Can mindfulness be used in all areas of our lives?
Simon Blanchard, provost’s distinguished associate professor and dean’s professor at the McDonagh School of Business at Georgetown University, determines one area where it can particularly useful.
Simon Blanchard is a Provost’s Distinguished Associate Professor and a Dean’s Professor at the McDonough School of Business, Georgetown University. His research focuses on developing tools and methodologies to help managers understand consumer decision-making processes. Substantively, he often focuses on how consumers interact with their finances and technology. His research and perspectives on consumer finances and technology have been featured in media outlets such as Forbes, Fortune, Harvard Business Review, NerdWallet, The New York Times, Marketplace, and NBC News.
Mindfulness and Money
Mindfulness is a meditation practice that brings one’s attention to present experiences and is gaining mainstream popularity. Not only are people using mindfulness exercises to tackle their relationships with diet and exercise, but even business leaders are recommending them to boost employee well-being and productivity.
As we noticed that financial service companies also started talking about helping with “financial mindfulness,” my co-authors and I wondered: what does it really mean to be financially mindful, and does it even matter?
Diving into the literature and conducting numerous interviews, we arrived at the view that financial mindfulness has two essential parts. The first is about being highly aware of your finances. Knowing what you have, and what you owe. The second is acceptance. That doesn’t mean being complacent, but instead to be able to face financial decisions without letting your emotions take over. When one has high financial awareness and high financial acceptance, then one is financially mindful.
But does having financial mindfulness matter? To test this, we proposed and validated a series of eight questions, four on awareness and four on acceptance, as to measure one’s financial mindfulness. Then, we conducted a series of lab experiments and field studies in partnerships with fintech startups. We found that it does matter.
For example, among users of a financial coaching app, a one-point increase in financial mindfulness was associated with a 15-point increase in a user’s credit score. Those high in mindfulness were also less likely to react impulsively to market downturns, or to fall for the famous sunk cost fallacy.
Most interestingly, the benefits of mindfulness seemed to be more about acceptance than awareness. So, we hope that companies who tout helping with financial mindfulness do make sure to offer consumers strategies to better handle the emotions that come with managing their finances.
