New study links financial wellness with happiness and better sleep

August 4, 2022
updated on
April 15, 2024

Key Takeaways

  • The CDC has called sleep deprivation a “public health epidemic.
  • People who are better off financially sleep better, according to the Northwestern Mutual 2022 Planning & Progress Study.
  • Alto lets you invest in a variety of alternative assets, many of which are not highly correlated with the stock market. Diversification can lead to better results, which can lead to better sleep.

If you’re one of the 70 million Americans who struggles with chronic sleep problems, you know how debilitating a lack of sleep can be. The problem is far-reaching with one in three U.S. adults struggling with a sleep disorder at some point during their lifetime. The CDC has even called sleep deprivation a “public health epidemic” since it’s linked to a host of chronic medical conditions.

Findings from a recent survey of 2,500 respondents reveal a link between financial wellness and overall wellness. Specifically, those who identified as disciplined financial planners reported lower levels of financial anxiety, higher levels of happiness, and better sleep. So, what were the key trends, and what are some of the ways you can improve your financial wellness, and ultimately, sleep better?

Financial Wellness = Overall Wellness

The study was conducted by Harris Poll for the Northwestern Mutual 2022 Planning & Progress Study. Christian Mitchell, Executive VP and Chief Customer Officer at Northwestern Mutual, noted that “It’s interesting to look beyond the traditional financial wellness categories and explore topics such as how happy people feel, and how well they’re sleeping at night. What emerges is a pretty distinct link between financial wellness and overall wellness.”

Key Stats

  • 84% of disciplined financial planners are somewhat/very happy.
  • 76% of disciplined financial planners sleep well/very well.
  • Gen X emerged as the worst sleepers (62% sleep well/very well).
  • Millennials and Gen Z tied for the most anxious (34% not very/not at all anxious about finances).

Alto’s 2022 Alternative Investing Report uncovered a similar trend regarding financial anxiety among young people. Over half of millennials stated that they worry about never being able to afford retirement. And 65% of millennials said they believe that the journey to retirement is less clear than it was for their parents.

The Top 4 Causes of Bad Sleep

This isn’t the first time research has linked financial wellbeing and sleep. The Better Sleep Council conducted a survey in July 2019, and four factors emerged that most negatively impact sleep in the U.S.:

  1. Stress
  2. Physical pain
  3. Personal finances
  4. Social isolation

Of the 2,000 respondents, those who rated their sleep as poor were 1.4 times more likely to live paycheck to paycheck versus those who rated their sleep as excellent. Further, those who rated their sleep as poor were 1.3 times more likely to be concerned about their own financial future compared to those who rated their sleep as excellent.

Investors tend to sleep better

Arguably, the most poignant statistic from the Better Sleep Council survey was that those who rated their sleep as excellent were nearly two times more likely to regularly save for retirement and/or unforeseen medical expenses than those who rated their sleep as poor.

Ed Coambs, a financial therapist, commented on the 2019 sleep study, “It does not surprise me that there is a positive relationship between good financial practices and sound sleep.” He continued, “I like to say that managing our money is an important self-care activity. Learning to manage our cash flow and investments and understanding the relationship between the two is important.”

Surprisingly Promising Post-Pandemic Habits

Recent events, including market volatility, high inflation, and of course the pandemic have undoubtedly caused financial strain on some Americans. However, the Northwestern Mutual Study revealed a surprisingly promising statistic: The majority of respondents (60%) said they’ve been able to build up their personal savings over the last two years, and of those, 69% said they plan to maintain their new saving rate going forward. Further, 73% said they’ve adopted better financial habits as a result of the pandemic. The top five behaviors adopted include:

  1. Reducing living costs/spending (35%)
  2. Paying down debt (22%)
  3. Increased investing (19%)
  4. Increasing their use of tech to manage finances (19%)
  5. Regularly revisiting financial plans (17%)

4 Ways to Improve Financial Wellness

Of the top habits listed in the report, we’ve consolidated them into the top four actions you can take to improve your financial wellness and hopefully get some more (and higher quality) Zzzs.

1. Create a financial plan.

Whether you work with a financial advisor or do your own due diligence with a budgeting app or good old-fashioned excel, making a plan and consistently revisiting that plan is vital to financial wellbeing and will keep your long-term financial goals top-of-mind.

2. Make a plan to tackle debt.

In 2021, the average American debt balance jumped 3.9% to $96,371. While there are several strategies for tackling debt, including the snowball method, the debt avalanche, and debt consolidation, what’s important is choosing a strategy and working toward paying it down-especially credit card debt.

3. Start an emergency fund.

It’s generally recommended to set aside an emergency fund that includes three to six months’ worth of expenses. This cushion can help protect your future self if/when unforeseen medical expenses, car troubles, or layoffs occur.

4. Invest consistently.

In addition to tackling debt and building up short-term savings, investing for the long-haul is part of a holistic financial wellness approach. Dollar-cost averaging is a popular investment strategy, particularly during down markets, because it allows investors to essentially buy the dip without committing too many funds at once.

The bottom line

The link between financial wellness and a better night’s sleep is clear. One final way to pursue peace of mind is to ensure your investments are well-diversified. Doing so spreads risk over a variety of asset classes, reducing the potential damage that declines in one asset class will do to your overall portfolio. A self-directed IRA or crypto IRA from Alto enables you to do just that. (And you don’t have to be rich, either.)

Alto lets you invest in a variety of alternative assets, many of which are not highly correlated with the stock market. So you can invest in the things that interest you most-like art, startups, crypto, real estate, and more.

Be mindful that investing, especially in crypto, involves risks, including risk of loss. Do not invest without doing your research.

Open an account today to get started. Sweet dreams and happy investing!

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