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Are you a financial well-being junky?
13th November 2024 • Joy At Work • Lucia Knight
00:00:00 00:09:54

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Do you believe that there is a connection between your level of joy and money? 

Many people do, which is why it's so important to take a deeper look at the connection between the two.

Today I’m talking with Chris Budd, author of 'The Financial Wellbeing Book' and co-host of the Financial Wellbeing Podcast to discover how our financial habits influence long-term happiness, the set point theory of well-being, and practical advice on becoming more aware spenders. Chris also sheds light on the concept of 'financial well-being junkies' and offers strategies for achieving sustained happiness through meaningful activities and quality social relationships.


Let’s dive in! 


[01:12] How can we become “better” spenders?

[01:42] Understanding Set Point Theory

[03:00] Financial Wellbeing Junkies

[05:51] Long-Term Wellbeing Strategies

[06:57] The Importance of Social Relationships

[08:33] Balancing Short-Term and Long-Term Spending

[09:29] Conclusion and Additional Resources


Next Steps:

If you enjoyed this, you might also enjoy my Life Satisfaction Assessment. It's a 30-minute program where I guide you through a deep dive into 10 areas of your life to assess what's bringing you joy and what's bringing you down. I call it Derailed and it's a fabulous place to begin a joy-at-work redesign.

Transcripts

Lucia Knight:

Oh boy, I've fallen down some dreary rabbit holes

Lucia Knight:

trying to find our next guest.

Lucia Knight:

Let's just say the world of personal finance isn't chock a block with wise,

Lucia Knight:

self deprecating, music loving, non finger wagging experts who also understand the

Lucia Knight:

psychological connection between money and true happiness, but I find one.

Lucia Knight:

His name is Chris Budd, and he's the author of the financial wellbeing book

Lucia Knight:

and one of the hosts of the rather brilliant financial wellbeing podcast.

Lucia Knight:

In this 10 minute episode, we talk about the set point theory of happiness, how

Lucia Knight:

much impact our financial situation influences our long term happiness and

Lucia Knight:

the idea of financial wellbeing junkies.

Lucia Knight:

Let's dive in.

Lucia Knight:

Chris, our listeners are here to hear about how to build more

Lucia Knight:

joy into their future work.

Lucia Knight:

And one of the areas that comes up when we're talking about this all

Lucia Knight:

the time is financial wellbeing.

Lucia Knight:

And so I was delighted when you said, yes, you'd come on and talk.

Lucia Knight:

So I've got one question that I know will be incredibly useful

Lucia Knight:

to every single listener.

Lucia Knight:

This question is Chris, how can we become better spenders?

Chris Budd:

Lucia, let's define better.

Chris Budd:

I would suggest better is spending within our means, but also spending

Chris Budd:

in a way that increases our wellbeing.

Chris Budd:

To understand that better, therefore we have to understand what makes us happy.

Chris Budd:

Our money should be a tool it tends to instead be an

Chris Budd:

objective or even our master.

Chris Budd:

So to get it back into its proper position, we've got to understand

Chris Budd:

what makes us happy and how can money help or hinder that.

Chris Budd:

And one of the models of this that I really like is called set point theory.

Chris Budd:

Okay.

Chris Budd:

A set point theory says that we arrive in our adult life with a set

Chris Budd:

level of wellbeing that doesn't tend to change as we go through life.

Lucia Knight:

Where does it come from?

Chris Budd:

I come back to that.

Chris Budd:

So you can probably think of somebody who when they walk into the room, just brings

Chris Budd:

joy into the room and lifts the place.

Chris Budd:

You probably think of somebody who just happy being miserable, right?

Chris Budd:

Now that's, but there are people that are like that.

Chris Budd:

And we all have our own set level and we go through life.

Chris Budd:

If we can call that our well being, right?

Chris Budd:

And then we'll call happy and sad.

Chris Budd:

What happens in the short term?

Chris Budd:

If we go above our set level of well being, that's us being happy.

Chris Budd:

If we go below it, that's us being sad.

Chris Budd:

When you're happy, that's nice.

Chris Budd:

You don't do anything, but you just get used to it, and you go back

Chris Budd:

to your set level of well being.

Chris Budd:

And if we get sad, again, you get used to it.

Chris Budd:

And you just go back to your set level.

Chris Budd:

We Oscillate or up and down around our set level of well being, but it

Chris Budd:

doesn't tend to change in the long term now If you're happy, that's great.

Chris Budd:

That's nice You don't want to deliberately push yourself back down to your set

Chris Budd:

level of well being, but if you're sad, that's not so great So we all

Chris Budd:

want to do something to give ourself a little hit of well being to go back

Chris Budd:

up to our set level And what do we do?

Chris Budd:

We buy stuff.

Chris Budd:

There's even a name for it retail therapy, right?

Lucia Knight:

Of it.

Chris Budd:

we buy short term hits of well being in order to

Chris Budd:

keep us up to our set level.

Chris Budd:

I call this that we're all financial well being junkies.

Chris Budd:

That's where I think of it.

Chris Budd:

Buying short term hits of happiness because life can

Chris Budd:

throw a lot of rubbish at us.

Chris Budd:

So we want to do stuff to give us that short term hit to

Chris Budd:

keep us up to our set level.

Chris Budd:

But there's other ways that you can get that set level.

Chris Budd:

You can speak to a loved one, have a hug, go out for a walk, get some fresh air.

Chris Budd:

Do some exersise.

Chris Budd:

There's lots of ways of getting that hit that doesn't involve spending money.

Chris Budd:

Now I'm not saying that retail therapy is necessarily bad, but if you're

Chris Budd:

spending money on stuff that you can't afford to quote, somebody famous buying

Chris Budd:

stuff, you can't afford to impress people you don't like, then it's

Chris Budd:

not giving you longterm wellbeing.

Chris Budd:

So we're all financial wellbeing junkies spending money that we don't need.

Chris Budd:

And if we're more aware of that the next time we go to buy something, Just

Chris Budd:

ask ourselves, do I actually want this?

Chris Budd:

Maybe use the one hour rule, just go out for a walk, walk around if it's online,

Chris Budd:

especially walk away from the phone, put it down, come back to it and go, is

Chris Budd:

this actually something I really want?

Chris Budd:

Or am I just giving myself that short term hit of wellbeing?

Lucia Knight:

I'm fascinated by this set point idea.

Lucia Knight:

And I wonder, do you think we're just born with this set point?

Lucia Knight:

Or do you think it's created somehow through nurture?

Chris Budd:

So the research says this is where it gets really interesting.

Chris Budd:

The research says that it comes from several different sources.

Chris Budd:

Most of it probably at least half of it is inherited.

Chris Budd:

You're just born with it.

Chris Budd:

How happy you are is in your DNA, which is pretty wild when you think about it.

Chris Budd:

10%.

Chris Budd:

This is all from a lady called Sonya Labomirsky in America.

Chris Budd:

It's her always make sure I reference who I'm talking about.

Chris Budd:

So this was her studies that showed that 10% comes from our circumstances.

Chris Budd:

So what we say, what we do how much money we have, where we live, what jobs

Chris Budd:

we're doing, that's our circumstances.

Chris Budd:

And only 10 percent of our long term well being comes from there.

Chris Budd:

So it leaves 40% And the remainder comes from our, what she calls our

Chris Budd:

intentional activity, how we act with money, our relationship with

Chris Budd:

money, our financial wellbeing.

Chris Budd:

So if you've got a financial education program that's teaching people how

Chris Budd:

to be better with budgeting and how to manage debt how to create savings

Chris Budd:

plans, you're only looking at 10 percent of their longterm wellbeing.

Chris Budd:

What we also need to be doing is explaining stuff like the financial

Chris Budd:

well being junkies model to help us understand our relationship with money

Chris Budd:

and how actually maybe it's not helping us make better decisions because

Chris Budd:

those decisions are just give you a very short term hits of well being.

Lucia Knight:

So how do we focus on longer term nuggets of well being

Lucia Knight:

then, if we minimize this sort of short term spending, what do we do instead?

Lucia Knight:

Okay.

Chris Budd:

Long term sources of well-being come from two man areas.

Chris Budd:

There was a fasinating study on happiness that's ongoing.

Chris Budd:

Harvard University, which you can just, if you just Google

Chris Budd:

Harvard study on happiness.

Chris Budd:

You'll see a brilliant 50 minute Ted talk all about this.

Chris Budd:

And they, I said, you don't need to, I'm going to tell you what it said.

Chris Budd:

So what they did is they asked a whole load of young people what

Chris Budd:

they thought was going to make them happy as I go through life.

Chris Budd:

And overwhelmingly they said money.

Chris Budd:

and fame.

Chris Budd:

They then went back every couple of years and they asked them, Are you happy?

Chris Budd:

And what is making you happy?

Chris Budd:

What's contributing?

Chris Budd:

And they've been doing this now for some 80 or so years.

Chris Budd:

And what they've discovered is that the main sources of well being

Chris Budd:

were not actually fame or money.

Chris Budd:

In fact, people who were famous were no happier or unhappy than Those who

Chris Budd:

weren't famous, and likewise for those that were rich, were no happier or

Chris Budd:

unhappier than those who weren't rich.

Chris Budd:

The main source was the quality of our social relationship.

Chris Budd:

if you get a hug from a loved one, you're going to feel better.

Chris Budd:

That is true of everybody.

Chris Budd:

We should put some work into maintaining our quality social relationships.

Chris Budd:

The second area is having something purposeful in our lives.

Chris Budd:

So if we are doing something that, it doesn't mean that you've got to spend

Chris Budd:

your time being Buddhist or Mother Teresa or what have you, but something

Chris Budd:

that gives you some meaning and purpose, some connection to other people, seeing

Chris Budd:

some impact of what you're doing being able to have competency in that thing.

Chris Budd:

This is a theory called self determination theory from psychology.

Chris Budd:

If you have those three things in place, you'll be motivated.

Chris Budd:

And if those three things align with your values, with what the thing that

Chris Budd:

you're doing, that will give you meaning.

Chris Budd:

And purpose.

Chris Budd:

Hey, presto, we have long term well being, but it takes work.

Chris Budd:

It takes this intentional activity.

Chris Budd:

We've got to actually spend time making sure we're doing these things,

Chris Budd:

finding that meaning and purpose that could just be helping out at a local,

Chris Budd:

when your kids go and play football or rugby or cricket or whatever it might

Chris Budd:

be, or tennis, maybe get involved.

Chris Budd:

Whether it's making the tea or becoming a coach or being a

Chris Budd:

helper, just getting involved.

Chris Budd:

That will give so much long term wellbeing compared to sitting on the

Chris Budd:

sides, watching and probably complaining that the coaches aren't very good.

Lucia Knight:

Yeah, which happens a lot.

Lucia Knight:

And that's in comparison to say, sitting on the sofa or lying in bed, buying

Lucia Knight:

something that you don't need, are totally polar opposites, aren't they?

Chris Budd:

they are.

Chris Budd:

But I've always wanted to just be very careful here, especially because

Chris Budd:

I've just come back from Bristol where I bought some records right now.

Chris Budd:

I love my music.

Chris Budd:

I've got so much music on a hard drive that if you played every track one

Chris Budd:

after the other on that hard drive.

Chris Budd:

24 hours a day, it would take 137 years to play all the music I own, right?

Lucia Knight:

But you still bought some more?

Chris Budd:

And I still bought some more and you know what I can

Chris Budd:

afford to buy a couple of records.

Chris Budd:

It's okay So a little bit of that financial well being junkie stuff It's

Chris Budd:

all right As long as it's not causing you financial difficulties and as

Chris Budd:

long as you're still on track for your longer term financial objectives so Do

Chris Budd:

a bit of financial planning, whether you can afford to pay for it or you

Chris Budd:

can just do some simple stuff yourself.

Chris Budd:

My financial well being book has got a model for how you can do that.

Chris Budd:

Make sure you're roughly on track, make sure you can afford what

Chris Budd:

you're spending, but yeah, it's okay to have some stuff sometimes.

Chris Budd:

Let's not be too miserable about this.

Lucia Knight:

So a little bit of junkie behaviour is

Chris Budd:

Yes, Yes,

Chris Budd:

if you enjoyed this, you might also enjoy my Life Satisfaction Assessment.

Chris Budd:

It's a 30 minute program where I guide you through a deep dive into 10 areas

Chris Budd:

of your life to assess what's bringing you joy and what's bringing you down.

Chris Budd:

I call it D Railed.

Chris Budd:

It's a fabulous place to begin a joy at work redesign.

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