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What is the key to happiness?
A multi-million-dollar industry has stemmed from trying to answer this question. Scholars, authors, life coaches and religious groups have spent centuries trying to decipher exactly what makes humans happy.
While there is no definitive answer, researchers have discovered that income, social relationships and philanthropy can all have an impact on happiness.
Finder's Consumer Sentiment Tracker has asked more than 36,000 Australians whether or not they consider themselves happy, and the results show it's not just money that makes a difference.
Key findings
Men are happier than women.
Baby boomers are the happiest generation.
Overall happiness levels declined during Australia's extended lockdown periods.
An increase in income makes the most difference to happiness at lower income brackets.
Credit card holders are happier overall, but only those who pay off their balance each month.
Homeowners are happier than renters.
Those who have trust in the government and large corporations are happier.
Being satisfied with your home broadband correlates with a higher rate of happiness.
Those who have insurance are more likely to be happy.
Happiness trends in Australia
Overall, 77% of Australians consider themselves to be happy. Finder's data shows men (78%) are slightly more likely than women (76%) to say they are happy. However, it seems age is a more determining factor – baby boomers (81%) are the happiest generation, while generation X (74%) are a bit less cheerful. Evidence shows people are typically happiest when they are young and in old age. Experts suggest this is because social and financial stressors peak around middle age. Older people have accumulated decades of wisdom and find it easier not to sweat the small stuff.
Those from the Northern Territory (85%) report the highest levels of happiness. Meanwhile, Tasmanians (72%) seem to be a bit more low-spirited. Could it be the cooler weather?
Money and happiness
Not surprisingly, household income is positively related to happiness. Less than two-thirds (62%) of households earning between $10,000 and $20,000 per year report being happy, compared with 87% for those earning above $200,000. However, the chart does show that an increase in income makes the most difference to happiness at lower income brackets. At higher incomes, a marginal increase in income has a smaller material impact on happiness.
An exception are those earning less than $10,000, who are happier than those earning between $10,000 and $20,000. While it's difficult to say why, this could partially reflect the student population whose lower incomes may not accurately reflect their income or wealth potential.
Finder's research is consistent with external studies which consistently show income to have a stronger positive effect on happiness for those on lower incomes. While previous studies had found happiness to plateau beyond an income of around $115,000 per year, research from the University of Pennsylvania has found money continues to be a determining factor of happiness as income rises, but it becomes less relevant than other factors like health and family.
Financial security
Financial security is arguably one of the leading drivers of overall happiness. Those who say they are not at all stressed with their financial situation have significantly higher levels of happiness (92%) than those who are somewhat (78%) or extremely (54%) stressed. There is a similar story with job security too; those who are very secure in their jobs (89%) are happier than those who are very insecure (51%).
Researchers have found financial stress and security to be significant predictors of overall happiness, and no less important than physical health or personal relationships. The ability to pay bills on time, repay debts and afford basic necessities alleviates anxiety and provides a feeling of "safeness" in the world.
It's also clear that wealth has a significant role to play with happiness, particularly for lower income earners. Happy Australians have more than twice as much money in savings ($32,420) than unhappy Australians ($17,420), and they save more than twice as much money per month ($840 compared to $420). Those who say they could live off their savings for more than a year report the highest level of happiness (87%), compared to just 63% for those who could survive for less than 1 week.
Credit cards and debt
According to the data, having a credit card is correlated with overall happiness – 4 in 5 (79%) credit card holders report being happy, compared to 73% of those without a plastic card.
But don't go spending yourself into debt just yet. The data also shows those who pay off their card every month (83%) are happier than those with debt. Not surprisingly, the longer it will take to pay off a person's credit card debt, the less likely they are to be happy. Only about half (54%) of those with 5 or more years of credit card debt report being happy overall.
Property ownership
Australians are obsessed with property, and owning your own home is a sure sign of financial freedom. Those who own a home and have paid off their mortgage are the happiest (85%), followed by those who are still paying off their mortgage (80%). Renters (70%) are the unhappiest demographic.
It's not all sunshine and rainbows once you own a home, though. Mortgage stress also contributes to an individual's level of happiness. Those who say they struggle to pay their home loan repayments are substantially less likely to be happy overall (68%) than those who don't struggle (84%).
The happiness gap is even wider among renters who struggle to pay rent (57%) and those who don't (76%).
Trusting in institutions
Interestingly, Finder found the happiest people are those who have trust in the government and large corporations. The data shows the largest improvements in happiness come from trusting the government (21 percentage points) and insurance providers (21 percentage points), followed by energy providers (20 percentage points), mortgage lenders (20 percentage points) and telco providers (19 percentage points).
Having a good Internet connection
Frustrated with your dodgy broadband? It could be bad for your mental wellbeing. The happiest people are those who say they are extremely satisfied with their Internet connection (85%), compared to 65% for those who are extremely dissatisfied. Those who never experience buffering issues (80%) are happier than those who experience dropouts daily (73%).
Finder's research shows that those with insurance are more likely to report being happy overall. Income protection insurance takes the top spot, with 84% of insured people saying they are happy, compared to 75% for the uninsured. This is followed by life insurance (83% versus 74%) and pet insurance (83% versus 75%).
Why is this? An explanation is that insurance provides a sense of financial security in the event of an accident, and this can help to relieve worry or anxiety about the future. If you know you're covered by income protection insurance, you might be less anxious about the possibility of losing your job.
How do Australians compare globally?
According to the World Happiness Report, Australia ranks 12 out of 149 countries for happiness. The report, published by the United Nations, assesses the happiness of each UN member country using both self-reported quality of life measures and a selection of socioeconomic indicators including GDP per capita, life expectancy, social support, trust and corruption, perceived freedom to make life decisions, and generosity.
The results show Finland to be the world's happiest nation for the fifth year in a row, followed by Denmark and Iceland. Eight of the top 10 happiest countries are located in Europe.
On the other hand, the bottom 10 countries are all located in lower-income or conflict-ridden nations, indicating that income, political instability and national security are likely closely linked to individual levels of happiness.
Top 10 happiest countries in the world
Country
Happiness score (out of 10)
1
Finland
7.821
2
Denmark
7.636
3
Iceland
7.557
4
Switzerland
7.512
5
Netherlands
7.415
6
Luxembourg
7.404
7
Sweden
7.384
8
Norway
7.365
9
Israel
7.364
10
New Zealand
7.2
Top 10 unhappiest countries in the world
Country
Happiness score (out of 10)
1
Afghanistan
2.404
2
Lebanon
2.955
3
Zimbabwe
2.955
4
Rwanda
3.268
5
Botswana
3.471
6
Lesotho
3.512
7
Sierra Leone
3.574
8
Tanzania
3.702
9
Malawi
3.75
10
Zambia
3.76
Tips for a happy and financially secure future
Invest in good relationships. Research consistently shows that personal relationships and social connectedness are the leading indicators of happiness and wellbeing. The Harvard Study of Adult Development followed 268 men over the course of 80 years and found close relationships to be the number one factor in keeping people happy, mentally stimulated, and helping them to live longer. Another study among retirees in China found social participation to have a significant impact on happiness and wellbeing later in life – so keep your loved ones close.
Safeguard your assets. There's a reason people with insurance are happier. Being adequately insured – from life insurance to home insurance – can protect you from severe financial stress or debt in the event of an illness or accident, and can also relieve concerns about your family's financial future. Just be sure to compare providers and seek out a competitive rate so you're only paying for what you need.
Build towards a financial future. Studies have shown that financial security is one of the leading determinants of happiness among retirees so it's worth taking a good look at your superannuation before you get there. Choose a high-performing fund to ensure you make the most of compound growth over time, and try to keep your annual fees below 1% of your balance per year. If you can, salary sacrificing part of your income allows you to contribute to your fund before tax, paving the path for a healthy and stress-free retirement.
Finder Consumer Sentiment Tracker, May 2019 - May 2022
AMP, Happiness Survey 2017
University of Pennsylvania, 'Experienced well-being rises with income, even above $75,000 per year", 2020
Netemeyer et al., "How am I doing? Perceived financial well-being, its potential antecedents, and its relation to overall well-being", 2017
United Nations, World Happiness Report 2021
Harvard, Harvard Study of Adult Development
Zhang et al., "Social participation and subjective well-being amongst retirees in China", 2014
Sophie Wallis is a senior insights analyst with a passion for data storytelling. She spends her time turning complex data into digestible stories and uncovering new consumer trends. When she isn't working, you'll find her planning her next overseas holiday or bingeing on a big novel. Sophie has a Bachelor of Economics from the University of Melbourne.
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