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.
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.