In this post I have two questions for you.
The first is … How are you at managing your finances?
The second is… What impact is your financial management having on you living a happy, flourishing and prosperous life?
There’s a long-held piece of wisdom that says the secret to financial success is to spend less than you earn. And while I still reckon that’s at the very least, a good start, it is no way sufficient.
The pursuit of a happy, flourishing and prosperous life takes serious thinking and intentional action – it’s not just about your feelings and emotions, it’s about intentionally impacting every aspect of your lifestyle.
If we use the research findings of the founder of Positive Psychology, Martin Seligman’s five elements of wellbeing, we can look at how our financial management is impacting not only our positive emotions, but also our engagement in our various life roles, our relationships, our sense of meaning and our sense of achievement.
Ask a professional financial adviser and they will advise you that you first need to clearly define your current and desired-future lifestyle, because unless you understand your lifestyle goals (what you want to be doing and having and enjoying in your current and future life), you will find it difficult to be able to practically identify the financial costs of funding your current and future lifestyle.
The first two inescapable truths for a prosperous life outlined in the Intentionomics Blueprint of 9 Inescapable Truths, starts with the need to define a prosperous life for you, and then to take stock of your truth about you.
I’ve shared the Intentionomics Blueprint with many financial advisers, and that’s exactly what they recommend from a financial and lifestyle viewpoint as well. First work out what you want in life (not just what money can buy, but also what money can’t buy) and then take stock of where you are in relation to your current and future lifestyle goals.
I read an article earlier in the week written by Mandi Woodruf in Business Insider which listed 9 Psychological Reasons Why Smart People Do Dumb Things With Money (read the full article here). The author talks about (1) Anchoring (2) Myopia (3) Gambler’s Fallacy (4) Avoidance (5) Confirmation Bias (6) Loss Aversion (7) Overconfident Investing (8) Mental Accounting and (9) Herd Mentality.
All of these reasons (and for many others as well) are why I recommend, if you haven’t already done so, seek out and work with a professional financial adviser.
Liz and I would not have the lifestyle opportunities we now have without trusting in and following the advice of our financial adviser over the past two decades. While we are experts in how we want to live our lives, our financial adviser is an expert in how to create a financial plan that will give us the best opportunity to achieve our lifestyle goals… including holding us accountable for the simple things like continuing to spend less than we earn and keeping focused on our lifestyle goals.
In a book I highly recommend by Prof Elizabeth Dunn and Prof Michael Norton ‘Happy Money’ they write; “By focusing on how to spend the money you have rather than how to accumulate more of it, our perspective departs from the obsession with chasing increased wealth in the pursuit of happiness. New research shows that greater wealth often fails to provide as much happiness as many people expect.”
That’s not to say we ought not be pursuing increased wealth. What the research is saying is, unless you’re clear on what will, in reality, make you happy, flourish and prosperous, the pursuit of more income or greater wealth is an aim without a reason or context.
And without context there is no meaning… and remember, having a clear sense of meaning is one of the five elements that significantly impacts our overall sense of wellbeing, and helps us to live more happy, flourishing and prosperous lives.
The real value of a financial adviser paradoxically isn’t in their financial advice. While their financial advice is important, it’s in their professional approach to helping you gain clarity around your lifestyle goals and then how to implement a financial plan to fund that lifestyle and of equal importance, to protect what you have now and in the future.
Happy saving and spending!