When asked to name the number one stressor in their daily lives, 62% of Americans identified money. Right now with coronavirus shutdowns and unemployment, that stress is even more prevalent. But a new study finds a very strong antidote: optimism.
Angela Holliday, President of Frost Brokerage Services Inc. and Frost Investment Services (LLC), partnered with the in-house research practice of FleishmanHillard, and positive psychology expert Michelle Gielan to develop an online survey that explored the link between optimism and financial health. The survey was conducted between September 20 and September 28, 2018, and consisted of 2,002 Americans aged 18 years and older. Among the findings:
- More than half (59%) of Americans say finances control their lives at least sometimes.
- Americans average nearly five months—or 148 days—annually of financial stress.
- 62% feel they are ‘just getting by’ financially.
- 87% of Americans report having experienced one or more financial setbacks.
Once Holliday turned her attention to the habits, attitudes and beliefs of optimists, she was surprised to discover that 62% of optimists exhibit better financial health overall, compared to pessimists at 9%. In addition, optimists practice more proactive behaviors relating to money:
- 90% have saved for a major purchase (compared to 70% of pessimists).
- Optimists are more than twice as likely to have paid for their children’s education.
This evidence certainly supports the idea that optimism could be the path toward better financial health, but there’s more to it than having a sunny disposition and a “can do” attitude. Holliday claims that dispositional optimism, when paired with a solid foundation of good money habits, is a recipe for success.
“Your behavior matters,” Holliday tells Parentology. “Optimism is the expectation that good things will happen. Even in times of challenge, your perspective is that good will be realized.”
While Frost’s study revealed that 66% of optimists are more confident to manage their finances, Holliday reminds us that financial literacy falls under two main categories: education and application.
“You have to have a good financial foundation and education,” she advises. “Once you have those pieces, those core principles will help navigate you and things become less daunting.”
Frost’s site, optforoptimism.com, identifies three main habits of financial optimists:
- Taking the taboo out of money. When you feel comfortable talking about money — your goals, current financial state, obstacles — you open yourself up to the tools and resources required to get you on track. Holliday agrees, “Optimists are more comfortable asking for help and following financial advice.”
- Seek progress, not perfection. Holliday’s methodology includes coupling your goals with sound financial practices. “Understand that you’re making progress, but realize that it doesn’t have to be perfect or that there’s a fixed time frame within which you have to achieve your goals.”
- Expect the unexpected. Setbacks will happen along the way. “It’s not a question of ‘if’, but ‘when’,” Holliday says. “Being prepared takes the stress off your financial and emotional perspective.”
There’s no need to worry if you have concerns about passing on your money behaviors or financial worries to your children. Holliday says not only can financial optimism and sound money practices be developed over time, it’s never too late to start adopting them.
“There’s a very popular adage: ‘When you know better, you do better’,” Holliday says. “If you don’t know basic finance principles, you can’t apply them. Once you have a good foundation and employ these basic principles, you can handle your finances better.”
Holliday advises parents set financial goals for themselves and their children. The latter, of course, should be age-appropriate. “It’s easy enough to gamify the process for teens and tweens,” she says. “Or if you offer allowances to younger children, set conditions that spell out not just how earnings are acquired, but how they should be spent. This starts their positive mindset about how to use money and have those basic habits.”
Holliday also suggests monetizing those practices together wherever possible. “For example, if you clip coupons, do it together as a family and use it as a lesson to encourage good saving and spending. ‘We saved $5 in groceries, so let’s start a college fund for you,’” she encourages. “Eventually, your kids will start to see savings as something directly related to them and they will create their own long term goals.”
On Frost’s site, Holliday offers the 30-Day Optimism Challenge, a family exercise whereby you receive small daily challenges via email.
Examples of small practices include:
- Do a favor for someone without asking them.
- Leave an uplifting note on a random car.
- Leave your phone behind and go for a 20-minute walk.
To date, nearly 400,000 acts of optimism have been pledged on the site. “Small challenges collectively make a big impact,” Holliday says. “We’ve shown it really works for individuals looking to relieve themselves of financial worry and for entire families looking to improve financial health.”