According to Charles Schwab’s 2020 Modern Wealth Survey, 57 percent of Americans say they or a close family member have been financially impacted by COVID-19. In addition, nearly 15 percent reported being more financially stressed as compared to the end of 2019 before the widespread outbreak, and express concern that their increasing stress might have a lasting effect.
However, there also appears to be a silver lining when it comes to changes in their financial behaviors. For example, 36% of the respondents indicated they are saving more to cover emergency expenses than before the pandemic, and 24% reported they are now more likely to establish a financial plan. The survey results also indicate that attitudes about money play a significant role in their overall happiness, but the importance of relationships ranks as the top driver of their overall sense of well-being.
This research seems to echo the findings of previous studies that examined consumer sentiment in the aftermath of the 2007-2008 financial crisis and painfully slow economic recovery. For example, the Boston Consulting Group (BCG) reported, “Recession anxiety has triggered a clear shift back to basics in what consumers say they value most.” They found that home and family, stability and calm, saving, and the environment all increased in importance while luxury and status became less and less of a priority.
For many individuals, financial realities and “clear shift back to basics” not only leads to wiser financial decisions, but promotes higher levels of life satisfaction as well. Based on mounting empirical evidence, Dr. Sonya Lyubomirski, a leading happiness researcher, describes the types of “values-based” expenditures that tend to improve the quality of our lives:
- Activities that will help us to grow as individuals, strengthen our connection with others, and contribute to the well-being of our communities
- Experiences that provide lasting memories rather than material possessions
- Expenditures on many small pleasures rather than on one big-ticket item
- Purchases that represent something hard earned to achieve
To summarize her findings, Lyubomirski wrote that our sense of financial well-being is a choice:
We can choose to become never-satisfied janitors of our possessions, or we can use our money in ways that improve our worlds and, as a bonus, supply us with genuine and lasting well-being.”
Similarly, Karen Ramsey, author of Caring for Your Soul in Matters of Money, wrote about the power and influence of our financial choices—in both good times and bad:
In personal financial management, the place to begin is to adopt a realistic perspective. Money will only improve the quality of your life when it is used with clarity. Only when you learn to spend money in concert with your underlying values—things that you most deeply care about—will it become a tool for creating a more fulfilling life.
Hopefully, by keeping this perspective in mind, we won’t need another financial crisis to remind us of what is most important to us. Always remember that financial and life satisfaction evolves from a clear understanding of the nature, influence, and importance of our values. As individuals, our sense of well-being will multiply when we clarify our priorities and make financial and life decisions that align with those priorities.
Reprinted by permission of Money Quotient, Inc