Freedom, Dreams...and Then Money: An Investor's Guide to Happiness in Canada

Overall, we Canadians appear to be a pretty happy group.

According to last year's Leger Happiness Index, Canadians rated their level of happiness on average at a solid 7.2 out of 10 — with highs of 7.5 coming from many of the Eastern provinces, and Ontario and Alberta falling at the lower end of the scale with rankings of 7.1 each.

If you had to guess, what do you think drives happiness? Money, yes, but in the online poll of more than 2,500 Canadians it came a distant third to two other factors: A current sense of freedom (according to 24 per cent of respondents) and a belief that Canadians are living the life they always dreamed of (19 per cent). The state of personal finances — aka money — ranked third at 8 per cent.

Interestingly, all three of the key elements ranked higher than other seemingly critical prerequisites to happiness, such as current health status and recognition from peers or family.

We decided to take a closer look at each of the three top drivers to determine if smart investing might even be able to bring a little more happiness to our lives.

Sense of freedom

In the Leger poll, respondents who had a strong current sense of freedom were far more likely to be happy (82 per cent) than unhappy. Obviously, there are many ways to identify "freedom," but a measure of financial independence can certainly be a contributing factor.

As investors, we use our accounts for all kinds of reasons: retirement, emergencies, education, vacations and more. It's easy to find elements of freedom in all of those!

Living your dream life

Of the respondents who believe they're living the life they've always dreamed of, more than 70 per cent considered themselves to be happy. What can smart investing mean for living our dreams?

Well, let's say your dreams include going back to school or buying a first home. A Registered Retirement Savings Plan (RRSP) can allow investors to borrow money for the former under the Lifelong Learning Plan, or for the latter under the Home Buyers' Plan. Do your dreams include travelling ? Investors often use Tax-Free Savings Accounts (TFSAs), which allow for tax-free growth of your investments and easy access to your money, to save for shorter-term goals like travel. Income from your investment portfolio may even help bridge the gap if your dream life entails gearing down from a stressful full-time job to work part-time instead.

State of your personal finances

People in the survey who said they believe their personal finances are in order (relative to their age) were far more likely to identify as happy (83 per cent) than unhappy (22 per cent). Smart investor tactics such as creating a budget, paying off debt, automating investment contributions and knowing what accounts are best for reaching your goals can all make you feel more in control of your personal finances.

So, will smart investing make you happier? Well, of course there's no guarantee. But if you are like most Canadians, using your investment savvy to achieve a sense of freedom, live the life you've always dreamed of and feel secure in your financial situation compared to your peers can statistically increase the likelihood that you'll end up smiling a little more.