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.
There is an old joke that sheds light on the role that money plays in our lives.
How many psychiatrists does it take to change a lightbulb? Only one, but the lightbulb has got to really want to change.
Wellbeing is a term that describes a long form of happiness. Doing something to make you happy is fairly easy. Finding and maintaining wellbeing, however, takes work. We have to want wellbeing.
Money distractions
This might sound, at first glance, rather strange. Why wouldn’t we want wellbeing? Surely, the natural state for any human being is to want to be happy.
While this is undoubtedly true, there are many aspects of modern life which, when combined with our natural behaviours, can distract us from this simple ambition.
Take our inclination towards comparison. This behaviour can be extremely positive in some circumstances. For example, copying others is an essential component of our ability to learn.
When it comes to money, however, we have a tendency to focus more on what others have than what we have ourselves. To quote Theodore Roosevelt: “Comparison is the thief of joy”.
This behaviour often results in our being unhappy. Looking at someone’s perfect lifestyle on social media, for example. We are also very good at ignoring the fact that we all know that the lifestyle being presented isn’t the whole picture!
Then there is advertising that presents beautiful people doing amazing things, which we can only do if we were to buy that particular product. Property programmes and magazine articles, suggesting that somebody else’s house is nicer than ours.
Then there is our difficulty in picturing our future selves. Research1 tells us that we see our future self as a stranger. This is why we are far more likely to spend our money on ourselves now, rather than deferring that enjoyment to a later date.
How to really change
I’m sure we have all, at some point, been on a diet and lost weight, only to put it back on again six months later. Indeed, research suggests that 95% of people on a diet regain the weight they lost within two years.
Changing our habits is very hard to instil. Being determined to change our patterns of spending, or to look at Facebook less often, rarely results in long-term changes in behaviours.
A more effective tactic might be to follow these two simple steps:
- Better understand your future self
- Create a plan to get there.
By bringing the future closer in this way, we are more likely to stick to this plan and create new, more meaningful financial behaviours.
Meet your future self
Understanding what your future might look like is something you can work on with your financial planner. Crucially, it should be a future in which you are happier, not just wealthier.
Try to envisage yourself in, say, 10 years. Where will you be? When you get out of bed and open the curtains, what will you see? What does the day ahead hold for you? Will it be different on a working day from a weekend?
You might ask some bigger questions. What will give meaning and purpose to your life? How will you be spending time with loved ones? Note that your possessions are unlikely to play much of a part in this assessment of your future self, as they do little to add to long-term wellbeing.
It is worth spending some time on this exercise. Once the future is a little clearer, your financial planner can then create that financial plan to help you get there.
Of course, we know that the only thing that is true of any plan is that it will be wrong in some way. The regular meeting with your planner should now focus on whether you wish to make any changes to your desired future and to monitor progress toward achieving it.
Once this plan has given you real clarity over your life, you will likely find that your financial behaviours start to change, because you will really want them to change. You will also find that those distractions become easier to ignore.
1Your Future Self: How to Make Tomorrow Better Today by Hal Hershfield
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.