I think about my mortgage constantly

One night in March 2009, after an exhausting day of work and children’s nappies, I was reading the FT just before bedtime. The paper said stocks were now terribly undervalued. They were bound to rise. Maybe, I told my wife, we should move our scant savings out of zero-interest accounts into shares. “Maybe,” she said, exhausted. We never got round to it.

Global stocks have since risen about 75 per cent. Our inertia that night might have cost us a secure retirement. This is how we live now: you run your life as a proactive small business, or you suffer. Since the 1970s, people in western countries have become both much richer and much more stressed about money. The other night we debated this issue at the RSA in London, and Gerard Lemos, head of what from April will be the UK’s new Money Advice Service, said: “As far as money is concerned, we have inadvertently concocted a recipe for unhappiness.” Maybe it’s time for a new recipe.

Britain is an only slightly exaggerated example of rising financial stress. Forty years ago, real British incomes were about half today’s levels. Yet people then seem to have worried less about money. For instance, most felt secure in their jobs. Admittedly unemployment had risen from its deathbed since the 1950s and 1960s, but even in the 1970s British unemployment never breached 1.5 million.

Few Britons then had credit cards. Few had private pensions, because the state provided. University was free. Half of Britons weren’t homeowners, and therefore didn’t worry about mortgages. And crucially, too, divorce was rare. Not only were couples spared the horror of telling the children, but they were also much more financially secure. Mark Taylor, of Essex University’s Institute for Social and Economic Research (ISER), has shown that even a halving of income causes fewer financial problems than does either divorce or unemployment.

But after the 1970s, stress about money soared. British unemployment now tends to peak at 3 million. Divorce rates have almost trebled since 1970. Two-thirds of Britons own their homes, which is particularly stressful because most have variable-rate mortgages. If interest rates rise, they can suddenly find themselves paying mortgage interest of 15 per cent. It has happened before.

I fled London for Paris as a real-estate refugee, and I now have a typically French fixed-rate mortgage. I know to the euro what my interest payment is for February 2032. That provides a kind of security.

Yet I’m still constantly thinking about my mortgage. That is boring, and stops me smelling the flowers. I left London partly because I was fed up with friends talking about house prices. But I understood why they did it. Everyone has had to become his or her own accountant, actuary and pension planner.

Unfortunately most Britons are poor financial planners, or can’t afford it. A recent survey by Bristol University’s Personal Finance Research Centre found that most working-age Britons didn’t have the savings to cover a month’s loss of income. Most now get no formal financial advice. Lemos says a third of Britons aren’t budgeting for retirement.

We now need to save, but most people can’t, and that disjunction causes stress. New research by Taylor of ISER shows that your ability to manage your money in 1991 correlated with your “life satisfaction” in 2006. Academics have long tried to connect income with happiness. Perhaps there’s a stronger correlation between financial peace of mind and happiness.

At the RSA, both Lemos and Rob Devey, chief executive of Prudential UK, the insurers, argued that people needed to be taught to manage their money better. However, most won’t learn. It’s just too complicated. And, as Devey noted: “I have absolutely no doubt that people find learning about finance deeply dull, because it is.”

Luckily there’s an alternative to education: take away people’s money and save it for them. That’s the Nanny State. I have a friend who is the Nanny State incarnate: he was for years a social democratic cabinet minister in Sweden. He once complained to me that a right-wing group was going around saying that Swedes had lower post-tax incomes than Alabamans, who are among the poorest Americans.

Well maybe, my friend said, but by the time Swedes got their post-tax incomes, their pensions, healthcare, schools and universities had already been paid for. Sweden took away their money, but it also took away their financial angst.

By contrast, the UK gives people choice. I hate to sound like an Egyptian president, but choice isn’t always good. I could choose my own water supply, and then purify the water myself, but I don’t want to. It would only cause me stress. And yet we now ask people without financial skills to plan their financial lives, from university fees to old-age homes. Devey suggested automatically enrolling employees in workplace pensions. That would just be a start. The one resource people have much more of now than in the 1970s is income. If they could hand over a big chunk to Nanny, she’ll leave them some pocket money.

simon.kuper@ft.com