‍

‍

The Impact of Purpose on Financial Wellness

‍

The myth of money as the gateway to happiness has had a long, slow death, but it does seem to be in its final stages. In the meantime, science, with popular opinion following close behind, has turned to enduring life purpose as the key to true, long-lasting happiness. Multiple studies have reported on the relationship between purpose and both psychological well-being and subjective well-being. Subjective well-being is a concept used by researchers that encompasses general life satisfaction and overall positive emotions. When discussing happiness, subjective well-being is typically used as a stand-in concept for the more nebulous term “happiness.” A 2016 study published in the Journal of Research in Personality connected these concepts in the last possible combination in an effort to answer this question: does having a purpose in life positively affect financial success? The short answer is a resounding YES!

‍

In a survey with thousands of participants, a higher score on a life purpose scale predicted both higher household income and higher net worth. After nine years, the researchers asked the same group of people the same questions and found that, again, an increase in perceived life purpose resulted in significantly higher household income and net worth (see Figure 1). These relationships held true even after controlling for other factors, such as initial levels of income and various demographic variables. Interestingly, the type of purpose or enduring goal the person had did not seem to matter, only that one existed. The authors hypothesized that a guiding purpose in life endowed people with greater energy and focus, allowing greater financial success over time. The benefits of a purpose even extend to businesses. A 2019 article in Organization Science found a relationship between a strong company purpose and better future accounting and stock market performance.

Figure 1. Changes in household income and net worth with a change of one standard deviation in life purpose score.

‍

Other studies have demonstrated positive effects of a purpose in life that may account for the financial success that seems to accompany it. Many studies seem to support the previous theory that stronger feelings of purpose result in greater engagement and productivity as an employee. This concept is so well accepted that a 2013 article in Advances in Developing Human Resources used it as a starting point to detail how employers might increase purpose in the lives of their employees. A recent BetterUp report also supports the theory that having a purpose results in greater productivity. Those who were experiencing purpose in their work produced over $9,000 a year more than fellow employees who felt little to no purpose. This could be due to the finding that these purposeful, motivated employees were taking less PTO and working about an hour a week more than their counterparts. As a result, high-purpose employees were more likely to have been promoted or received a raise. While higher motivation and productivity at work may account for the significant increases in income and net worth, there are other theories that may contribute to this relationship.

‍

One study put forward the theory that having a life purpose yielded an evolutionary advantage. Having a purpose would lead to more efficient use of resources, allowing a greater chance of survival. Most early human purposes were likely simple and along the lines of “survive, have a family, eat well.” However, researchers theorize that this instinct to form long-lasting goals to direct use of resources would translate in the modern day to better use of time and money. In this theory, the increase in wealth is due to better financial habits. Alternatively, people with a strong sense of purpose do not get sick as often or as seriously as those without a sense of purpose. In multiple studies, purpose in life has been linked to better health overall and less extreme health problems, including reduced risk of stroke, heart problems, Alzheimer’s disease, and suppressed immune response due to chronic stress. Even if avoiding serious medical emergencies is not the reason a relationship is seen between purpose and higher net worth, it certainly is a great side-effect!

Whether people with a purpose are harder working, wiser in financial matters, or simply healthier, it appears that having a clear purpose in life can increase not only overall happiness but also improve financial wellness. To help your employees find their purpose, Go Beyond has developed an exclusive software experience, The Purpose Journey,  that guides employees to define their life purpose and align that purpose with different components of their lives, including their work. To see if we can help you invest in a more fulfilled workforce, give us a call at 678-680-3985, send us an email at hello@trygobeyond.com, or click here to schedule a conversation today.

‍