Beth and I recently attended the Financial Planning Association conference and learned more about the research of Positive Psychology and its applications to financial planning.
We learned about “Wellbeing Theory” which states that wellbeing and happiness are a function of five core elements (PERMA):
5. AccomplishmentIt is believed that these five elements can help people achieve a life of fulfillment, happiness, and meaning. How does this relate to money? Well, you can promote greater wellbeing by aligning your spending with these 5 elements. The idea is that “if money doesn’t make you happy then you probably aren’t spending it right.” (Dunn, Gilbert, and Wilson, 2011).
Discretionary spending priorities that promote wellbeing include:
- Buy more experiences than things.
- Spend money on others.
- Buy many small pleasures versus a few large ones.
- Delay consumption, buy it now and consume it later.
- Be cautious of comparison shopping
- Pay close attention to the happiness of others.
Of course, it is not just about how you spend. You can do a lot to foster wellbeing without spending a dime. Enjoying the outdoors, reading a favorite book, spending more face to face time with friends, and volunteering are all free.
Here are two exercises you can do if you would like to promote more wellbeing in your own life. Research has shown that they increase happiness levels over time:
Exercise 1: What Went Well
For one week write down 3 things that went well every day and why they went well.
This exercise is especially useful for major life transitions and when you are trying to change your behavior.
Exercise 2: Gratitude Visit
- Select an individual who has positively contributed to your life and write a brief but specific letter to that person.
- Arrange a meeting with that person and have a conversation with that person about this topic.
- Then read the letter to them.
This exercise is especially useful for promoting positive relationships across multiple generations.
If this topic intrigues you, go to the University of Pennsylvania’s website on Positive Psychology: www.authentichappiness.sas.upenn.edu for more information!
Carolyn Nunez, CFP® and Beth Remick, CFP®