Mood Follows Action
Financial steps proven to improve your state of mind
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.
Confront your money problems to feel calm
On more than one occasion as a broke college kid, I sold plasma for beer money. To this day, I feel a tinge of anxiety about it. The root of that anxiety is the fear of missing out, the desire to join the party, whether I had the financial means or not. Even if it meant literally giving myself away. What changed was not a shift in my emotions but in my focus toward more studying and less drinking.
Financial anxiety and stress are born from such personal experiences that shape our attitudes toward money. Unfortunately, for many people those attitudes are negative, such as guilt, embarrassment, worries of running out, helplessness.
A report by Finra and the Global Financial Literacy Excellence Center analyzed survey answers from more than 19,000 American adults and found that 60% felt anxiety just thinking about their personal finances. The common sources of financial anxiety and stress provided by respondents were not psychological. They were “a lack of assets and insufficient income, high debt, money management challenges and low financial literacy.”
Therefore, it’d be wrong to think their peace of mind would come from managing their emotions. Rather, it comes from concrete steps – building emergency savings, increasing income, establishing a debt repayment plan, risk diversification – that address the root cause. As the report also shows, those who knew how to address their financial problems – that is, those with a higher level of financial literacy – experienced significantly less anxiety when thinking or talking about their personal finances.
Give to feel joyful
Maybe clicking a donate button doesn’t produce the same euphoric rush as monkeys pulling levers for cocaine, but it’s close.
Brain imaging studies have shown making donations activates the organ’s reward center to release “feel-good chemicals,” such as dopamine. Giving back, whether volunteering or donating money, can provide both physical and mental benefits. In various surveys, volunteers report lower levels of physical pain and lower levels of depression.
Research proves that giving back makes us feel happier and healthier, essentially validating what religion and philosophy has purported all along: it is better to give than to receive.
Even the simple click of a donate button sparks joy. It is the acknowledgement that money you worked for is going to someone in greater need, as if you worked for them, which you did to bring more good into the world. In that way, money connects us to a deeper purpose, an action to do good and help ourselves by helping others. As the late billionaire businessman turned philanthropist Eli Broad believed,
“To me, money is a means to do good.”
Pay down debt to feel emboldened
Debt is like the warm, pleasant, blossoming burn from a sip of liquor. Most of us have experienced it. Many people manage it responsibly. While others fall into a trap of full blown addiction. And some are pressured into it as if in a financial fraternity hazing ritual, just trying to feel as if they belong in society.
The mark of debt is very much psychological. Essayist Kristin Collier wrote about her own troubles with debt and framed it this way:
“The future that debt chose for me — indeed the future it chooses for many people — included a lot of shame, confusion, and pain.”
No wonder debt is associated with high blood pressure, chronic stress and depression.
Debt can be a personal choice or a systematic symptom in the guise of inequality and predatory lending. Either way, eliminating debt can reverse its negative psychological effects. For instance, when studying the impact of a debt-relief program in Singapore, researchers saw those with more debt accounts paid off experienced greater improvements in cognitive functioning, reported less anxiety, and became more focused on their future lives.
Essentially, focusing on your future won’t help you to manage debt, but managing debt can help embolden you to work toward a more promising future.
Save money to feel secure
Our biggest fears are often just different iterations of the fear of uncertainty. Financially, it takes shape as a fear of a market crash, fear of an emergency expense or fear of running out of money.
Saving money is the tangible antidote to uncertainty – and its psychological impact is powerful. Just consider retirees, who have essentially earned the right to spend as they wish. After all, it was the point of saving it in the first place.
The Employee Benefit Research Institute’s Spending in Retirement Survey evaluated the spending habits and well-being of 2,000 Americans ages 62 to 75, 97% of whom were retired. The majority (57%) wanted to spend down only a small portion of assets, spend none at all, or grow their assets. What’s more, a surprising 64% of survey respondents agreed that saving as much as they can makes them feel happy and fulfilled.
This is often a cart-before-the-horse problem. Some people wait to save money until they feel secure enough to save, when that feeling won’t come until they actually start saving in the first place.
The good news is that unlike a physical activity such as running, we can automate our finances. It’s not possible to program our body to go for a run without forcing it to do so. But we can automatically send a portion of our paycheck into a savings or investment account, essentially limiting the potential for self-induced obstacles.
Invest to feel hopeful and free
The biggest regret people have about investing is not withdrawing from their investment accounts, trading like they’re in Vegas, or listening to Jim Cramer. People of all ages simply regret not starting to invest earlier, according to a MagnifyMoney survey.
What they regret is not having taken action to create more possibilities for a better future. That is the point of investing. In that sense, I like to think of hope as an antonym for regret. For, regret is to grieve the past; hope is to cherish the future. Investing is an act of hope.
To invest is to feel hopeful for a better future through the growth of money, with the ultimate end result being financial freedom – freedom with your time and abilities.
Reasons people wait to invest range from the belief they do not have enough money to simply a lack of confidence. There are real financial restrictions if the choice is between buying Apple stock and real apples. But the reality for many is that we’re not helpless in finding reasons to spend money today. Paradoxically, reaching a point where we feel we’re in a position to invest is generally by investing.
So, anyone who’s waiting, start investing anyway you can – set up automatic contributions to a 401(k), open an IRA, download the Acorns app. This action turns that burden of procrastination into hope as compounding works its indelible magic.
Spend money on experiences to feel satisfied with life
Money is limited by the finite resource of time. While theoretically there is no limit to the amount of money I can accumulate, I don’t have an infinite amount of time to use it. So, what is a worthwhile use of my time will also be a worthwhile use of my money.
It explains the conclusion of a study published in the Journal of Consumer Psychology: People are happier when spending money on experiences instead of things. We feel a deeper and more lasting connection to purchased experiences (ex., going to a concert, traveling, visiting an art museum, etc.) than material purchases. Experiences are to be anticipated, shared with others and transformed into jewels of memory, all of which are elements of life satisfaction. Which is why the aura of experiences last long beyond the interest of objects.
Sure, material things are not a total waste. We need things to do things, but they’re not the most important thing. I don’t have fond memories of my first car, yet it was a means of conveyance to fond memories like attending hardcore punk shows in abandoned homes and skateboarding empty streets around Detroit.
What the preference of experiences over things provides is a guideline for spending and happiness. We don’t need to be happy to make better financial decisions, but rather better financial decisions can make us happy.
Altogether, experiences offer what material goods often can’t: meaning. Victor Frankl speaks to the power of experiences in this passage from his book, Yes to Life: In Spite of Everything:
Should I perhaps try to explain for you with some hackneyed phrase how and why experiencing beauty can make life meaningful? I prefer to confine myself to the following thought experiment: imagine that you are sitting in a concert hall and listening to your favorite symphony, and your favorite bars of the symphony resound in your ears, and you are so moved by the music that it sends shivers down your spine; and now imagine that it would be possible (something that is psychologically so impossible) for someone to ask you in this moment whether your life has meaning. I believe you would agree with me if I declared that in this case you would only be able to give one answer, and it would go something like: “It would have been worth it to have lived for this moment alone!”
Coda
None of these actions are groundbreaking. They’re as generic as a sports cliche – and that’s the point. They work, and just about anyone can implement them into their life. We can’t control our emotions directly, but we control the lever that can, our actions. Those tried-and-true basic financial steps can create the attitudes, feelings, thoughts, emotions and overall sense of well-being we want in the first place.
Grab Bag
Links to various things I enjoyed recently.
Meet 92-Year-Old Shred Lord, Nancy
Whether rich or poor, the people I’ve met that are most satisfied in life are often those who never stop moving.
Despite the fact the water was just 14 degrees, she never mentioned it, instead talking about how she really enjoys the strong waves, not the ‘little ones that stop too quick’, and loves ‘the energy they bring’.
The Seven Habits That Lead to Happiness in Old Age
For me, Arthur Brooks is one of those never-miss-an-article writers. This piece is a good example why.
Each of us has something like a “Happiness 401(k)” that we invest in when we are young, and that we get to enjoy when we are old. And just as financial planners advise their clients to engage in specific behaviors—make your saving automatic; think twice before buying that boat—we can all teach ourselves to do some very specific things at any age to make our last decades much, much happier.
(Shameless plug: I wrote a similar article in Kiplinger, Happy Retirees Have These 7 Habits in Common)
Ben Carlson is among the best at writing about complex investing and economic concepts; he’s equally good at writing about life, too.
There is nothing wrong with feelings of nostalgia. In some ways, building a portfolio of nostalgic feelings in your memory bank is what life is all about.
But the good old days are probably not as grand as you think.
Newspaper columnist Franklin Pierce Adams, who himself was writing during the roaring 20s, once remarked, “Nothing is more responsible for the good old days than a bad memory.”
On the Write Side of Money
A short Q&A with notable finance/business writers about writing.
In this edition, we have the creator and writer behind the personal finance blog, Accidentally Retired, a 36-year-old former CEO who reached financial independence. The blog covers topics ranging from early retirement to personal growth, with a lot of great personal insights and stories to inspire anyone. I hope you check it out and subscribe – and find some good takeaways in this interview!
Describe your ideal writing experience (ex. when, where, what, how)?
I don’t know why, but for me it needs to be in front of a computer with no distractions. I enjoy working from a standing desk, so it would be standing, and generally with an idea of what I am going to write about BEFORE I write. I find that I get into my best flow state when I have as close to a fully formed idea ahead of time. This has led me to write some of my best pieces rather quickly and in such a great state of flow that time almost stands still.
What led you to start writing?
I’ve always found that I feel the most authentic version of myself coming out when writing. So whether that was writing a love note to my spouse, a memo to my employees, or a letter to my kids, my true authentic self seems to come out when writing. For years I had an urge to start a blog, but I felt I didn’t have time. Well, guess what? In early retirement, you have time. I had no excuses, so I started Accidentally Retired, and I haven’t looked back since.
What trait is most important to become a good writer?
I think authenticity is the most important trait. It doesn’t matter if you use perfect grammar, punctuation, or anything like that. But if you are authentic and can engage with the reader, then you’ve already won. This goes for anything from writing a book, to a blog post, to a highly journalistic piece.
How do you judge if a piece of writing is successful?
While it’s always nice to get that dopamine hit from your work being shared, I find I get the best feeling from getting into that state of flow I mentioned earlier. Seriously, nothing beats it. Time stands still, and it is as energizing as anything else on this earth. To me that is true success. Getting into that flow states beats any outward accolades (though those are nice to let you know that you are on the right track).
Who are your favorite writers?
I’ve always loved Seth Godin. He’s able to convey his messaging in such short blocks of text that it is unbelievable. I also enjoy Walter Isaacson, though admittedly haven’t finished a couple of his biographies that are still sitting in my nightstand. Lastly, Peter Drucker. His work stands the test of time. There are many others, but those were a few that really resonate off the top of my head.
What writing book, article or blog has helped improve your writing?
My writing has improved simply by forcing myself to stick to a twice a week writing schedule. By publishing twice a week for over a year now, I have 100+ articles and can see the improvement from the early days. I picked up The Elements of Style by William Strunk Jr. and E.B. White last year. I got some great tips from that short little book, but doing the work, and sticking to my writing schedule is the most important thing I’ve done to improve my writing.
What money book, blog or podcast do you recommend most?
I don’t think I can recommend just one blog or podcast. There are so many great ones. Money book wise, I found that The Little Book of Common Sense Investing by Jack Bogle really, really, resonated with me. I read this even before The Simple Path to Wealth by JL Collins (which is also great). But most of my money thinking over the years was shaped by The Millionaire Next Door by William D. Danko.
What are your favorite sources for news, research, data, etc.?
I subscribe to The New York Times daily briefs and Axios’ news alerts for major news only. I’ve tried to cut back on ALL other news sources. I subscribe to a heck of a lot of Personal Finance sites, but that is because I enjoy engaging with the community and keeping up-to-date with other bloggers.
You’re organizing a dinner party. Which three people, dead or alive, do you invite?
I think a great dinner party would be Elon Musk, Steve Jobs, and Michelle Obama. I have no idea what direction that dinner party would go, but it certainly would be interesting.
What is your favorite piece of advice (writing, life, finance or business)?
Make sure that you find the right balance for you. Sure when you are twenty you can work longer hours and hustle more. But you also only have this ONE life. I was an entrepreneur and a CEO, and yet I STILL managed to find my balance and work 40 hours a week or less. I was able to save money and retire early, but still made sure to travel and enjoy life too. You do this by saying “no” to a lot of things, so that you can say “yes” to the right things. But the key is building the right system for you. You can indeed have your cake and eat it too.
Interested in being featured in On the Write Side of Money? Send me an email at rootofall@substack.com
Take a Penny, Leave a Penny
A new idea, exercise, principle or tip I’ve been thinking about lately.
A common copywriting rule is to know your audience. The idea is that your writing is most effective when you write specifically about what your readers care about most – their fears, their dreams, their challenges, etc. Paradoxically, one of the best ways to do that is to write about yourself.
Here’s how Krista Tippett, host of my favorite podcast, On Being, spoke of the universal appeal of personal experience: “The more personal you are willing to be and the more intimate you are willing to be about the details of your own life, the more universal you are.”
To know your audience, know thyself.
What new thing has been on your mind?
Your Moment of Grace
“Why assume that an infinite supply of time is the default, and mortality the outrageous violation? Or to put it another way, why treat four thousand weeks as a very small number, because it’s so tiny compared with infinity, rather than treating it as a huge number, because it’s so many more weeks than if you had never been born? Surely only somebody who’d failed to notice how remarkable it is that anything is, in the first place, would take their own being as such a given — as if it were something they had every right to have conferred upon them, and never to have taken away. So maybe it’s not that you’ve been cheated out of an unlimited supply of time; maybe it’s almost incomprehensibly miraculous to have been granted any time at all.”
–Oliver Burkeman, Four Thousand Weeks