What separates people who are optimistic and positive about their finances from those who aren't? One key factor is a sense of control, according to a new study by insurer Lincoln Financial Group. And no matter where you are on the wealth spectrum, adopting the habits of people who feel in control of their financial destinies can boost your happiness.
"Americans who feel in control of their destinies share a common mindset -- one that is focused on positive, constructive behaviors every day," noted Mark Konen, president of Lincoln's insurance and retirement solutions, in a statement.
Psychological research has found that uncertainty and a sense of powerlessness significantly undermine happiness. With the economic dislocation of the last few years, many people are feeling a loss of control over their finances. The survey found that specific behaviors helped circumvent feelings of powerlessness.
The five behaviors include: cultivating close personal relationships; volunteering and donating to charitable organizations; setting aside quiet time to be alone and think; exercising and devoting time to a hobby or passion; and learning how to adhere to a set budget.
In short, the people who felt optimistic and in control didn't allow their finances to monopolize their attention or define their success. Specifically, 66 percent of those surveyed said that success isn't contingent upon outside factors such as income or employment status. Rather, internal characteristics such as determination and resilience are often responsible for creating an overall sense of well-being.
Another characteristic of the upbeat group: They valued money for the options it provides, rather than the status it can bring. A majority of those surveyed found that financial freedom -- or possessing the resources to do what an individual wants in life -- was of far greater value than amassing large sums of wealth.
Doug Flynn, a co-founder and partner at Flynn Zito Capital Management in New York, agreed that money doesn't buy happiness. "Wealth doesn't always have to do with a set amount of dollars, but coming to accept what is my amount of dollars," said Flynn, a certified financial planner. "It doesn't matter what means you have, but learning to live within your means to achieve your goals. If you can learn to get by within your means, you truly are wealthy and can put yourself on a course to be financially wealthy one day."
One of the key steps that individuals in retirement report employing to great success is learning early on how to set a monthly budget and stick to it. Also, setting aside money from each paycheck, regardless of the amount, generally lends itself to later feeling a sense of control, the survey found.
"The key to having enough money to do what you want to do, whether you're in your 20s, 30s, 40s or older, is to develop and stick to good financial habits, such as establishing and staying within a budget and putting money away for retirement on a regular basis, including making a point of saving some money from every paycheck -- even if it isn't a lot," said Jamie DePeau, the Lincoln Financial Group's chief marketing officer.
"Establishing these habits at an early age gives you that confidence when you get close to retirement and after you retire," said DePeau. "But even if you haven't yet developed these habits, our survey findings indicate that getting started today will lead to a greater sense of control and much lower stress levels."