and make sure you know that password. This is very important in this day of websites needing added authorization.
How come only positive up arrow counts are being displayed?
It’s a net number, up minus down.
Good article, especially the finical house keep section, something I’ve been thinking about doing for a while.
One thing I would add, make sure your finical beneficiary’s are updated for your assets they don’t have to go thru probate if you die. Any bank accounts, stock or index funds, etc. I’ve found you need to confirm the beneficiary’s are still valid when you retire.
Beneficiary’s for your companies 401k won’t automatically follow when you retire and move the 401K to your own IRA. You’ll have reenter them again.
Thanks for the last point–a good reminder!
Thanks for yet another useful and thought provoking article, Adam. The literature on happiness research is interesting.
I have considered what sorts of things might bring me unhappiness, and worked backwards to avoid or minimize them. At least, to the extent that I have any control. So yes, preserve and strengthen social ties with family, friends and anyone else in my circle. Make healthy choices, or at least try to. And for money matters, my allocation and withdrawal strategy were chosen to meet my goals and to provide me peace of mind, no matter what the headlines scream or what the market does. And to keep learning!
The surplus suggestion has worked very well for us. I try to keep my checking account above $8k and my wife’s above $3k so that we don’t have to worry about balancing (this number would be different for each of us). We also don’t balance it; we just make sure there isn’t anything that looks wrong. This has removed a huge amount of stress. If you have enough money to do this, I recommend it.
The letter on the wills is highly recommended by our attorney too. I’ve been an executor of four estates and my wife of one; having accurate lists of assets made things easy. The attorney also suggested it to reduce fighting by family members, for instance by saying that the china belongs to one person and pearl necklace to another (at least we hope that this would reduce discord– I’m not sure this works, but it’s a good theory). This also helps with simplicity to keep things outside of formal probate (but keep it legal!). There are things that really should be outside probate, like jewelery that a great grandmother gave specifically to a great grandchild but are stored in a group safe deposit box.
But as for passwords, I worry about written passwords falling into the wrong hands. It would be great to hear ideas how to keep these safe. And in some cases, two factor authentification is no safer, and in others it can be a complete impediment to access.
For those with an iPhone, you can setup a “Legacy Contact” that will allow someone to access your iPhone. There’s a code for them and they need to provide a copy of death certificate. They can find your passwords for everything. I also have all my critical contacts coded for easy searching; attorney, FA, etc.
Fidelity had some sort of digital safe where you can store important documents and provide names of people who can access when you are gone. Assume if the docs are MS docs, you could also password them. I keep meaning to check it out but have not done as of now.
The website is called FIDSAFE:
https://www.fidsafe.com/index.html
Very Basic but might be useful.
One nice feature is that it has a mechanism to provide access to someone you designate in advance after proof of your death via a death certificate.
That’s a great idea! I wish Vanguard had something similar. They did have a Personal Financial Inventory at one time and it had you list every account name, number and contact info, so the executor of your will would be able to find all that easily. It was just a paper form that printed out and I gave it to my executor and backup.
Fidelity makes FidSafe available to anyone, not just their customers
https://www.fidsafe.com/index.html
Thank you Adam. Articles on happiness always make me a bit happier. 🙂 With regards to a will, my wife and I finally updated our will in 2016 after 23 years and 2 more children after the first will. When I got that completed, I wasn’t happier, necessarily, but it bought a big dose of peace of mind.
Here are two pain points which make me financially unhappy. 1. The non-health insurance system in the U.S. 2. The fear of being hit with liability claims which may be specious. (I was on the phone this week with a relative explaining why she should buy a large umbrella policy as her earnings increase.)
Until last year, the answer was simple, but the world has changed fast.
This second one has a new corollary in the last year, let’s make this a 3, which is government taking by accusation of a crime, suing, freezing assets, etc. The current administration is clear it will stop at nothing to silence dissent. (Look at how fast ICE morphed from valid and perhaps necessary law enforcement to something abusive and a threat to citizens.) And even if we are not targeted as individuals, the attacks on consumer protections make us unsafe because institutions may not be held accountable, especially with new methods for fraud, often by electronic means including hacking and AI. And, of course, what will removing Fed independence do to the value of our money?
The only dissent attempting to be stopped is when protesters forcefully, and illegally interfere with, or try to run over with their SUV’s, ICE agents. Agents trying to do their jobs removing some of the over 10 million illegal immigrants let into this country by the previous administration.
I wouldn’t have left this comment if the up and down arrow system showed the number of negative arrows (which it used to do) instead of just the count of the positive ones.
I really appreciate all the writers and contributors on this site. It is unfortunate that occasionally someone feels compelled to add their political rant.
i agree. We don’t need or want this on HD.
We have umbrellas but I struggle with the “deep pocket” conundrum e.g. the richer the take, the more the incentive to sue baby sue. In the end we decided on the amount to cover about either half our non IRA accounts OR about half the house.
Who knows what’s right with insurance. We had to argue with the insurance company to raise the amount on our home owners, real estate in our area is rising faster than I could have imagined. THough it’s nice that it’s done, does not feel like it’s increasing happiness