Why Gratitude Helps Financial Decisions

We all know emotions can play a big part in decision making. When we feel stressed out, we can reach for a chocolate bar, even if we’re on a diet. When we’re feeling a little blue, we might buy ourselves a nice new top to cheer ourselves up.

A study from researchers at Harvard examines the idea of the emotion of gratitude being an indicator of making the best financial decisions.

Short term vs. future gains

Losing 10kgs on our diet will take a long time, and so will paying off our credit card debt. Breaking your diet or splashing out on a new top can be looked at in terms of short term reward seeking behaviour over possible future gains. We eschew our diet and reduced debt in favour of the chocolate bar and new top – even if our long term gains are much more heavily weighted in importance.

The role of patience in delayed gratification

We all know our diet or debt levels are far more important than a quick pick me up. However, we often choose to use that quick fix when we are feeling emotional. But what if there was an emotion that helped us to be more patient, to exercise more self control?

Well, researchers might have just found it.

The effects of gratitude

According to the study, and others like it, researchers have found gratitude, feeling grateful, increases patience when it comes to waiting for future rewards. This is what’s known in academic circles as “decreased temporal discounting”. Temporal discounting is where the further off the time to reward is, the less likely we are to care about it. This is a common occurrence for many people, but not all.

Feeling grateful for all we have means increased patience, and in turn, will reward us in the future. If you’re grateful for what you have, you’re less inclined to overspend on what you don’t. This is exciting news, especially for financial goals. If you are thankful of what you do have, you’re less likely to find satisfaction in new purchases.

Researchers have been quick to note that levels of overall happiness aren’t an indicator of patience when it comes to long term reward – so be careful not to confuse the two.

How to become more grateful

It might seem difficult to increase your levels of gratitude – isn’t that something we’re simply born with? Well, it turns out you can do certain activities to help push you in the right direction.

• A gratitude journal

A gratitude journal is a good way to help reinforce positive thinking. Jot down 3 things every day you’re grateful for – and they always have to be different!

• Don’t be afraid of negative life challenges

Successfully navigating life with gratitude involves processing negative parts of your life, instead of ignoring them, or blaming others. Remember that without looking at the bad times, you’ll never appreciate where you are now.

• Spend more time with family and friends

Feeling loved makes you feel grateful for the relationships you have. Connect with people more often and you’ll find yourself automatically grateful, both for the time you spend with them, and for having them in your life.

• Be kind to others without prompting or expecting anything in return

A little bit of thought goes a long way. Giving a small gift to a friend, to celebrate your friendship, or helping out in your community for an hour a week can help to feel like you’re doing more for the world.

• Be mindful of your language

By expressing yourself in terms of positives instead of negatives, you can start to become more grateful. Expressing negative language, e.g. “Mindy is horrible because she never visits me”, can help to reinforce negative thought. Try positive language instead, “I’d love to see Mindy more often”, to reduce this.

We can all make steps to become more grateful, which can end up paying dividends – both financial and otherwise – in our decision-making processes.

Paper Plus has a great range of Gratitude Journals to get you started.