This guest blog was written by Chris Budd, who wrote the original Financial Wellbeing Book as well as The Four Cornerstones of Financial Wellbeing. He founded the Institute for Financial Wellbeing and has written more than 100 episodes of the Financial Wellbeing Podcast.

This is an extract from Chris Budd’s book The Four Cornerstones of Financial Wellbeing.

I would suggest that there are three steps to creating a financial wellbeing plan.

Firstly, we need to start with step two.

Starting at the beginning is not always the right answer. By focusing on the beginning, there is the danger that we are unable to clearly see the destination. Unable to see the point, we don’t bother to start at all. Let’s, therefore, start by looking at step two.

Step 2: Understand that happiness comes from within

If we obtain our joy, our self-worth, from external sources – perhaps fame, possessions, or status – then we find ourselves on a treadmill of trying to please other people. We might succeed in achieving happiness. However, it will be temporary, only there as long as others bestow it upon us. We can become stressed and worn out trying to please others.

If, however, we find our joy, our self-worth, from within, from living a life with meaning and purpose, then this will provide much deeper and satisfying wellbeing. This also happens to be good for our bodies, a healthier way of living.

Which leads to the question: If we get external self-worth from others, how do we develop self-worth from within? The answer to this forms step three.

Step 3: Be compassionate

A wonderful expression of this principle is what the Dalai Lama calls having a warm heart. Compassion, a focus on helping and being kind to others, will develop our internal joy and sense of self-worth.

What might be stopping us from getting to steps two and three? One reason is that we are taught from a young age to strive, work hard, achieve, and aim for financial rewards. Images of success invariably involve wealth or possessions. Pathways to success are always upwards, and achievement is depicted as standing at the top. Success is always somewhere different, and it is invariably someone else.

As a result of this emphasis on material possessions as success, we don’t have the space in our heads to actively develop our internal self-worth.

In my career in financial planning, I’ve noticed that when a person reaches financial security, the most common next step is to consider how they can help others. They ‘send the lift back down’. This might take the form of charity roles, mentoring, coaching, philanthropy, or investing in start-up businesses.

Which begs the question: why have they not made this a focus of their lives before? The answer is because they have been busy trying to achieve financial security. They have been unable to see the destination.

Now that we can see the destination, we can come back around to step one.

Step 1: Create a financial wellbeing plan for a happy future

There is something blocking our view in steps two and three. And that thing is: money – thinking that financial independence comes from the accumulation of wealth. If we become more aware of what makes us happy, we will find that financial independence moves nearer to where we currently are!

We need to be able to look past step one, the financial plan, to see what is in store in steps two and three. We need to see the destination. Only then will we have the inspiration to embark on step one.

This means that we need to:

• Put some thought into our own individual definitions for success;

This requires us to:

• Understand the factors that work against a healthy relationship with money;

In addition, we’re going to need to:

• Understand what brings happiness, and what brings wellbeing;

It would also be helpful if we could:

• Identify the distractions and barriers that stop us from achieving wellbeing.

Only then are we likely to change the focus from external to internal self-worth. With this insight, we can create a financial wellbeing plan which is unique to each of us.

Please note: This blog is for general information only and does not constitute financial advice, which should be based on your individual circumstances. The information is aimed at retail clients only.