Join Klaudia in this thought-provoking episode as she unravels the intricate relationship between money and happiness. 

Helping me with this topic is Peter Komolafe, who is a Financial Coach & Speaker, the author of the book “The Money Basics.”

Whether you're striving for financial success or seeking contentment beyond material wealth, this episode sheds light on the nuanced ways in which money impacts our overall satisfaction with life.

Tune in and embark on a journey creating more financial wellbeing.

Klaudia Mitura: Hello, happiness seekers. Welcome to The Happiness Challenge Podcast. I'm Klaudia Mitura and I'm on a mission to explore the best happiness habits that science has to offer. Like so many others, the pandemic cut me off from my family and work. So I decided to use my training as a psychologist to discover what science can tell us about the art of happiness.

What I found set me on the path to joy. And now I'm ready to share my journey with you. Each month I'm publishing three linked episodes where I'm speaking to a leading expert, putting their tips to the test and sharing my findings and feelings. From mindfulness to exercise and random acts of kindness, I'll be shining a light on the simple happiness habits that can bring more joy to our lives.

So join me as I embark on my challenge and together, we can become more successful, resilient, and happy.

Hello, happiness seekers. Welcome to this month's happiness challenge, where I'll be exploring how much money makes us happy. And helping me with this topic is Peter Komolafe, who is a financial coach and speaker, the author of an excellent book, The Money Basics. And Peter is going to introduce us to the relationship between money and happiness, and also share some practical tips for creating more financial wellbeing.

Welcome Peter

Peter Komolafe: Hey, well, thank you so much for having me and the pronunciation of my surname is actually Almost spot on in the Nigerian, almost. It's the E at the end, the inflection on the E very, very good.

Klaudia Mitura: Brilliant. Thank you, Peter. So we are meeting for an amazing topic and what a topic, because I think on one hand, we often hear that money can't buy happiness, but on the other hand, we sadly may know from experience that, well, it's bloody difficult to be happy when we are experiencing high financial stress.

So my first question to you is what are the common misconceptions about money and happiness that we should be aware of?

Peter Komolafe: Really good question to actually open up with. I think the biggest misconception is actually the question that money equals happiness. I think it really is dependent on your background and where you come from.

But I've certainly seen from my own personal experience from working with clients and actually I did a talk about a month ago at a corporate event, and one of the other speakers was Catherine Ryan, the comedian. And I asked her whether, she thought money equalled happiness. And she said money buys freedom, gives you freedom.

And I think that's the main thing that I think people need to acknowledge saying that money equals happiness infers that there is so much more that money can substitute in your personal life and the way you see the world. And I don't think that's necessarily true. I believe that money provides you the ability to have the freedom of choice.

So my book is all about how you become your own financial hero. And the idea behind being your own financial hero is being able to make choices, life choices out of freedom. In opposed to necessity. And I think that's the vast difference. There is no doubt that if you have money, it will allow you to do certain things and will afford you certain things.

Absolutely. But that doesn't necessarily fill the void that a lot of people fill when personally, they don't feel fulfilled in what they're doing, or they find that money is actually problematic to them because actually that does happen. And I've seen a number of times people who have a lot of money and it's problematic because there's a level of expectancy from family members, from friends, and that in itself can cause a real conflict.

Klaudia Mitura: Brilliant. So quite interesting then straight away we're challenging our assumptions. I like this conversation so far in that sense because we straight away thinking, yes, don't think money, happiness, as you say, think about money and freedom, that money giving us access to maybe certain opportunities is allowing to have certain experiences, which maybe bring happiness, but it's not necessary a direct link.

Amazing. And now, when it comes to our financial stress what role does it play in our wellbeing if we are under that financial stress? And if we are in those situations, how can we reduce it?

Peter Komolafe: Right. Okay. So look, if we take the example of the last maybe two or three years, cost of living crisis. This year, specifically, we've seen interest rate rises, which meant that mortgages, rents have gone up compounded the way people feel about their financial situation, particularly if they're in an environment where they don't necessarily have any disposable income.

Statistics tell us at the moment that there's less than 1 in 4 of us that have £100 in emergency fund and that leads people to using debt. So there is a very, very clear link between anxiety, depression, stress, and poor finances. So if you don't have positive financial habits, there is that clear link between them.

And I think for a lot of people that I kind of work with, or people that I speak to on a day-to-day basis, you can't really get away from that. It's like, things are tough right now. The squeeze is really, really on, but in terms of something practical that you can do. It depends on where you are, but I always go back to the basics really, which is first and foremost, trying to really understand the financial structures that you're working with.

So your finances, how much you have coming in, how much do you have going out? And it will sound boring because it's budgeting that we're effectively referring to here. I truly believe, and I would take myself as being someone who has pretty good financial control, but even when I sit down with my budget and I write everything that I've got coming in, everything that's going out, I will always find something that I'm like, did I really spend that much money on this?

I'll give you a prime example. This past month, because I've been so busy, I had a look at this the other day, Deliveroo, and I was shocked. Absolutely shocked. And I think being proactive and actually being honest with yourself to say, actually, maybe I'm spending a little bit too much money on this, or do I really need this?

That's the first port of call really, because if you are under financial pressure, it is all about trying to minimize the stuff that you have going out and it might mean sacrifices to a certain extent, they will be short lived sacrifices, and I think people often forget that.

Klaudia Mitura: Yes, absolutely. And I think again, it's as you said, it's a basic, but sometimes we avoid that, isn't it?

It's like, we not necessarily want to know how much we spent on Uber and coffees and Deliveroo. And maybe we just need to think about that, but I guess when we planning and budgeting, it's also really important to have that financial goal in mind now, like understand what are we aiming for, I guess, when we use, I sometimes find when people use those concepts like wealthy, rich comfortable, like what do they mean in terms of numbers?

Peter Komolafe: Right. Okay. I love this. Okay. So this, I love talking about this. I had a coaching call this morning with someone and the question was, so he's been lucky enough to inherit some money, and he's been wanting to get on the property ladder. This isn't the first coaching call I had with him and in the previous one He said that there might be some money coming to me and the question that he had was I have x amount in inheritance coming to me.

I want to get on the property ladder Do I take a mortgage or I buy this property outright and I’m like, okay so there are mathematical answers that I can give you In terms of, well, you could invest the money and the money could do this, or you could do X, Y, Z. I asked him, what do you want your next 10, 15 years to be?

Do you want to have a mortgage? And he's lucky enough to buy a place with no mortgage whatsoever. What's going to make you feel more secure? And I think in today's society, where there is so much emphasis about rich, wealthy, earning so much money. We completely lose sight of what really matters. What is it that we actually want?

And because you're freelance, your income is sporadic. You have the opportunity, lucky him, by the way, to purchase a house in one of the most desired cities in the world and be mortgage free in your early thirties. Like, what do you want? Think about that. And in the end, at the end of the call, he was like, I can see financial freedom because that's what it is.

That's what he will get. And I said to him, you know, you're not going to have the burden, you know, rent mortgages are people's biggest burden. You're not going to have that. It would allow you to operate from a space that is more of a relaxed mindset where you can pursue the things that you want to do.

If you want to scale your business, you can, if you want to, you know, step back and maybe travel a little bit, you can make choices out of freedom at that point. And I think that's what we often miss in society. What do we want? My saying is money is a tool. Life is for living. How does money help you create the world, the life that you want?

Because really that's what it's all about. Not the numbers, not what people are saying on social media. What do you want? And keying into that is crucial.

Klaudia Mitura: Okay. Very interesting. So really understanding and having that vision. And I guess sometimes we have to go on journey, like your client, to really even stop and reflect and really think about, okay, what do we want? Because we have all those different messages, as you say, from society, pressures from family, friends, obligations, there is just so much. And I guess that what we want will also be very important, I guess, in those daily choices that we make.

Because I often have this pressure between now versus future me. Yeah. So often very much thinking how to balance the fact that yes, I want to enjoy life. And for me, one of the enjoyments of life is that I love to travel. But on another hand, of course, we have a long-term financial planning. So how do we balance those two?

Present versus future which sometimes feels like it is conflicting.

Peter Komolafe: Yes. And yes, it is. It can be a conflict, but it doesn't have to be. All right. So this is the exercise that I would give you, right, and anyone who's listening to this. When I was advising, what we would often do with clients is we would do a timeline exercise and a timeline exercise simply ask you to think, draw, you know on a piece of paper, just a line going straight across.

And you think, right, 12 months, three months, I don't know, 50 months, three years into the future. And you put four boxes. So in those four boxes, you might have something like career, business. You might have health, you might have other personal goals, but you would either have up to four key areas. And in each of those four key areas, if you've chosen two years into the future, there's 24 months, you would write down and document what your goals are, right? So for many people, for you, it might be travel and it's okay to say, I want to travel more, but be really specific around your travel. So where do you want to go? Where do you want to stay? What kind of flights do you want to take? Are you staying there for two weeks?

Are you staying there for much longer? What is it exactly that you want to do? Because by having that granular detail, you're able to dill down into how much it's actually going to cost you, monetary wise. And the idea is when you do this timeline, it gives you a very, very clear idea of the financial aspect of what you want to do. And it allows you to plan ahead of time. Now, if you do a timeline, for example, and you zoom out maybe 10 years, and one of the big goals that you want to achieve is I want to purchase my first home and you work out right property values currently, what your deposit rate might be, you've got all of that in your visual spectrum.

And if traveling is still part of your thing that you want to do you plan accordingly but knowing that I do have a long-term goal over here. So it may be a sacrifice of saying, Klaudia, you might normally want to take three or four holidays a year, but actually in aid of you being able to save for your house deposit, maybe you take three in opposed to the four and the money from the fourth one goes towards your house deposit, but allows you to plan financially. And I think having a clear line of sight when it comes to your goals, allows you to properly plan from a financial point of view towards those things that you enjoy in life or the things that you want to achieve as well.

Klaudia Mitura: Okay. So my dear listeners, that's what we exactly going to be doing then. We'll be doing some financial planning. And as you said, very clear kind of timelining, dream line almost. So that's, it's very much understanding and having this clarity. Okay. This is what I want. How do I maybe have to adjust that?

And yeah, very interesting because we make those choices daily. Isn't it? Do I spend on this? Do I spend on something else? And really, I think that could, could definitely help. So thank you, Peter.

Peter Komolafe: The choices become easier to make when you know what you're planning towards. So you will instinctively know what you need to cut back on because importantly you are making that sacrifice for a reason that you know is your aspiration, your goal, that is something that is going to benefit and enrich you. So those momentary sacrifices that might seem painful in the moment become inconsequential because you're working towards something so much bigger.

Klaudia Mitura: Yes. And I can really imagine that reward and almost like, I would say connect with my future self being happy that the past self actually made the right choices, which is so important.

Great. So I guess my question also is about mindset, how our mindset influences our relationship with money, because I guess through our lived experiences, we'll have different approach towards money. And how that influences our behaviours towards money and therefore happiness.

Peter Komolafe: There is a piece of research that I quote in my book, and it states that our financial habits are locked in at age seven.

And that is a by-product of the things that you observe. And I speak to parents about this all the time. So if you have kids who are going to school, and they may notice that their mate has better trainers, and they start asking you questions. Those are subtle things that basically embed a financial belief, a financial belief system that can later on come and impact us in life.

And I talk about this in my book. I talk about my very first memory of money. And that was when I was being fostered my next-door neighbour, at dinner, his kitchen smell amazing. And that's because he was having, you know, lamb chops and all kinds of stuff for dinner. I looked at our dinner table, we're having, you know, beans on toast and fish fingers.

And I was maybe six or so years old at that point in time. But I remember thinking, oh, Glen can afford better dinners than we can. And what that did is it embedded a scarcity mindset. Now at six and seven years old, that's not necessarily a problem. But when you become an adult, that becomes problematic.

And for me, it meant that when I started working in Canary Wharf and I started doing really, really well, because I had a scarcity mindset, like money isn't abundant. So now that I have a bit of money, I should go and enjoy those things that I haven't been able to enjoy growing up. It meant that I spent without even thinking. And so financial habits are embedded to our belief system. And that in itself can impact that comes from our mindset essentially. So it's really what I typically ask people to do is ask yourself what your first memory of money was. What was the first thing where you connected the dots and it had a financial implication or a realization that you can think of, and then try and figure out within the relationship that you have with money, be it the way you spend or the how you feel about money, what might that have done to influence it?

And you'll start to get a better understanding of maybe some of the delinquencies that you maybe manifest when it comes to your financials, where it all comes from.

Klaudia Mitura: Okay, we're going deep now. We're going deep into those reflections. As you say, first memories around money, really, really interesting. And I guess if we identify all of this, and I definitely also have a scarcity mindset towards money.

Again, my first memories were definitely around that money is something that you worry about and there is never enough money and therefore we cannot afford certain things. And I can definitely say that even as a working adult and being comfortable with money and growing my financial planning and financial skills, I never really feel I have enough money and it doesn't really matter how much I earn just because of this idea that you just don't have enough money. So I found that really fascinating. And if we decide, okay, I want to change this. Okay. I want to change that mindset. I want to change maybe some of the habits I have.

Where do we start?

Peter Komolafe: Right. So it's really important to understand how your beliefs manifest. So for me, it was all about exuberant spending, buying the things I never felt that I had. Right. For some people, and this may be you, Klaudia, it may be that you hoard things, so you don't spend the money.

Because you want to make sure that you've got enough because you're never going to have enough. So you hoard the money as much as you, as you possibly can. I've gone, I've gone three, six, I've gone one 80. I went from impulsive spending to kind of having more money than I need in an account at any given time.

And. It's important to understand where it comes from and why that comes from. And we talked about timeline planning as well. Right? So think about, right, what is it that you actually want to achieve and what kind of person do you want to be? How do you want to think about money? We all experienced something called cognitive dissonance, which is, we all know that we want to be doing this, but there's this blockage that prevents us from doing it.

That can be hard to kind of combat, but the first thing is identifying how do you want to perceive money? Do you want to have more of an abundance mindset and exploring, right? What are the blockers between here and there? Because if it is a case of, okay, you want to have an abundance mindset Well, what does that actually mean?

How do people with an abundance mindset see things? Do they go out spending money? Because obviously there's lots of money. They could, or does it mean that actually on your journey, an abundance mindset means that you want to use the money that you're currently hoarding to generate more money for future security, right?

You need to identify what that might actually mean, and then try and explore very, very slowly and in your own time, the steps that you need to take to get there. And you know, on that journey in those, taking those steps, there'll be education and it's just about seeking out information as well and trying to practically implement some of the things that you'll find.

Klaudia Mitura: Yes. That education, isn't it? Like I often say, oh, I wish if I had known that when I was in my twenties or when I was a teenager, but again we need to jump on that financial education as quickly as possible. So that yeah, we have that information, and we have that skill set then to make those choices, which is fascinating.

And now you're saying that all of our kind of financial habits are locked by age seven. That's just terrifying.

Peter Komolafe: Yeah, it is pretty scary. I mean, it's not to say that you can't undo it. You can, but it just takes work. I mean, me personally, I had to identify, you know, why am I spending money in the way that I do?

Like, this is absolutely crazy. Like I don't own anything. I'm just spending money on things to make myself feel good and look good, but I had no tangible assets to show for it and. For me, I had to identify, okay, what are the triggers to me spending? If I went to certain places, if I was around certain people, if I had a particularly stressful month, where it was bonus month, I knew what my triggers were, and then what I did is put things in place to stop me from spending.

So for example, Selfridges was my downfall. If I went into Selfridges because I'm an impulsive spender, if I see something, I have to buy it. And one of the interventions I put in place was, right, I'm going around Selfridges if I end up in Selfridges. I don't have my bank cards with me I have a small bit of cash. So I’m not necessarily going cold turkey.

I can still buy something if I want to but because I’ve only got a little bit of cash, I’m limited on what I can buy so I still get a little bit of a boost because I make myself feel better, but not at the scale that I would do where I'd just go crazy. And I bought a thousand-pound pair of trainers once.

It's absolutely mad, you know, so it's little things like that. It will allow you, if you know what your triggers are, you can put interventions that will actually work. And over the course of years, you'll quickly find that actually your dependence on those kinds of, you will change habits, your habits will just change altogether. Your mindset will change, but it takes time, and it takes intention.

Klaudia Mitura: Yeah, and it's a definitely very interesting journey to go on. So fascinating, isn't it? We kind of think about money that, well, we should know how to use money, we use it every day, but actually we have so much work that we need to do in order to be actually happy.

Happy with in life with money. Brilliant, Peter, that has been absolutely amazing. I've learned so much about myself and I'm going to be applying lots of different hacks that you have mentioned in this episode. So my final question to you, because this is a show about happiness is what makes you happy?

Peter Komolafe: What makes me happy? Ooh, okay. Personally travel makes me happy. I don't get to do enough of it if I’m completely honest. I think all of us have this imbalance between work and life. And for a lot of us, work dictates a lot of life. Professionally, what makes me the most happy is when I get messages from people saying your book has helped me or your content on your podcast, or you use your channel has helped me.

I've just bought my first home, or I've cleared my debt. Those are the moments that make all of the hard work and the stress that I go through worthwhile. And that's the biggest thing that makes me happy. It verifies and validates my sacrifice and my purpose, I would say.

Klaudia Mitura: Yeah, that positive impact that we are changing the world for the better. We are making that small bet. No, that's fantastic. Thank you so much, Peter, again.

Peter Komolafe: Thank you.

Klaudia Mitura: Thank you everyone for listening. Don't be a stranger, follow me on LinkedIn, join the happiness challenge newsletter, and I see you at the next episode.

Thank you so much.