Good health, savings contribute to happiness

This monthly column addresses the relationship between money and happiness. There are many topics that connect the dots between money and happiness. Today, I will focus on two of them: leading a healthy lifestyle and setting up automatic savings.

Healthy lifestyle

Our health is a very valuable asset. If our health declines, having a large investment account often becomes irrelevant. It is essential that we make maintaining good health a very high priority.

As a diehard workaholic, I understand how hard it is to make time for exercise. Good intentions do not go far if you don’t carve out the time for exercise from your busy schedule.

Studies have shown that consistent exercise (defined as three to five days a week for 30 minutes per day) can lower blood pressure, improve cholesterol levels, and help prevent heart disease and Type 2 diabetes. It also improves mental health by reducing depression and anxiety. Some studies have shown consistent exercise is more effective at treating depression than commonly prescribed antidepressant medications.

You may be saying, “I know all that, but how do I get more exercise?” And how does this relate to money?

Think about what forms of exercise you enjoy. Schedule exercise on your calendar and make it your top priority. Consider joining a walking, running or hiking group. This will provide exercise and an opportunity to make new friends.

If your health is not what you would like it to be, consider hiring a personal trainer or a physical therapist, or joining a health club. Sign up for tennis, swimming or ice skating lessons. Go for a walk in the early morning or in the evening and enjoy the fresh air.

Plan a vacation that includes the outdoors. One of my clients (in their mid-60s) recently emailed me that he and his wife went rafting down the Grand Canyon and had a fabulous time. Plan a vacation that includes horseback riding, hiking or camping. Try something new.

Many of these ideas require spending money, and spending money on getting healthier or on experiences will make you happier.

Automatic savings

Did you know that saving is the number-one way to attain financial security? Let’s dispel a myth. Many people assume that those with high incomes are wealthier than people with average incomes. This is not true. Many people with high incomes do not have a high net worth.

The key is not how much you earn but how much you save. The amount you save is the primary factor in becoming financially secure. Many people with high incomes live a “high-consumption lifestyle” in which they spend everything they earn. Often, they spend more than they earn, which lands them in debt.

This is a common example of living beyond your means. People like this tend to be very statusdriven as they strive to keep up with the Joneses. Clearly, you do not want to follow this destructive, but very common, path.

In the classic financial book “The Millionaire Next Door,” Thomas Stanley researched the common traits of millionaires during the 1990s. He discovered that, on average, they saved and invested 20 percent of their income.

How much do you save? Perhaps you are saving 6 percent in your retirement plan at work. Make sure you are contributing enough to get the maximum match from your employer.

I recommend you keep an emergency fund that covers six months of expenses. Once that is in place, I recommend funding a Roth IRA. If you are under age 50, you can contribute $5,500 to a Roth for 2016, and if you are age 50 or over, you can contribute $6,500. There are income limitations, but they are high at $117,000 for a single person and $184,000 for a married couple filing jointly. Also, you must have “earned income” in order to contribute to a Roth IRA so retirees are usually not eligible.

Add up all your savings and divide that figure by your gross income. That is the percentage you are currently saving. Strive to increase the percentage, eventually aiming for 15 percent to 20 percent. The most painless way to save is to make it automatic. Similar to a retirement plan such as a 401k, the money is deducted from your paycheck before it reaches you.

You can set up automatic savings through a brokerage firm or a bank. The amount is irrelevant. It may be a very small amount each month. The wonderful thing about saving is that it gets easier as you do it. You will start to see the progress quickly, and knowing you are working toward financial security will make you happier.

Discuss saving with your children or grandchildren. Tell them stories from your childhood, including lessons you have learned from your experience with money. This will help them learn, and you will become a positive role model, teaching them valuable financial lessons.