Three Good Things and Financial Planning

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At the Canadian Applied Positive Psychology national conference last month, there was a cornucopia of intriguing ideas about what supports the good life, with each idea refreshingly presented from a data-based, scientific point of view.  Positive psychology is a recognized discipline within the field of psychology.  In the words of Harvard professor Tal Ben Sha-Har, it is the scientific study of optimal human functioning—the science of happiness.

The focus of positive psychology is on understanding what helps individuals and communities flourish.  In contrast to pop psychology, positive psychology is data-based and often counter intuitive.  It is different from the retail self-help books exhorting everyone to just think positively and be happy.

A core tenet of positive psychology is the value of focusing on what’s going right.  You may have heard of the three good things exercise, explained in this short video clip by positive psychology luminary Marty Seligman. The three good things exercise involves jotting down at the end of each day three things that went well that day and why you appreciated them. The three-good-things exercise comes out of research documenting the powerful ripple effect on well-being of focusing on what’s going right and taking time to savor and to reflect upon those good things.

It occurs to me that in financial planning it is well known that a helpful strategy is to think about some good financial decisions you have made in the past and what you have learned from them.  It is also helpful to consider the example of the people in your life whom you view as role models for financial well-being and why you view them as role models.

In the spirit of the “three good things” exercise, here are the three things that I noticed and appreciated at the conference, followed by a key take away message.

1.  First impressions: People have come here here from all over the world.  Diverse disciplines and career stages are well represented. There is vibrant interaction between academics and practitioners. 

Overall there’s a sense of something new and important being created, with frequent upbeat references to the just completed 7th European Conference on Positive Psychology .  Three C’s come to mind: Collaboration, Curiosity, and Calling.  It’s exciting just being in the exhibit hall.

2.  Opening Remarks: The conference opens with a warm welcome and an immediate deep dive into what’s coming next in the research world.
In a short video clip Marty Seligman welcomed participants and then described imagination as a next-up topic for research.

According to Seligman and his team, imagination encompasses prospection (envisioning the future in a way that motivates action), originality (novel representation of the future), creativity (novel and useful representation of the future), and innovation (novel and useful mental representation of the future implemented on a large scale).

A better understanding of imagination could be helpful in many fields, e.g., scenario planning and/or new product development in both the profit and non-profit sectors, and for individuals, perhaps enhancing peak artistic or athletic performance.  In financial planning, it could improve our understanding of how individuals picture and then move towards their desired future. I really enjoyed seeing what is the next research frontier and how research leads to better day-to-day decisions-making.

3.  From the first to the last presentation, insights are presented in the context of data, with new insights building on prior research and interesting nuances and counter-intuitive results explored.  

There is intriguing current research exploring what facilitates personal growth subsequent to a terrible loss, building in many ways on the ideas from Victor Frankl’s Man’s Search for Meaning. Other presentations detailed the negative link between consumerism and happiness. (Once basic needs are met, giving money away or buying experiences “buys” more happiness than buying things.).

In the opening keynote, Sonjha Lyubomirsky identified several “happiness myths”, e.g. I can only be happy if [some particular thing comes true] or I will be unhappy if [some specific unpleasant thing] happens.  She detailed that, in fact, “nothing is as misery-inducing as we think it will be”.  People are remarkably resilient and often find silver linings in challenging situations.  Plus, people tend to adapt quickly to positive changes. (In the words of economists, there is “habit formation”.) You get used to a new state, lose the sense of it being special, and don’t want to go backwards from it.  So the good feeling you anticipate for a job promotion, a marriage, a big economic win or whatever, does not last.  You get used to your new state, which makes ”being happy” problematic if the presence of that new state is how you had been defining happiness.

Each of the presentations dived into some interesting aspect of happiness, character strengths, and/or meaning and purpose. Character strengths, (e.g. zest, hope, gratitude, curiosity, and love—see image above), are innate in all of us and are the focus of much of applied positive psychology.  Character strengths are what “‘makes us our best and connects us”, and they can be developed.

Throughout the conference there were lots of references to hedonic pleasure (the in-the-moment “let’s get some pizza and watch a movie together” kind of of kick-back and enjoy yourself form of happiness) and eudaimonic pleasure (where you get immersed in working hard on something you care about, experience “flow” and find personal meaning and satisfaction). And guess what? We all need both—which makes financial planning for retirement particularly interesting!

In the closing keynote Dr. Robert Vallerand parsed passion by differentiating between obsessive and harmonious passion, commenting “it’s healthy and life-enhancing to have a passion to pursue—but it matters how you pursue it”.

Key take away: Well-being is a learned skill.

We think a lot about how to teach our children the three Rs, how to cross streets safely, how to stay safe on the internet, and how to be courteous and polite. How well do we also teach our children about well- being and specifically the habits that support flourishing? And how well do we extend that same care to ourselves? For myself, as a good next step, I’m giving the “three good things” exercise a try. How about you?

Do you see a link between these ideas and how you manage your finances? What is the intersection for you of personal wealth management and personal well-being?