WHAT
Financial well-being describes the feelings that you have enough money to meet your needs, that you have control over your day-to-day finances, that you can absorb financial shocks and are on-track to achieving your financial goals, and that you have the financial freedom to make life-enhancing choices. Financial wellness is a broader concept encompassing not just financial health but other aspects of human well-being. Ramping up your financial wellness requires more than boosting your financial well-being.
WHY
Does a bigger salary or more money in your bank account make you happier? There is a relationship between the two – but maybe not what you think. Research shows that having more money does enhance well-being and happiness, but only up to a point. The relationship between money and happiness looks like an upside down “U”: once you reach the top of the curve, more money can actually undermine your well-being. It’s not how MUCH money you have that’s the key to happiness, it’s how you use what you have that counts.
HOW
To boost your financial wellness, focus on both your financial well-being and understand the connection between your money and your happiness. Deepen your financial knowledge, explore your attitudes and behaviors toward money. Be honest about what makes you feel more satisfied with your life. Only then can you make better choices about how to spend your money in ways that will grow your happiness. Here are nine shortcuts to supercharging your financial wellness:
Take control of your financial behavior. Become more financially literate. Make a budget so you understand your financial situation and can better manage your income, spending, and saving. Doing so will bolster your sense of control and your confidence.
Avoid comparisons. Be clear about what happiness and enjoying life mean to you. Research shows that comparing ourselves to neighbors, friends and co-workers reduces satisfaction with life and happiness.
Pursue your passions and purpose. Discover your purpose in life and pursue what you are passionate about. Think about how your money can help you pursue a passion other than accumulating more money.
Practice gratitude. Brain imaging studies have found that practicing gratitude can literally rewire our brains. Practices that promote gratitude can create feelings of contentment and enhanced well-being.
Get off the “hedonic treadmill.” Buying the bigger house or the more luxurious car produces short-term happiness. Humans are great adapters. Before long, the bigger house is just our home, and the fancier car is just how we get around town. Psychologists call our desire to have the newer and shinier baubles the “hedonic treadmill.” Take a step back and be honest with yourself. Can you get off the treadmill?
Be intentional about where you maximize and where you “satisfice.” Research has shown that the “paradox of choice” – looking to have or to be “the best” in too many realms of life – reduces feelings of well-being and satisfaction. Where possible, make conscious decisions to “satisfice” rather than to “maximize.”
Invest your money in time, health and vitality. Research shows that buying time promotes happiness. Remember the saying that even with all the riches and success in the world, you have nothing if you don't have your health? Most of us know that exercise increases happiness. To reduce stress, get in shape, and boost your financial wellness, invest in that gym membership or that cross-fit class.
Be generous with your money (and time). Spending money on others can make us happier and more satisfied than spending it on ourselves.
Prioritize experiences over another shiny object. Spending money on memorable experiences leads to a longer-lasting boost in well-being than acquiring material possessions.
Authors
Eudaimonic by Design is a global network of consultants, facilitators and systems thinkers who share a passion for the science of well-being and believe that organizations must be designed to enable it. We harness the best of scholarly thought and years of practical experience to help people be truly engaged, act ethically and pursue excellence.
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