I talk to people about money all the time. The richest people I know are not necessarily the happiest, and the happiest people I know are not the richest. Research supports this: In 2010, psychologist Daniel Kahneman and economist Angus Deaton examined the evidence and decided that at above $75,000 a year in income (in the United States), people weren't necessarily any happier.
The day-to-day experience of enjoying your life has a lot to do with the people you spend it with. An income that ensures your basic needs are met, like food and housing, gives you a sense of security. But more money can't buy the experience of being with people you want to be with and having experiences you enjoy.
High-income earners will sometimes feel very satisfied with how much money they have collected. They get a sense of well being from being successful. That's fine, but that's not how I think of real happiness, and I suspect it's not how you do, either. Real happiness is in the moment, when you're not concerned about how you compare with others or stand in the world. (You can hear Kahneman talk about the science of happiness at this TED Talk.)
As you make your New Year's Resolutions this year, my suggestion is to sit down and make a list of the people and experiences that make you happy. That probably includes having a sense that you are taking care of the people you love. Do this with your family, and you might discover some of what you have been doing to take care of others is unnecessary for their happiness, and your own.
Once you have your list, the financial challenge is simple: Earn enough to do those things in the present, and save enough to do those things in the future.
That will probably lead you to a handful of pretty simple resolutions. Here are the ones I suggest:
• Make sure you are spending less than you are bringing in. Budgets come in all shapes and forms. You don't need a complicated one. But you should be saving at least 10 per cent of your income, among all your different savings vehicles.
• Pay your future self off the top and make it automatic. After your mortgage, your utilities and your food bill, make your savings automatic by setting up transfers from your bank account. It really is okay to start small. Just start.
• After you have saved enough for a cash reserve of three to six months, divide your savings three ways: between your kids' education, your retirement, and your next big spending goal, like a family vacation.
If you've focused on what really makes you and your family happy, you might find that third item -- that new car, or the big vacation, or the line item for expensive meals out -- is something you really don't need after all.