Two Non-Financial Ways to Boost Your Wealth

Long-term wealth creation and preservation does not occur within a bubble. Rather, it’s influenced by many factors, including allocation choices, investment selection, career path, inheritance (and lack thereof), financial discipline, etc. It’s also affected by one’s health. To that end there are two non-financial actions you can take to boost (or at least preserve) your wealth: exercise and meditation.

The former could reduce your medical expenditures, while the latter can help improve your decision process. I’ll discuss both, with research on both.

Let’s start with exercise. A study published last year in the American Journal of Preventive Medicine (and referenced in this month’s issue of Money) found that being very fit during midlife led to a significant reduction in medical expenditures later in life relative to someone who isn’t physically fit. The study was based on analysis of approximately 5,000 people. Each participant’s fitness levels were measured and recorded at an average age of 56. The study’s authors then tracked the Medicare claims filed by those individuals later in life until study participants passed away or the study period ended. Participants who had unfavorable cardiovascular health characteristics when they were in their 50s went onto have average non-cardiovascular disease expenditures of $5,058 per year. In contrast, those who were categorized as having favorable cardiovascular health averaged $3,883 in annual non-cardiovascular disease expenditures. Cardiovascular disease expenditures were also higher for the non-fit group, averaging an additional $600 per year. (Expenditures included Medicare, third-party insurance reimbursement and out-of-pocket costs.)

Beyond what we commonly perceive as physical health, exercise may also help with our cognitive abilities. This is an important benefit because declining cognitive skills leads to financial problems. A study published earlier this year in the Journal of Alzheimer’s Disease found that practicing yoga leads a “statistically significant improvement in depression and visuospatial memory.” (Visuospatial memory relates to our ability to recognize shapes and our environment.) The study’s authors think yoga may also specifically improve visual memory encoding—our ability to remember what we’ve seen.

As someone who has practiced yoga for well over a decade, I am obviously pleased with the study’s results. However, before you roll out a yoga mat, I will caution that the results were based on a very small sample of people (14 in the yoga group and 11 in the memory exercise group), so further research is absolutely needed. What we do know, however, is that yoga does improve balance and strength and can lower stress—three big positives. Additionally, the Alzheimer’s Association has previously pointed to research that shows exercise to have a positive impact on cognitive skills. So while yoga specifically may not ward off cognitive impairment better than other forms of exercise, practicing it does yield benefits.

The yoga practice used in the study incorporated breathing, poses and meditation. It’s not clear if one part of the practice specifically had more influence than the others, but meditation does offer benefits by itself.

Among the benefits meditation offers is mindfulness. Mindfulness means being aware of the present moment. Being mindful sounds like a pretty obvious thing to do, but our minds wander nearly 50% of the time according to Jeremy Hunter, an assistant professor of practice at the Peter F. Drucker School of Management. If you think that number seems high, try this exercise from Headspace, a digital provider of meditation training that I subscribe to: Consciously acknowledge every time you change your posture, meaning standing up, sitting down or laying down. It may sound easy, but I can tell you from personal experience that it’s not.

A big reason why it’s not easy is our brain’s system 1. System 1 is quick, intuitive and relies on mental shortcuts (heuristics) to make decisions. System 2 is slow and deliberate. We like to think we’re engaging System 2 when we’re making important decisions, but in reality we most often use System 1. In fact, Daniel Kahneman says System 2 spends most of its time rationalizing the decisions made by System 1.

The danger of System 1 is its automation and tendency to be reactive. System 1 works well for getting us to run when we’re in physical danger, but not when it comes to making portfolio decisions. Rather, we need the logic of System 2 to think through the potential ramifications of our actions. We also need System 2 to check our orders to ensure we’re not making a mistake, whether it’s entering the wrong ticker or clicking on “buy” when we really intend to sell.

Meditation helps us to engage System 2 by making us more aware of the present. Even the mere practice of closing our eyes and focusing on the act of breathing for a minute or two can make a huge difference. A short mental timeout can be all a person needs to stop and think through the action they are about to take. That alone can help boost wealth by engaging System 2 more often.