How does Economic Stability Impact a Person’s Social Life?

In today’s world, money affects everything – from our well-being and health to our life satisfaction and self-image. But could it be that it also affects the way we socialize? If so, how exactly does our financial stability affect our social life?

A recent study on the topic revealed that people’s financial well-being and their perceptions of their relationships are highly related. What’s more, nine out of ten people with a favorable financial status report that their relationships with their friends, spouse, or partner are better than ever. However, the number is lower – six out of ten – when it comes to those that experience financial struggles. 

Gallup-Healthways Well-Being Index

According to the Gallup-Healthways Well-Being Index, our sense of well-being is comprised of five elements: our physical health, relationship to community, various social relationships, our sense of purpose, and financial security. 

The creators of the Well-Being Index, Healthways, and Gallup, have conducted extensive research to gather necessary data and prove a correlation between financial stability and social life. 

To evaluate the factor of financial security, they have asked the participants if they find food and healthcare affordable, whether they have any financial constraints, whether they worry about money, and how their quality of life compares to those around them. 

Determinants of Financial Stability 

To determine what affects the way we perceive our financial status, Gallop and Healthways have also considered income as one of the determinants of financial well-being. However, they’ve discovered that financial security does not depend on higher income, but rather, on skillfully handling one’s finances to alleviate stress and enhance financial stability. 

With that being said, our perceptions of our social life do improve as our financial stability improves, but this occurs regardless of our income level. Both lower and upper-income individuals are likely to evaluate their relationships as thriving if their financial status is favorable and stable. 

So if you have a lower paycheck, but you know how to manage your finances properly, it’s more likely you’ll perceive your financial situation as satisfactory, which will then affect your relationships positively. 

Two Ways Finances and Relationships Relate

To observe the effect of our finances on our social life, we need to consider two elements: one’s sense of financial stability and self-assessed relationship quality. Even though the strength of the correlation between the two is unclear, it can be stated that a person’s sense of financial security – along with experiences and emotions that accompany it – interact with interpersonal relationships. 

One option is that financial security affects social life. For example, financial pressure can harm interactions with friends and family, while financial stability may facilitate them since the lack of money issues means less potential for conflict in a relationship. 

Another option is that relationships and interactions affect financial stability. For instance, going through a divorce can be the cause of significant financial difficulties. Or, solid relationships can expedite the psychological strain of financial stress, such as supportive friends or family members. 

Essentially, the way people perceive their financial situation and the way they handle their money significantly impacts their relationships, regardless of their income. Thus, it can be said that financial well-being and interpersonal relationships are positively correlated.

[1] “Financial Well-Being and Social Relationships Closely Linked.” Gallup [Online] Available at: https://news.gallup.com/poll/187616/financial-social-relationships-closely-linked.aspx [Accessed on: 5 June 2020]