Being Sad Is Expensive: How Your Money-Mindset Matters

Entrepreneurs and professionals often focus on hard skills, strategies, and market trends to achieve financial success. However, recent research suggests that emotions and money mindsets play a significant role in shaping financial well-being. My study titled Personal Emotions and Family Financial Well-Being: Applying the Broaden and Build Theory found that emotions influence household income and net worth beyond traditional factors, like education, income, or age.

The Link Between Emotions and Money

Traditional thinking suggests that financial success leads to happiness. However, my research flips the script: positive emotions may actually drive financial well-being. The study, based on a sample of 993 U.S. adults, discovered that emotions such as contentment and love positively influence financial outcomes, while negative emotions like anxiety and loneliness tend to have the opposite effect.

This aligns with the Broaden and Build Theory (BBT), which proposes that positive emotions expand cognitive abilities, build skills, and foster stronger relationships, all of which contribute to financial growth. On the other hand, negative emotions narrow focus, limit creativity, and can lead to poor financial decisions.

How Positive Emotions Boost Financial Success

The study highlights three key positive emotions that contribute to financial success:

1. Contentment – People who experience higher levels of contentment tend to have greater income and net worth. This emotion is linked to reduced materialism and smarter financial choices.
2. Love – Feeling loved correlates with higher relationship stability, which can lead to better financial planning and resource sharing within households.
3. Joy and Interest – These emotions encourage curiosity, risk-taking, and personal growth, all of which can translate into entrepreneurial success and wealth accumulation.

These positive emotions create a positive feedback loop, since people who experience a growth in skills, personal growth, and resources will also experience a boost in positive emotions, which then cultivates even more financial success.

The Downside of Negative Emotions

Just as positive emotions build financial resilience, negative emotions can erode financial stability. The study found that:

• Anxiety and Sadness were associated with lower income and net worth. Financial anxiety and sadness can lead to avoidance behaviors, poor investment choices, and short-term thinking. As you get stuck in a permanent “flight or disgust” response to the world, you are not able to focus on growing or long-term thinking, which are incredibly detrimental to wealth-building.
• Anger and Loneliness had a more complex relationship with finances. While loneliness was surprisingly linked to higher net worth (possibly due to a focus on material wealth over relationships), anger was also associated with financial success, possibly because it acts as a motivator to improve circumstances. However, prolonged anger and loneliness can have negative effects on long-term financial stability and well-being.

These negative emotions create a negative feedback loop, since people who are chronically trying protect themselves from perceived dangers will experience shots of sadness, anxiety, anger, and loneliness as they recede, which then cultivates more financial loss as they do not engage in personal growth, relationship-building, or creative play.

Practical Takeaways for Entrepreneurs and Professionals

Understanding the connection between emotions and financial well-being can help you make better financial decisions. Here are a few practical ways to leverage emotional intelligence for financial success:

1. Cultivate Positive Emotions – Engage in activities that boost joy, love, and contentment. Strong personal relationships, exercise, and gratitude journals can enhance these emotions and positively impact financial decision-making. One proven way to boost all areas of well-being is to keep a daily gratitude journal.
2. Manage Financial Anxiety – If money-related stress is a concern, implement structured financial planning. Working with a financial advisor, automating savings, and setting clear financial goals can help mitigate anxiety-driven decisions.
3. Use Anger Productively – While anger can be a motivator, it’s essential to channel it into productive financial planning rather than impulsive decisions.
4. Balance Relationships and Wealth – While accumulating wealth is important, maintaining strong personal relationships should be a priority. A supportive network can lead to better financial opportunities and overall well-being.

Incorporate Money Mindsets Into Financial Planning

The findings of this study suggest that financial professionals should consider emotional factors when advising clients. Financial well-being isn’t just about numbers—it’s about mindset, emotions, and behavior. As more financial advisors, business coaches, and policymakers recognize this connection, we may see a shift towards a more holistic approach to wealth management.

Incorporating emotional intelligence into financial planning isn’t just a theoretical concept, it’s a practical strategy that can help entrepreneurs and professionals achieve lasting financial success. By fostering positive emotions and managing negative ones, you can build a stronger financial foundation for yourself and your family.