This guest blog was written by Chris Budd who wrote the original Financial Wellbeing Book, and also 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.
Our approach to money can be a great enabler of wellbeing. It can help us to spend our time doing the things we want to do. However, it can also act as a barrier.
Money should be our servant, but it often acts as our master. Understanding this aspect of our relationship with money, and where it acts against our wellbeing, can allow us to create a financial plan that will help us to be happier, not just wealthier.
There has been a lot of research over the centuries – and religious and philosophical teaching over millennia – about the sources of wellbeing in life. Financial wellbeing is firstly about understanding some of what has been learnt over the centuries. It is then about applying those principles to our own lives, a process we might call “know thyself”.
In this piece, we will look at some of what we have learnt about how money can sometimes get in the way of our wellbeing.
Comparison is the thief of joy
The comparison theory of happiness suggests that if you compare yourself with your peers, then this will either make you happy or unhappy, depending on whether you are better or worse off than them.
This can have a significant impact on our self-regard. Research shows that comparing ourselves with someone worse off can increase self-regard. It also helps to appreciate what we do have as we see people less fortunate than ourselves.
However, comparing ourselves with someone wealthier than us reduces our self-regard. It can also drive spending that doesn’t add to our wellbeing, and slows down progress towards achieving our financial goals.
Society encourages us to compare upwards. We tend to present the very best of ourselves on social media, for example. When we compare upwards, we are often comparing ourselves with people who appear to be happier and more successful than perhaps they really are.
What is success?
Your definition of success may be a significant factor in your wellbeing. We are surrounded by images of success, and they invariably involve money and fame.
To see success in such terms is not conducive to wellbeing. A materialistic, or extrinsic, purpose, such as owning expensive things, relies on the approval of others. Achieving such a goal will only bring wellbeing as long as it is being noticed.
If you have a purpose or objective that is meaningful to you – known as an “intrinsic purpose” – then achieving this will give fulfilment and wellbeing.
“Know thyself” is about understanding what makes you happy, and what success means for you. Having clarity over your future, and a financial plan to get you there, will make a significant contribution to your wellbeing.
Your money stories
We all have our own view of money. Think of the many phrases about money:
- Money makes the world go around
- Money doesn’t grow on trees
- Can’t buy me love
- Time is money.
Many of these phrases contradict each other. What phrases come into your mind when you think about money? For example, is it: “I’m not very good with money”.
It is worth taking some time to understand your own money stories, and asking yourself whether they are leading to you making good decisions. Perhaps discuss this with your financial adviser.
Conclusion
As we travel down life’s stony road, it can be hard enough just concentrating on the day-to-day. Taking a step back to “know thyself” is often a luxury many of us cannot afford.
This is why the role of a financial adviser is so important. It gives us time and space to think about what a happy future might look like – and then to create a financial plan for how to get there.
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.
