Are you a financial well-being junky with Chris Budd
Are you a financial well-being junky?
Chris Budd was a financial planner for twenty years and wrote the original Financial Wellbeing Book in 2015. He is the host of the Financial Wellbeing Podcast. His new book, The Four Cornerstones Of Financial Wellbeing is out now. Follow Chris on LinkedIn.
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
Mentioned in this episode:
Financial Wellbeing Podcast
TedTalk: What makes a good life? Lessons from the longest study on happiness
The Financial Wellbeing Book: Creating financial peace of mind by Chris Budd
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.
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Financial well-being junkies with Chris Budd
Lucia Knight: Oh boy, I've fallen down some dreary rabbit holes trying to find our next guest. Let's just say the world of personal finance isn't chock a block with wise, self deprecating, music loving, non finger wagging experts who also understand the psychological connection between money and true happiness, but I find one. His name is Chris Budd, and he's the author of the financial wellbeing book and one of the hosts of the rather brilliant financial wellbeing podcast.
In this 10 minute episode, we talk about the set point theory of happiness, how much impact our financial situation influences our long term happiness and the idea of financial wellbeing junkies. Let's dive in.
Chris, our listeners are here to hear about how to build more joy into their future work. And one of the areas that comes up when we're talking about this all the time is financial wellbeing. And so I was delighted when you said, yes, you'd come on and talk. So I've got one question that I know will be incredibly useful to every single listener.
How can we become better spenders?
Lucia Knight: This question is Chris, how can we become better spenders?
Chris Budd: Lucia, let's define better. I would suggest better is spending within our means, but also spending in a way that increases our wellbeing.
To understand that better, therefore we have to understand what makes us happy. Our money should be a tool it tends to instead be an objective or even our master. So to get it back into its proper position, we've got to understand what makes us happy and how can money help or hinder that.
Understanding Set Point Theory
Chris Budd: And one of the models of this that I really like is called set point theory. Okay. A set point theory says that we arrive in our adult life with a set 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. So you can probably think of somebody who when they walk into the room, just brings joy into the room and lifts the place. You probably think of somebody who just happy being miserable, right? Now that's, but there are people that are like that.
And we all have our own set level and we go through life. If we can call that our well being, right? And then we'll call happy and sad. What happens in the short term? If we go above our set level of well being, that's us being happy. If we go below it, that's us being sad. When you're happy, that's nice.
You don't do anything, but you just get used to it, and you go back to your set level of well being. And if we get sad, again, you get used to it. And you just go back to your set level. We Oscillate or up and down around our set level of well being, but it doesn't tend to change in the long term now If you're happy, that's great.
That's nice You don't want to deliberately push yourself back down to your set level of well being, but if you're sad, that's not so great So we all want to do something to give ourself a little hit of well being to go back up to our set level And what do we do?
Financial Wellbeing Junkies
Chris Budd: We buy stuff. 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 keep us up to our set level. I call this that we're all financial well being junkies. That's where I think of it. Buying short term hits of happiness because life can throw a lot of rubbish at us. So we want to do stuff to give us that short term hit to keep us up to our set level.
But there's other ways that you can get that set level. You can speak to a loved one, have a hug, go out for a walk, get some fresh air. Do some exersise. There's lots of ways of getting that hit that doesn't involve spending money. Now I'm not saying that retail therapy is necessarily bad, but if you're spending money on stuff that you can't afford to quote, somebody famous buying stuff, you can't afford to impress people you don't like, then it's not giving you longterm wellbeing.
So we're all financial wellbeing junkies spending money that we don't need. And if we're more aware of that the next time we go to buy something, Just ask ourselves, do I actually want this? Maybe use the one hour rule, just go out for a walk, walk around if it's online, especially walk away from the phone, put it down, come back to it and go, is this actually something I really want?
Or am I just giving myself that short term hit of wellbeing?
Lucia Knight: I'm fascinated by this set point idea. And I wonder, do you think we're just born with this set point? Or do you think it's created somehow through nurture?
Chris Budd: So the research says this is where it gets really interesting. The research says that it comes from several different sources. Most of it probably at least half of it is inherited. You're just born with it. How happy you are is in your DNA, which is pretty wild when you think about it. 10%. This is all from a lady called Sonya Labomirsky in America.
It's her always make sure I reference who I'm talking about. So this was her studies that showed that 10% comes from our circumstances. So what we say, what we do how much money we have, where we live, what jobs we're doing, that's our circumstances. And only 10 percent of our long term well being comes from there.
So it leaves 40% And the remainder comes from our, what she calls our intentional activity, how we act with money, our relationship with money, our financial wellbeing. So if you've got a financial education program that's teaching people how to be better with budgeting and how to manage debt how to create savings plans, you're only looking at 10 percent of their longterm wellbeing.
What we also need to be doing is explaining stuff like the financial well being junkies model to help us understand our relationship with money and how actually maybe it's not helping us make better decisions because those decisions are just give you a very short term hits of well being.
Long-Term Wellbeing Strategies
Lucia Knight: So how do we focus on longer term nuggets of well being then, if we minimize this sort of short term spending, what do we do instead? Okay.
Chris Budd: Long term sources of well-being come from two man areas. There was a fasinating study on happiness that's ongoing. Harvard University, which you can just, if you just Google Harvard study on happiness. You'll see a brilliant 50 minute Ted talk all about this. And they, I said, you don't need to, I'm going to tell you what it said.
So what they did is they asked a whole load of young people what they thought was going to make them happy as I go through life. And overwhelmingly they said money. and fame. They then went back every couple of years and they asked them, Are you happy? And what is making you happy? What's contributing?
And they've been doing this now for some 80 or so years. And what they've discovered is that the main sources of well being were not actually fame or money. In fact, people who were famous were no happier or unhappy than Those who weren't famous, and likewise for those that were rich, were no happier or unhappier than those who weren't rich.
The Importance of Social Relationships
Chris Budd: The main source was the quality of our social relationship. if you get a hug from a loved one, you're going to feel better. That is true of everybody. We should put some work into maintaining our quality social relationships. The second area is having something purposeful in our lives. So if we are doing something that, it doesn't mean that you've got to spend your time being Buddhist or Mother Teresa or what have you, but something that gives you some meaning and purpose, some connection to other people, seeing some impact of what you're doing being able to have competency in that thing.
This is a theory called self determination theory from psychology. If you have those three things in place, you'll be motivated. And if those three things align with your values, with what the thing that you're doing, that will give you meaning. And purpose. Hey, presto, we have long term well being, but it takes work. It takes this intentional activity. We've got to actually spend time making sure we're doing these things, finding that meaning and purpose that could just be helping out at a local, when your kids go and play football or rugby or cricket or whatever it might be, or tennis, maybe get involved.
Whether it's making the tea or becoming a coach or being a helper, just getting involved. That will give so much long term wellbeing compared to sitting on the sides, watching and probably complaining that the coaches aren't very good.
Lucia Knight: Yeah, which happens a lot. And that's in comparison to say, sitting on the sofa or lying in bed, buying something that you don't need, are totally polar opposites, aren't they?
Chris Budd: they are.
Balancing Short-Term and Long-Term Spending
Chris Budd: But I've always wanted to just be very careful here, especially because I've just come back from Bristol where I bought some records right now. I love my music. I've got so much music on a hard drive that if you played every track one after the other on that hard drive. 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 afford to buy a couple of records. It's okay So a little bit of that financial well being junkie stuff It's all right As long as it's not causing you financial difficulties and as long as you're still on track for your longer term financial objectives so Do a bit of financial planning, whether you can afford to pay for it or you can just do some simple stuff yourself.
My financial well being book has got a model for how you can do that. Make sure you're roughly on track, make sure you can afford what you're spending, but yeah, it's okay to have some stuff sometimes. Let's not be too miserable about this.
Lucia Knight: So a little bit of junkie behaviour is
Chris Budd: Yes, Yes,
Conclusion and Additional Resources
Chris Budd: 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. It's a fabulous place to begin a joy at work redesign.
