How to Rewire Your Brain to Increase Financial Optimism

6 activities you can do daily to be more optimistic about your financial future

Welcome to part 2 of this mini-series on cultivating financial optimism.

In part 1, we reviewed all the ways being optimistic helps you achieve better financial outcomes.

In this article, we review what causes someone to be optimistic and pessimistic and review six research-backed exercises you can do in just a few minutes per day to become more optimistic about your financial future.

This post took a ton of research, so if you find this a valuable resource, please consider becoming a paid subscriber or sharing this newsletter with a friend.

Let’s get into it.

What causes someone to be optimistic or pessimistic?

If you hope to become more optimistic about your finances, the first thing we must investigate is what causes someone to be optimistic or pessimistic.

How much of optimism and pessimism is “inherent”? Put simply, are people born to be natural optimists or pessimists based on their genetics? That was the central question of a 1992 paper titled “Optimism, pessimism and mental health: A twin/adoption analysis” written by Plomin et al.¹

They studied 500 pairs of fraternal twins, half of which were raised together and half of which were adopted apart from a very young age. They studied the levels of optimism and pessimism in each group in an effort to measure how much someone’s level of optimism or pessimism is inherent and how much is attributed to environmental and learned behavior. They found that optimism is 23% inheritable while pessimism was 27% inheritable.

A hopeful takeaway from this study would be that more than 75% of optimism comes from learned behavior rather than your inherent genetic makeup. If true, that is good news for anyone who wants to increase their level of optimism; behavior that can be learned can be unlearned.

Where do people learn most of their behavior? As children. It’s widely documented that whether someone grew up rich or poor can have a dramatic impact on their relationship with money. But does growing up rich or poor contribute to being an optimist or a pessimist?

A 2009 paper titled “Socioeconomic Disparities in Optimism and Pessimism” written by Robb et al. sought to answer that very question; does growing up rich make someone more optimistic, and growing up poor makes someone more pessimistic?²

No, and yes.

They found that growing up in a low-income household made someone more likely to be a pessimist but growing up in a high-income household wasn’t any more likely to make someone an optimist.

Training your brain to be more optimistic

So, if optimism is something that can be at least partially learned, the big question is, what actions can you take to become more optimistic about your financial future?

Here are six activities you can do every day that have been linked to increased optimism:

1. Mindfulness

2. Gratitude

3. Count your future blessings

4. Stop doom scrolling

5. Imagining the best possible version of yourself

6. Challenging negative thoughts

Let’s have a look at how each of these can be applied to your financial life and improve your relationship with money.

Mindfulness

If you are a naturally analytical like me, you probably look at a squishy term like “mindfulness” and roll your eyes. But hold on, there’s actually compelling evidence linking mindfulness to increased optimism

Let’s start with the obvious; what exactly does “mindfulness” mean? Here’s a useful definition from the Mayo Clinic.³

“Mindfulness is a type of meditation in which you focus on being intensely aware of what you're sensing and feeling in the moment, without interpretation or judgment.”

A 2020 study titled “Compassion meditation increases optimism towards a transgressor” written by Koopmann-Holm et al. examined the impact of mindfulness meditation on compassion towards an unsympathetic figure.⁴

The study included 74 participants and assigned them into one of three groups:

1. Performed daily mindfulness exercises

2. A control class

3. No class at all

After eight weeks, all participants were asked to write a letter to a convicted murderer. The researchers found that those who participated in daily mindfulness wrote more optimistic letters, “in part because they valued positivity more.”

Ask yourself this: If practicing mindfulness can make someone more optimistic about a murderer, do you think it could make you more optimistic about your financial future?

Practicing mindfulness does not mean you need to roll out the yoga mat and start meditating every day (unless you want to).

The following is a list of exercises put together by the Mayo Clinic that I have altered slightly to focus on financial mindfulness.

1. Pay attention to how financial situations make you feel.

Next time you whip out your credit card to buy something, slow down and notice how you feel. Does spending money make you feel anxious? Do you feel more anxious about buying certain items than you do others? Ask yourself why that might be.

The same goes for your thoughts about money. When you have a thought about money, notice how your body is feeling at that moment. What are you feeling, and where in your body are you feeling it? Be as specific as possible.

2. Don’t judge your money feelings

When you think about a financial situation, try not to judge the situation as either inherently “good” or “bad,” it simply “is.”

Let’s say you have a bill to pay, and you don’t have the cash to pay it until next payday. Try not to focus on how difficult the situation is or dwell on the decisions that led you to this moment and start focusing on the optimal path forward. If you can get to a place where you’re mental energy is focused on solutions to financial issues rather than how they make you feel, you’ll be on your way to more financial optimism and better financial decision-making.

3. Be kind to yourself

Many people are a lot harder on themselves than then they are on their friends.

If you forgot to pay your credit card bill on time, your inner dialogue might be pretty harsh “how could I be so stupid?” But what if your best friend came to you and was beating themselves up over making the same mistake? Would you call your friend an idiot or show them compassion?

Treat yourself the way you would treat your best friend.

4. Focus on your breathing

If you are feeling overwhelmed by negative thoughts or worries about your finances, sit down, close your eyes, and take slow and controlled breaths. Do this for at least 60 seconds—or as long as you need to— when you feel overwhelmed by financial stress.

Gratitude

In 2005 Seligman et al. published a landmark study detailing the benefits of practicing gratitude.⁵ They studied various interventions or exercises that had the greatest impact on someone’s happiness and level of optimism.

One of the most effective interventions in the study was the “three good things” exercise. Participants in the study were asked to write down three things that went well that day every night for a week. They were also given clear instructions to write down what caused that good thing to happen.

Participants in the three good thing study were less depressed, more optimistic, and happier than those in the control group.

The three good things methodology can easily be tweaked to help you cultivate optimism about your financial life.