Financial Wellbeing

Another Installment from Wellbeing by Tom Rath

Stating the obvious, having enough money to meet your basis needs and provide good health care is directly correlated to your wellbeing.  Also, money can increase our short-term happiness by giving us more control over how we spend our time.

  •  Spending money on yourself does not significantly boost wellbeing.
  • Spending money on others is as important to people’s happiness as the total amount of money they make.
  • Buying experiences increases our wellbeing and that of others.
    • Enjoyment of experiences lasts longer than things: looking forward to it, doing it, remembering it indefinitely.
    • If income is less than $25K, material things and experiences are about of same value
    • If income is greater than $25K, then experiences bring about 2-3 times the level of wellbeing compared to material purchases.

 

  •  There is a component of financial satisfaction that involves our comparative economic wellbeing to others.
  • This is a trap, because the Jones next door will always have something that we don’t.
  • If we have a satisfying life from the other areas of wellbeing—in our careers, our social network, our health and our community involvement—then there is less need to play the comparative game.
  •  Do cash flow planning with positive defaults

    • Credit cards act as a “decoupling device” because they separate the joy of the immediate purchase from the pain of the payment, which is off in the distant future.

  • People that are thriving in their finances tend to set up a system and use technology to pay bills, pay down debt and save for experiences on a regular basis.

 

    • People that live below their means alleviate stress and guilt from overspending.

Wealth Accumulation vs. Financial Security

  • People with thriving wellbeing put more focus on financial security (and lack of worry) than increasing their net worth.
  • Financial security—the perception that you have more than enough money to do what you want to do—has three times the impact of your income alone on overall wellbeing.
  • A lack of worry about money has more than double the impact of income on overall wellbeing.
  • Financial security is both possible and practical for people across a range of income levels
  • People with thriving wellbeing:
    • Are satisfied with their standard of living
    • Don’t worry about money in their everyday lives
    • Have confidence in their financial future
    • Things that detract for financial wellbeing:
      • Pursing a wealth accumulation strategy that contains risk which causes daily stress
      • Taking on debt to buy a larger house or nicer car or something else that produces an uncomfortable burden
      • Managing your finances well allows you to do what you want to do when you want to do it.

Summary

People with thriving Financial Wellbeing are satisfied with their overall standard of living.  They manage their personal finances well to create financial security.  This eliminates day-to-day stress caused by debt and helps build financial reserves.  People with high Financial Wellbeing spend their money wisely.  They buy experiences that provide them with lasting memories.  They give to others and don’t just spend on themselves.  As a result of managing their money wisely, they have the financial freedom to spend even more time with the people whose company they enjoy the most.

 Three Recommendations for Boosting Financial Wellbeing

  1.  Buy experiences—such as vacations and outings with friends or loved ones.
  2. Spend on others instead of solely on material possessions.
  3. Establish default systems (Automated payments and savings) that lessen daily worry about money.

Social Wellbeing

My next installment from the book Wellbeing–The Five Essential Elements by Gallop researchers Tom Rath and Jim Harter…

When you reflect on the most memorable events, experiences and moments in your life, you’ll notice that they have something in common: the presence of another person.  The best moments—and most agonizing ones—occur at the intersection between two people.

Your odds of being happy increase by 15% if a direct connection in your social network is happy.  In other words, having direct and frequent social contact with someone who has high wellbeing dramatically boosts your chances of being happy.

  • If your friend’s friend has high wellbeing, the odds of you being happy increase 10%.
  • If your friend’s friend’s friend has high wellbeing, the odds of you being happy increase 6%.
  • This is about three times the impact of $10K in income: for each additional $10K annual income increased the likelihood of being happy only 2%.
  • Each happy friend you have increases your odds of being happy by 9%.
  • Each unhappy friend you have decreases your odds of being happy by 7%
  • Influence on Smoking
    • If a close friend or family member smokes, you are 60% more likely to smoke
    • If second degree of separation smokes, you are 30% more likely to smoke
    • If third degree of separation smokes, you are 10% more likely to smoke
  • Influence on Obesity
    • If your close friend obese, you are 60% more likely to become obese
    • If your spouse, brother or sister is obese, you are 40% more likely to become obese
  • Influence on health
    • If your best friend is very active, you are three times as likely to be very active
    • If your best friend has a healthy diet, you are five times more likely to have a healthy diet
    • Combining social interaction with physical activity has a compounding effect on our wellbeing.
    • Relationships serve as buffers during tough times, which improves cardiovascular functioning and decreases stress levels.
      • People with few social ties are at twice the risk of dying from heart disease
      • Couples who report hostility in their relationship take twice the time to heal from wounds.
  • To have a thriving day, we need six hours of social time.  This includes time at work, at home, on the phone, talking to friends, sending e-mail and other communication.
    • This is true for both introverts and extroverts
    • This is true on weekdays and weekends
    • If less than six, every additional hour of social time had a measurable benefit
    • For seniors, among those who were socially active, their memories declined at less than half the rate compared to those who were the least social.
  • Best friends at work
    • Only 30% of employees have a best friend at work
    • Those who do are seven times as likely to be engaged in their work and be better employees
    • Of those who do not have a best friend at work, there is a 1 in 12 chance they are engaged in their jobs
    • Small increases in social cohesiveness—chit chat—lead to large gains in production

Summary

“People with thriving Social Wellbeing have several close relationships that help them achieve, enjoy life, and be healthy.  They are surrounded by people who encourage their development and growth.  Those with high Social Wellbeing deliberately spend time—on average about six hours a day—investing in their social networks.  They make time for gatherings and trips that strengthen these relationships even more.  As a result, people with thriving Social Wellbeing have great relationships, which gives them positive energy on a daily basis.”

Three Recommendations for Boosting Social Wellbeing:

  1.  Spend six hours a day socializing with friends, family, and colleagues (this includes work, home, phone, e-mail and other communication).
  2. Strengthen the mutual connections in your network.
  3. Mix social time with physical activity.  For example, talk a long walk with a friend so you can motivate each other to be healthy.

 

Career Wellbeing

Continuing highlights from the book Wellbeing by Gallup researchers Tom Rath and Jim Harter:

  • Only 20% of people like what they do each day.
  • Career Wellbeing is the most essential of the five elements.
  • People with high Career Wellbeing are more than twice as likely to be thriving in their lives overall.
  • Long-term unemployment
    • Unemployment might be the only major life event from which people do not fully recover within five years.
    • Our wellbeing actually recovers more rapidly from the death of a spouse than it does from a sustained period of unemployment.
  • Being disengaged at work appears to be a leading indicator of a subsequent clinical diagnosis of depression.
  • On bosses…
    • If your manager ignores you, there is a 40% chance that you will be actively disengaged or filled with hostility about your job.
    • If your manager is primarily focused on your strengths, the chance of your being actively disengaged is 1%.
    • People looking for a job should be as concerned about who their manager will be as they are about their job title, benefits or pay.
  • Career Wellbeing in one of the major differentiators that helps us live into our 90s
    • Of the men who live to see 95, the average retirement age was 80
    • 93% of these folks reported a great deal of satisfaction out of the work they did
  • People who have the opportunity to use their strengths are six times as likely to be engaged in their jobs and more than three times as likely to report having an excellent quality of life.

The Essentials of Career Wellbeing

People with high Career Wellbeing wake up every morning with something to look forward to doing that day.  Whether they are working in a home, a classroom, or a cubicle, they have the opportunity to use their strengths each day and to make progress.  Those with thriving Career Wellbeing have a deep purpose in life and a plan to attain their goals.  In most cases, they have a leader or manager who makes them enthusiastic about the future and friends who share their passion.

While you might think that people with a high Career Wellbeing spend too much time working, they actually take more time to enjoy life, have better relationships, and don’t take things for granted.  And they love what they do each day.

 Three Recommendations for Boosting Career Wellbeing:

  1.  Every day, use your strengths.
  2. Identify someone with a shared mission who encourages your growth.  Spend more time with this person.
  3. Opt into more social time with the people and teams you enjoy being around at work.

 

 

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