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Many studies have shown that mood and finances are deeply intertwined
and that how people feel about themselves can dramatically influence their
success, says Dr. Srini Pillay, assistant professor of psychiatry at Harvard
University and chief executive of NeuroBusiness Group, a Cambridge,
Mass.-based firm that coaches business executives on communication
skills.
Pillay pointed to one 2008 study by T.A. Judge and C. Hurst, “How the rich
(and happy) get richer (and happier),” published in the Journal of Applied
Psychology, which showed that higher core self-evaluations were
associated with both higher initial levels of work success and steeper work
success trajectories. “As a result, people have more ascendant jobs and
careers,” Pillay said. “Many other studies have confirmed this finding as
well—that happier people are more likely to be more successful.”
Mood can also affect spending behavior, says Pillay. According to a 2008
study by Oono Takahashi et al. published in the scientific journal
NeuroEndocrinology Letters, being depressed may lead to being more
impulsive in one’s financial decisions. Another 2008 study of the brains of
depressed people by B. Knutson, J. P. Bhani et al. published in
Psychological Bulletin, showed that when people are depressed, they are
less able to discriminate between gains and losses; and when anticipating
gains, their brains go into a state of greater conflict. “This can significantly
affect their financial decision-making,” Pillay said.
“Those who are in the middle of the spectrum tend to be very pragmatic in
their planning for the long-term,” Bruno said. “While they are fairly
optimistic about the future, they know they still must plan accordingly—
versus those who think, ‘Why the hell should I bother?’”
Many Americans are overly optimistic that they will be able to afford a
comfortable retirement but are doing too little to prepare for one, according
to the 2010 Retirement Confidence Survey released in March by the
Employee Benefit Research Institute and the American Savings Education.
According to the survey, fewer than half of workers (46%) report they
and/or their spouse have tried to calculate how much money they will need
to have saved for a comfortable retirement by the time they retire.
The collective mood of the country can also affect the national economy
overall, says Lauren Lyons-Cole, LearnVest’s financial planner in
residence. “The better Americans feel, the more likely we are to think our
economy—which represents our collective success as a nation—will
improve over time.” The national mood seems to be improving, according
to the latest Conference Board Consumer Confidence Index. The Index,
which had rebounded in March to 52.3, increased further in April to 57.9,
and is now at its highest reading since September 2008, when the
economy hit the wall.
Let’s just hope we don’t get so rosy-eyed again that we forget the need to
prepare for our futures.
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