Do you find yourself in a frequent state of stress and worry about your finances? If so, you’re not alone. In a study, 30% of respondents reported being “constantly” stressed about finances, and the average person spends nearly six months out of the year feeling stressed over their finances. But letting that anxiety overwhelm you doesn’t have to be your only option.

Recent research shows that your mindset matters when it comes to your relationship with your money. A new study by Harvard Business Review finds that optimists experience 145 fewer days of financial stress each year and that there are ways to become more optimistic at any point in your life.

To understand more about this study’s implications and how to apply the findings to our lives, I caught with Michelle Gielan, researcher and bestselling author of Broadcasting Happiness: The Science of Igniting and Sustaining Positive Change . A featured professor in Oprah’s Happiness course, Gielan partnered with Texas-based Frost Bank and TRUE Global Intelligence – the in-house research practice of FleishmanHillard, to conduct a national survey to learn more about how optimism and outlook may impact finances. Gielan has spent more than a decade researching the link between optimism and success.

Here’s what Gielan shares steps to change our mindset and outlook in order to enhance our financial happiness:

Kathy Caprino: Michelle, in this study, you explored a link to a person’s outlook–optimistic or pessimistic–and how it manifests in their finances. Tell us about the connection you found between our mindset and our money.

Michelle Gielan: Our study found a strong connection between feeling optimistic and experiencing high levels of financial well-being. So much so, that optimists stress about finances nearly five months less each year than pessimists. Additionally, we found 62% of optimists exhibit better financial health, nearly seven times higher than pessimists.

Financial health includes many things beyond what your finances look like. For example, being able to pay your bills on time or having an emergency fund are both examples of financial well-being. The same goes for being able to make choices about where and how you spend your money, such as going out to dinner, taking a class or going on a vacation. There was an incredibly strong connection between being generally optimistic in life and having high levels of financial well-being.

Caprino: What prompted you to begin researching this connection between a person’s mindset or outlook and their finances?

Gielan: Money is front and center for just about every one of us, and it has a huge effect on our happiness. In previous research, we’ve seen a direct link between a person’s level of optimism and their financial and career successes. Optimists make more money over the course of their careers and are more likely to be promoted. Using a scientifically-validated optimism scale researcher Shawn Achor and I developed to test professionals at hundreds of companies, we found that “Visionary Work Optimists”—those that are in the top quartile for optimism as compared to their peers—are 40% more likely to receive a promotion over the next year. While money and success aren’t the only or often biggest sources of true happiness, they both play a significant role in well-being, therefore I was curious to see how much optimism and financial well-being were connected.

Caprino: What about skeptics who say this is just a case of the wealthy being more optimistic?

Gielan: That’s an important question. In this study, we surveyed more than 2,000 people nationwide. We controlled for wealth, income, skills, behaviors and other demographics to ensure we leveled the playing field. There were significantly more optimists at the high end of the well-being spectrum. What this told us is that it’s not necessarily about how much you have or how much money you make. Mindset makes a difference no matter your financial starting point.

Caprino: You and I have talked in previous interviews about optimism, and how it sometimes gets a bad rap from those that equate it with Pollyanna and rose-colored glasses, but optimism is not that. Explain how you look at it both from a research and practical perspective.

Gielan: Rose-colored glasses can be fashionable, but they are not a key to success. I research rational optimism which is the expectation of good things to happen and the belief that our behavior matters, especially in the face of challenges. When optimists face setbacks, they generally view them as temporary situations. They believe that if they take steps to fix the problem, they can improve their circumstances.

An irrational optimist is someone who drives around not wearing seatbelts. They don’t check the stock market before investing their entire nest egg in one company. If as an optimist, we are rational, that means we are in touch with real life–our bills, income and potential to save. Optimists, for example, believe that they can make progress toward their financial goals so they are more likely to take positive action. For pessimists, they feel overwhelmed by their circumstances and are typically less likely to take the necessary steps to create a better financial reality.

Caprino: In this study, you identified three positive habits of optimists, and if we do these can we become more optimistic?

Gielan: Previous studies have shown that small habits can train the brain to be more optimistic so we wanted to understand from a financial perspective, what are our optimists doing that helps them create a better financial picture for themselves. We found three major habits:

#1: Expect the unexpected

Life will always have its ups and downs, and optimists understand this and see it for what it is. They put safeguards into place, including starting a rainy-day fund or transferring credit card balances to cards with 0% APR. For example, 69% of optimists reported they put in place better financial habits after their most recent setback, suggesting they learned from the experience, compared to only 36% of pessimists who report having done the same. Even if it’s just five dollars a week, start an emergency fund and sock some money away to help if you hit a rough patch.

#2: Take the taboo out of money

Many people are uncomfortable talking about money–we hear that all the time. But 76% of optimists say they are very comfortable talking about money with someone they trust like a friend, family member, banker or financial advisor. My advice? Find someone you trust and talk with them about your financial situation. In our research, we found that social connection is the greatest predictor of happiness we have. When we feel meaningfully connected with someone–particularly over such a personal topic like finances–that can boost our happiness and lead us toward better financial habits.

#3: Seek progress, not perfection

Optimists don’t strive for perfection but they do have the courage to try. If you’re worried because you don’t have the perfect financial plan, don’t be. Optimists report that they don’t wait to have a detailed plan. The majority just use a rough one. Set a financial goal like paying off your college loans in a specific number of years or saving toward a year-end vacation, and start making your way toward it now. You’ll be surprised by how far you’ve come as the weeks and months go by.

Caprino : What contributes to our being generally pessimistic versus optimistic? Is it nature or nurture or both, and we see those tendencies emerging as early as age 4, right?

Gielan : Scientists believe we are born with a genetic predisposition to be more or less optimistic, and without a doubt, other people play a role in how we look at situations in our lives. For instance, if our parents were more optimistic when explaining setbacks to us, we are more likely to see the world with an optimistic lens. That said, the way we are when we are young is only a jumping-off point since the brain can change at any time.

Caprino: So, by embracing these three habits and working to change our mindsets, we can become more optimistic?

Gielan: Absolutely. That’s the most encouraging part of this research. Scientifically speaking, optimism is malleable, and we can actually train our brain to become more optimistic at any time. Doing so boosts our financial health and our happiness, and it doesn’t stop there. Studies show that happy, optimistic people are generally healthier, live longer and are more successful over the course of their careers.

Optimism can positively impact people’s lives in incredible ways. Beyond finances, optimism can be a catalyst for better physical and emotional health. It can also encourage people to turn challenges into opportunities. It can change perspectives and the way people view and interact with the world. According to our research, most Americans want more optimism in their lives. And who wouldn’t?

This article was written by Kathy Caprino from Forbes and was legally licensed by AdvisorStream.

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Brian Brotherston
Qualified Associate Financial Planner
Watershed Financial Solutions
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