Financial Steps Proven To Improve Your State Of Mind
Financial Steps Proven To Improve Your State Of Mind
Mood Follows Action By Jacob Schroeder Feb 18
What if we have the psychology of money backward? Psychological research from the likes of various Nobel Prize winners has shown how emotions shape our financial behaviors, which has turned our focus toward changing the way we think to make better financial decisions. But the truth may be that changing our mental state starts with changing our actions. Perhaps, money can’t exactly buy happiness, but the way we use it can indeed improve our emotional well-being.
Watch sports on any given night and you’ll hear commentators spew an assortment of cliches to explain the outcome of a game: “They were more motivated.” “They had more passion.” And, my personal favorite: “They wanted it more.” Whatever “it” is.
While such talk can make for a good story, it’s a whole lot of journalistic B.S. As if championships are won on feelings. Athletes don’t play better because they spend more time happily thinking about winning than their opponents. Moods matter; actions matter more.
Yet, we often put the emphasis on our feelings. If only I had the motivation, I’d exercise more. If only I felt inspired, I’d write that novel. If I were more driven, my business idea would take off.
Certainly, mentality plays a role in all we do. Except we can’t control our thoughts or emotions as well as we like to think. For example, do not, I repeat, do not think of the number 23. See what I mean?
We have the calculus all wrong. It’s our actions that shape our emotions. As endurance athlete and wellness advocate Rich Roll puts it: Mood follows action. This maxim was supported by neuroscientist Andrew Huberman, who told Rich Roll on his podcast:
“Our feelings and our thoughts and our memories and all that is very complicated. But our behaviors are very concrete and they are the control panel for the rest of it… when it comes to wanting to shift the way that you function, to get better or to perform better, or to show up better, or to move away from things like addictive behaviors, it’s absolutely foolish for any of us to think that we can do that by changing our thoughts first. It’s behavior first, thoughts, feelings and perceptions follow.”
It works in sports. After making the varsity basketball team, Michael Jordan didn’t set out to prove everyone wrong by thinking of himself as the greatest of all time. Hundreds of practice shots each day convinced him that he was the greatest.
It works in art. What separates successful writers apart isn’t so much a deeper well of creativity but rather consistency. They show up to work whether inspiration strikes or not. As E.B. White said: “A writer who waits for ideal conditions under which to work will die without putting a word on paper.”
And, it works with money. Warren Buffett doesn’t simply wake up with more knowledge about businesses and markets than yesterday. He goes to bed with more knowledge about businesses and markets than yesterday after having read around 500 pages over six hours.
Thanks to the field of behavioral economics, we know certain mental errors, from confirmation bias to the Dunning-Kruger effect, can cause us to make choices that are not in our best interest. However, many proposed solutions focus on the futile task of changing the way we think. Don’t panic! Think long term! Ignore the noise!
Instead, studies show that the actions we take with money are what ultimately shape our feelings about money. Here are some financial actions that can improve your financial state of mind – and even your overall well-being.
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