“Acknowledging the good that you already have in your life is the foundation for all abundance.”
– Eckhart Tolle, A New Earth
The Emotion that Helps us Make Better Financial Choices!
Gratitude is an important element to experience contentment and inner wealth. But does it have a positive impact on our financial wealth?
Apparently, YES it does! And now there is proof.
According to a research study published June 2014 in Psychological Science, when people feel grateful, they make better financial decisions. Being in a state of gratitude made participants more likely to have the patience to save for a higher return on their money.
Best yet, the study demonstrated that gratitude helps people delay gratification and save more money effortlessly – without having to strive for willpower or contemplate the “rule of 72.”
David DeSteno of Northeastern University’s Department of Psychology led the inter-disciplinary research project, entitled “Gratitude: A Tool for Reducing Economic Impatience.” The study’s aim was to weigh how various emotions affected people’s ability to make better financial decisions by choosing to receive a greater amount of money in 30 days versus a lesser amount immediately.
In the study, participants were given a classic test of their ability to delay gratification, not unlike the famous Stanford “Marshmallow Experiment.” The Stanford experiment tested to see if children could wait 15 minutes to receive a second marshmallow (or other goodie) along with the first.
In the Gratitude study, adult participants were given a choice between receiving $54 now or $80 in 30 days. While the dollar figure was modest, the rate of return was impressive – a monthly return of 48%, or, as the Truth Concepts calculator below demonstrates, an annualized return of 577.78%!
To test the influence of specific emotions on their financial decision-making, participants were directed to spend 5 minutes journaling about something that would lead them to feel either grateful, happy, or neutral before making their decision.
Those who were either happy or neutral were very likely to take the $54 offered instead of wait for the $80, with no significant difference between those in a happy or a neutral state of mind.
However, researchers discovered that those who put themselves in a grateful state of mind had a noteworthy increase of patience and self-control! Not only were the participants in the state of gratitude more likely to wait 30 days to receive the $80, the results also showed that more gratitude the participants reported feeling, the more willing they were to wait for the larger return!
“Be Thankful, Save More… Gratitude Helps us Reach Financial Goals” declared Psychological Science. “A sizable body of research shows that people tend to discount the value of future rewards in favor of short-term gratification, but a new paper… finds that thankfulness triggers patience and a willingness to hold out for greater monetary gain.”
Money Plus Emotions Doesn’t Usually Equal Good Decisions
There are countless ways in which emotions affect our financial choices, and almost always, the outcome is not positive. Indeed, the field of behavioral economics documents countless ways that investors self-sabotage when emotions dictate their investment decisions. Impatience, distrust, and sadness can compromise sound decisions where money is concerned.
One study even showed that those who could not feel emotions at all (the result of a brain lesions compromising affective processes) made better investment choices than those of similar IQ who had “normal” emotions – because those who could not feel emotions were most likely to act on logic rather than fear of loss, which led them to make mathematically illogical decisions.
It may be that gratitude is the only emotional state proven to lead to better financial choices!
How does gratitude foster more economic patience? Perhaps because gratitude leads us to be thankful for what we have, rather than desiring what we don’t have.
The first Principle of Prosperity is to “THINK” from a prosperous mindset. When we are consumed with thoughts of scarcity and “not enough” rather than gratitude, we act in a way that brings about more scarcity, clinging to what we have rather than saving and investing for the long term.
The Benefits of Delayed Gratification
Through follow-up studies over many years, the Stanford Marshmallow Experiment showed that the ability to delay gratification was tied to big benefits later in life. The children who were able to successfully wait for the second marshmallow before eating the first went on to become teens and then adults who as a group average higher SAT scores, better social skills, higher levels of educational attainment, and lower rates of substance abuse and obesity.
Obviously, the ability to delayed gratification also presents a clear advantage when it comes to a person’s financial success. “On average, we increased people’s financial patience by about 12 percent,” said DeSteno, who led the Gratitude study. “That doesn’t sound like much, but imagine if you could increase people’s savings by that much.”
Are You Saving with Gratitude?
It’s clear that for both our peace of mind and our net worth, we need to be cultivating gratitude all year long, not just around the Thanksgiving table. After all, who doesn’t want to save 12% more effortlessly?
Some simple suggestions for bringing MORE gratitude into your life:
- Keep a daily gratitude journal and develop the habit of writing in it either every morning or evening.
- Set aside time each week to write appreciation and thank-you notes to the people you are grateful for.
- Cultivate the practice of Positive Focus. Begin your day, your meals, even your meetings thinking or speaking about what you are grateful for. Especially when circumstances are challenging, look for the silver lining and the learning.
Whether waiting in line at the store, dealing with a work challenge, or celebrating a “win” with our children, gratitude simply makes everything better.