How both optimists and pessimists can balance their budgets

How both optimists and pessimists can balance their budgets

3 minute read

Whether you’re a glass-half-full kind of person or tend to focus on the negative in life, you can take advantage of your natural inclinations to secure your financial future.

Do you expect good things to happen in the future? Do you believe your behavior matters more to your success than the surrounding circumstances, especially in the face to challenges? Then you're an optimist. And you can skip ahead to the 'Optimistic finances: less stress, better health' section below.

If, instead, you know exactly what could go wrong in the years ahead, and you don't believe there is much you can do about it, you're a pessimist. Keep reading to see how your attitude to life can help you attain your preferred financial position.

Finances for pessimists: careful is as careful does

As a pessimist, you may make careful decisions with your money. This is because your outlook in life – that you worry about the possibility of losing your job, or have to repair your car, or that you will get ill, at least one in the next few years – leads you to make financial choices only after considering all the angles. This attitude can spur you to save money, so you can be prepared for just about all contingencies.

When it comes to credit cards, you expect that you may not always be able to pay off the balance in full; so you are more likely to choose a card with a higher annual fee, but a lower interest rate on the balance. That is, if you get a credit card at all: pessimists are more likely to avoid debt because of the possible things that could go wrong. This means they are less likely to get into financial trouble or waste money on interest.

Being pessimistic, you are also less likely to fall for scams. Although distrusting others is not a good trait, when it comes to financial choices it forces you to do your own homework and become your own financial advocate.

What to watch out for:
Get solid financial advice from an expert. As a pessimist, you are less likely to feel comfortable discussing money with family and friends. Which is fine – but you are also less likely to seek financial advice. It's always important to figure out your financial goals and the path to getting there.

Optimistic finances: less stress, better health

Being optimistic about your future, and feeling secure in your ability to handle challenges, does not mean that you ignore reality. In fact, compared to pessimists, you are more likely to put money aside for a major purchase (90% versus 70%). Two-thirds of optimists also have an emergency fund. Saving for the future also stretches to optimism about retirement: Aegon research proves that 80% of people who have a positive view of retirement, always save for their own retirement.

But the major difference between optimists and pessimists was in how they felt: you feel far less stressed about your finances than others.

All in all, you are more likely to take risks – but this attitude leads, surprisingly – to better financial health. According to Frost's Opt for Optimism initiative, 62% of optimists exhibit better financial health. That's a stunning seven times higher than pessimists at 9%! This can in part be contributed how optimists are more likely to seek out and follow advice from someone they trust and talk about money matters with friends and family.

What to watch out for:
Are you aiming to be a CEO? Make six figures? Or take a sabbatical to travel or raise children? According to a study by Heather Barry Kappes and Gabriele Oettingen, imagining your desired future actually makes you less likely to achieve it. That's because fantasies don't include the obstacles, frustrations, setbacks, and necessary efforts. Plan your future with rationale and solid financial advice.