For years, psychologists have lauded the power of optimism in truly improving our lives. Unfortunately, positive thinking has developed a bit of a bad reputation, with many equating it with ignoring reality or wearing rose-colored glasses. Positive thinking means acknowledging reality while still expecting good things – and more than that, knowing that behavior matters in the face of challenges. Now, a new study is quantifying how optimism can be an important factor in your financial well-being, too.
In 2018, researchers tested 2,002 Americans for optimism, financial well-being, and money attitudes. They utilized measures that have been scientifically validated, like the Life Orientation Test and the Consumer Financial Protection Bureau Well-Being Scale, and then controlled for demographic factors like wealth, income and skills in order to level the playing field. What they found was a clear correlation between an optimistic mindset and financial health. In fact, the study concluded that having a positive attitude could mean as much as a 10-point increase in overall financial well-being.
Specifically, the study showed that optimists are:
- …nearly seven times as likely as pessimists to show signs of financial health
- …about twice as likely to practice smart money habits after experiencing a financial setback
- …20 percent more likely to proactively save for a major purchase
- …almost twice as likely to have an emergency fund
- …less likely to feel stressed about financial matters
This last point is quite compelling – in an age where chronic stress seems to be at an all-time high and money is the top stressor, optimists reported 145 fewer days of stress in the calendar year. Think about that – having a positive attitude can give you more than five months free from the financial worry that plagues pessimists. Those months, taken year over year, quickly add up to a truly meaningful amount of time over the span of your life.
According to the Harvard Business Review, the study also showed that optimists enjoy a more positive work experience, regardless of industry. They are more likely to be highly engaged employees, more likely to get promoted and more likely to earn more over the course of their careers. In short, optimism can provide quite a pay-off over time.
If you’d like to achieve the goal of enhanced financial well-being in the coming year, don’t forget to factor in the benefits of positive thinking. If you consider yourself a pessimist, check out this article from Scientific American about how to become an optimist. After all, it pays – literally – to develop a positive attitude.
