Why happy entrepreneurs are better wealth creators
on January 19, 2023 • 3 minute read
We know that money can buy some forms of happiness, but can happiness buy money?
As a Xolopreneur, I am fascinated by wealth and those who achieve it. Wealth has special significance for me – not only as a source of financial freedom but also because it is interesting to understand the tactics that successful people use to build wealth.
Popular culture leads us to believe that wealth comes first, followed by happiness. But, according to recent psychological research, this may be an outdated way of understanding the relationship between wealth creation and positive emotions.
For instance, a new study published in Personality and Individual Differences shows that positive emotions can promote better money management practices that lead to increased net wealth. For Xolopreneurs, this means that the success of your business may be more tied to your mental health and happiness than you think.
“Existing research tends to show that money leads to happiness,” says the lead author of the paper, Sarah Asebedo of Texas Tech University. “Despite this favored interpretation, there is robust evidence that positive emotions actually support and create the behaviors necessary for people to succeed in their financial life (e.g., earn money, exercise control, stay out of debt, save, etc.). Our research builds on this work by generating evidence that positive emotions also have a causal relationship with wealth creation.”
To come to this conclusion, Asebedo and her team examined over 10 years of data from the Health and Retirement Study conducted by the University of Michigan. The researchers tracked people’s emotional state (e.g., determined, enthusiastic, active, attentive, inspired, hopeful, etc.), and their net wealth to see whether positive emotions promoted a higher level of wealth creation.
They found the answer to be a resounding yes.
“This finding expands our view of the relationship between happiness and money to include the idea that cultivating a happy, full, and meaningful life results in a greater capacity to earn and save money, manage spending, and grow wealth,” explains Asebedo.
While the researchers did not test whether certain personality traits were more important than others in amassing wealth, past research has found that conscientiousness and extroversion are generally associated with higher levels of financial success.
It is also important to keep in mind that personality traits are more malleable than many people realize. For example, one study found that keeping a structured daily routine increased people’s levels of conscientiousness – a trait that has been linked to wealth creation and financial success.
What does this mean for the aspiring Xolopreneur?
You can apply the findings of these studies to your own entrepreneurial journey to develop and refine positive financial behaviors.
Awareness about your current thought patterns, emotional states, and behaviors along with appropriate interventions can help you create meaningful financial behavior change.
The research also highlights the importance of maintaining a positive outlook during challenging economic times, especially as an entrepreneur. Psychological interventions, such as psychotherapy, can help protect your emotional state during economic downturns.
Lifestyle changes can also help boost your mood and your business’s bottom line. One study published in the Journal of Positive Psychology found that implementing the following seven lifestyle tweaks can result in a significant increase in psychological flourishing:
Speaking positively – Offering a genuine compliment or memorizing an inspirational text or saying
Moving dynamically – Doing 30 minutes of moderate exercise, achieving 10,000 steps daily, or engaging in 20 minutes of guided resistance exercises
Immersing yourself in an uplifting natural environment – Spending 30 minutes in an uplifting natural environment or experiencing a sunrise
Eating nutritiously – Eating multiple servings of plant-based food daily or preparing a high-fiber, plant-based meal with friends
Getting quality sleep – Spending eight hours in bed without a device
De-stressing – Spending 15 minutes in a quiet place, relaxing and being mindful of your surroundings, or going off-line for 24 hours to recharge
Serving others – Performing a random act of kindness, or using a signature strength to perform an act of service
Negativity can only serve as an obstacle and hinder wealth creation while positivity creates a powerful mindset conducive to wealth acquisition. Those who hold a positive outlook tend to be more motivated, open to new opportunities, and unafraid of taking risks – all essential components in becoming successful as an entrepreneur.
Mark Travers, Ph.D., is an American Psychologist with degrees from Cornell University and the University of Colorado Boulder. Xolo helps him run his online therapy practice, Awake Therapy, from whatever part of the world he is currently living in.