What is Prosperity

Prosperity is not just about money or wealth. It is made up of the resources and financial foundations that support your life: mindset, budget, savings, earning, and freedom. Money should serve you, providing stability and choice. Prosperity is the pillar that asks whether it does.

How we define Prosperity

As the saying goes, money can't buy happiness. But the research is actually more nuanced than that. In 2018, researchers found that how people's finances felt, how much stress managing money caused now and how secure the future looked, predicted their overall wellbeing about as strongly as job satisfaction, health, and relationship support combined, regardless of how much money they actually had. And in a study of 530 workers, satisfaction with finances was the single strongest of seven areas of life in explaining satisfaction with life as a whole.

Money should support you: known, planned, and enough, so that the only stress it causes you is having too many options for how to spend it.

At optml, we break Prosperity down into: mindset, budget, savings, earning, and freedom.

Mindset

The first part of Prosperity is how you think about money, because a scarcity mindset will limit you long before your income does.

Scarcity actively changes the way you think. In a 2013 study, shoppers asked to think about a large unexpected car repair did worse on tests of attention and reasoning, but only if they were poor. In a comparison study, Indian sugarcane farmers scored worse before the harvest, when money was tight, than after it, when they had been paid.

Among Australian women surveyed in 2013, financial self-efficacy, the confidence that you can manage your own money, was one of the strongest predictors of holding savings and investments and of not holding debt, whatever their income.

We all have money beliefs, many of them limiting, and if we don't address those, money will forever cause psychological stress, no matter how much of it we have.

So we recommend deciding:

• Money is a tool you direct. It is neither inherently good nor inherently bad.
• You are capable of earning money. More, even, than you currently believe.
• You are capable of understanding money. And that understanding it will empower you.

If you have time, write down all your money beliefs without judgment — what are all the beliefs you've picked up over your life about money? (e.g., "I'm bad with money," "Money doesn't grow on trees," or "Rich people are evil"). Acknowledge your current beliefs, then decide that other beliefs about money may serve you better (e.g., "I'm great with money," "Money is shockingly easy to make," or "When I am rich, I can serve more people").

Then create a plan to learn your numbers, build up savings, and have a plan for the year (or even until retirement). Look at your numbers on a schedule rather than when something goes wrong; this will help you build a more confident relationship with money.

Budget

Budget is knowing where the money goes: the fixed expenses that arrive whether you like it or not, and the variable wants that are the point of earning it.

As humans, we are bad at guessing these numbers. People underpredict their monthly spending by about 15 percent, because they estimate from the ordinary expenses that come to mind easily. We budget the frequent, ordinary expenses fairly well and underestimate the infrequent ones — the car repair, the wedding, the flights — because each one feels like an exception. And budgets made for the next month fall well below what people actually spend, while budgets made for the year are closer.

Variable expenses are where we can actually buy happiness. The research shows that the greatest happiness is gained when we:

• buy experiences over things
• buy many small pleasures over a few big ones
• pay now to enjoy later
• buy time (e.g., on cleaning, on delivery, on things we hate doing)
• spend on other people

At optml, we recommend using an annual budget rather than a monthly one, with two sections:

• Fixed: the rent, the insurance, the groceries, the subscriptions
• Variable: every irregular expense (like trips or potential car repairs) and every desired purchase (like gifts or a new TV) for the next twelve months

We then track the categories monthly against the year's plan so we can see whether we are ahead of plan and have to cut back, or behind it and can spend more. The main question we want to answer at the end of the year: did our money buy us the greatest happiness it could?

Savings

Savings is the cushion first and the future second: the money that turns a surprise into an inconvenience, and then the money that makes work optional.

Only 63 percent of American adults say they could cover a $400 emergency with cash or its equivalent, according to the Federal Reserve's 2024 survey. And this cushion matters for how life feels: when researchers paired people's actual account balances with their life satisfaction, they found that liquid cash on hand predicted a sense of financial wellbeing, and through it life satisfaction.

So we recommend putting savings on autopilot rather than relying on willpower. Create a savings account and have part of your paycheck transfer into it automatically on payday. We recommend an amount you can always commit to, ideally 10 to 30 percent of your paycheck. The first goal should be one month of expenses, the second three months, then six, or long-term accounts. As you build this muscle, notice how it makes you feel. Money is meant to buy freedom.

How to invest what comes after the cushion is between you and your advisor; this pillar's job is to make sure the transfer exists and that the target has a date (see below for an example of how to set this up in optml).

Earning

Earning is the income that funds all of this, and it raises the real question: does more of it make you happier?

For a decade the answer was thought to be "only up to about $75,000 a year." Then, in 2021, a researcher found that there is actually no such plateau. It turns out that the plateau exists only for the least happy fifteen to twenty percent of people, whose happiness stops rising near $100,000; for everyone else, more income keeps helping. So earning matters. In addition, people who value time over money report higher wellbeing, as do people who spend money to buy back their time.

So we recommend treating earning as a goal with a place on the calendar rather than a hope:

• put the conversation about a raise on the calendar
• set a goal to complete the certification that increases your rate
• find the second client
• try a new side income for a quarter

And price the trade honestly. An extra ten hours a week for the extra money is a Prosperity gain and a Power, People, and Play cost, and only you can say whether it is worth it this season.

Freedom

Freedom is the part of Prosperity people mean when they say "financial freedom": no undesired debt, no financial stress, and the option to stop working.

Studies have found that people with unsecured debt (credit card debt and loans not attached to a house) were more than three times as likely to have a mental health problem, with the strongest link to depression. Perceived financial wellbeing is made of two things: how stressful money is now and how secure the future looks.

So we recommend knowing three numbers:

1. What you owe and the date you will pay it all back
2. What a month of your life costs (for real, not approximated)
3. Your freedom number, the amount at which work becomes optional

We will be writing more on this topic, but for now, here is a Financial Independence Calculator that you can use to get your own numbers.

What to watch out for

Money is frequently avoided because it can be painful or stressful to think about. The statement goes unopened, the exceptional expense gets treated as a one-off every time, and the budgets are never created or adhered to. The fix is just to face the numbers. After people adopted an app that simply showed all their balances in one place, their overdraft fees fell substantially over the following two years.

The other failure is obsession, where Prosperity becomes the only pillar that matters. But Prosperity funds all the other pillars, and they are not mutually exclusive. The same job can sit in two pillars: earning, security, and options are Prosperity; whether the work means something is Purpose. The trip that costs money is Play, the course is Potential, and the meaningful job that pays less is Purpose. This comes back to mindset, so it's important to address.

How we prioritize Prosperity

Here is how Prosperity gets planned in optml, following one example the whole way through.

The rating. On a Sunday in June, Luis, a freelance designer whose income arrives in lumps, rates his Optml Six. Prosperity is rated a 3: he does not know where last month's money went, a $3,000 tax bill surprised him in April, there are no savings, a credit card balance gets the minimum payment every month, and money makes him anxious enough that he does not look.

The vision and the year-long goal. On Prosperity's card in optml he writes the vision, three to five years out and in his own words: "Money is boring. I know where it goes, I have three months of expenses sitting untouched, and every trip is paid for before we leave." Under it, the goal for the year, written so he can check it in December: "Three months of expenses saved, zero credit card debt, and an annual budget that survives the next tax bill."

The quarter. For every pillar, optml supports multiple quarterly goals, so the year's goal breaks down into this quarter's: "By September 30, have one month of expenses stashed in a separate account, have halved the card balance, and have listed every fixed and irregular expense for the next twelve months." From now on the card shows whether the quarter is on pace.

The first Sunday Check-In. In Weekly Capture he empties his head: open a savings account, set an automatic transfer for the day the retainer lands, list the fixed and irregular expenses, call the card company about the rate, look at last month's numbers. Each of these items falls under Prosperity. He stars two must-dos, the account and the list, then drags everything into the week beside his existing calendar events, in Prosperity's color: fifteen minutes Tuesday at 12:15 to open the account and set the transfer, an hour Wednesday at 8pm for the list, fifteen minutes Thursday at 12:15 for the card call, and a money hour as a recurring block on the first Sunday of every month at 4pm.

Following the day. On Tuesday, the Today tab shows the account first, and by 12:30 the transfer is set for the 3rd. On Wednesday a client call runs late into the hour he set aside for the list; he drags the time block to Saturday morning rather than deleting it. Thursday's call gets the rate down, and the payoff date goes on the calendar in Prosperity's color: March 14.

The next Sunday. The Weekly Overview shows Prosperity: two and a half hours planned, two hours completed. The account is open, the transfer is set, and the list has fourteen items on it that come to $4,100 a month, which is what his monthly budget had been hiding. He rates Prosperity again: a 4, mostly because he looked. The transfer and the money hour stay, and the list goes into a spreadsheet as the start of next year's annual budget.

The end of the quarter. In the quarterly reflection he scores the goal. The separate account holds three weeks of expenses, not four, because a slow August ate one transfer. The card is down by more than half, and the list is done. Call it 80 percent, and he has not been surprised by a bill since June. Next quarter's goal builds on it: the transfer stays, the card debt will be gone by March, and the spring trip gets budgeted for before it gets booked. The year goal is on track, and Prosperity is a 6.

The year. In the annual review, he asks whether Prosperity still deserves the most effort or whether it is now maintenance while another pillar takes the lead, and he asks the only money question that matters at the end of a year: did it buy us the greatest happiness it could? That is the whole loop: rate, name, plan the quarter, plan the week, follow the day, look back on Sunday, adjust.

Prosperity is the fourth of The Optml Six, between Potential and Purpose. The annual review is where you decide how much weight it carries this year, and where the money gets its own review.