Flow state vs. cash flow: Make better money decisions by discovering your flow state

How much should you spend on well-being?

The answer to how much you should spend on well-being really comes down to… it depends. Yes, this might sound like a cop-out; however, like many areas of our financial lives, we must consider various factors. With that in mind, let’s start with a simple rule-of-thumb budgeting strategy called the 50/20/30.

The 50/20/30 budget rule is a straightforward and effective method for managing our finances. It suggests dividing your after-tax income into three main categories:

• 50% for needs: This covers essential expenses that you cannot avoid, such as housing, groceries, utilities, insurance, car payments and other necessities.
• 20% for savings: This is allocated towards your financial goals, like paying off debt, saving for retirement, building an emergency fund or other savings objectives.
• 30% for wants: The remaining portion is for discretionary spending on non-essential items and activities that enhance your lifestyle, such as dining out, entertainment, hobbies and travel, or items that fulfill your well-being.

Does this mean we are spending 30% on our well-being and things that offer you flow? Not exactly. The key is to intentionally spend this part of our budget on areas that genuinely increase our well-being. Too often, we spend unconsciously on dining out, unused gym memberships or other things we think should make us happier. In reality, they often don’t. Moreover, going through the 50/20/30 budgeting process allows us to evaluate just how much we are spending on our fixed expenses. If you’re spending 50% or more on fixed expenses, perhaps it’s worth working to lower this allocation, especially if bigger houses and fancy cars aren’t important to you. (Check out MoneySense’s free Excel budget template.)

One you understand how and where you spend your money, you can find a balance between managing your fixed expenses, saving for your future self, and spending on your well-being. Personal finance experts say best practice is to maintain your savings around 10% to 20%. (If you aren’t there yet, know that it’s OK, we are all working towards something.) If you are saving 30% to 40%, your future self will thank you. However, think about allowing your present self to enjoy your money, too. Alternatively, if you’re spending, say, 60% on your fixed expenses, can you cut back anywhere and allocate more of your budget toward your well-being? 

How do flow states relate to money?

While it’s true that money makes the world go around, as I’ve explored in A Rich Life column called “How to live a rich life,” money itself isn’t a guarantee of a satisfying and fulfilling life. Singer Neil Diamond’s lyric “Money talks, but it can’t sing and dance” reminds us of money’s limitations. It can buy comfort, but not contentment. Social scientists support this view, suggesting that enduring life satisfaction stems from meaningful moments and social connections, not merely from an increase in our bank balances.

I’m not undermining the critical role of money in our society. Its true value may be realized when it’s used to enrich our life experiences. Martin Seligman, one of the founders of positive psychology, suggested in 2002 that flow allows us to have meaningful moments and deep connections with ourselves and others, thereby enhancing the satisfaction with life.

What does flow do for your happiness?

Csikszentmihalyi’s research suggests nine characteristics of flow. How do you know if you’re in the flow? If you have any or all of these experiences:

1. Balancing a challenge with your skills.
2. Being fully involved in an activity.
3. Setting clear objectives.
4. Quickly seeing how well you’re doing from outcomes or others’ comments.
5. Feeling a sense of personal control.
6. Losing track of time because you’re so focused.
7. Doing activities for the joy of it, not for a reward.

According to Csikszentmihalyi, flow has many benefits, but these two have the biggest impact:

• Emotion regulation: Engaging deeply in an enjoyable activity boosts your mood and generates positive emotions, which in turn strengthens your ability to manage stress and navigate difficult emotions. It helps maintain emotional balance, which is beneficial when making investment and spending decisions. Being calm means you’re less likely to react impulsively with your money, leading to fewer costly mistakes. This emotional steadiness leads to thoughtful financial choices.

• Fulfillment and happiness: Flow can bring enjoyment to what you’re doing, making the activity rewarding. Csikszentmihalyi’s research indicates that flow can contribute to increased happiness and overall life contentment. Budgeting to have more of these moments can lead to lasting life satisfaction.

How money can make you happy

You’ve likely heard that money is a tool. While that’s true, using money as a tool for happiness can be challenging. We attach so many emotions and meanings to money that it can be hard to separate them. However, that shouldn’t deter us from using money to mindfully invest in engaging, joyful activities and experiences that create moments of flow.

How to use flow for a better relationship with money

A musician I know named Greg says he’s always been grounded by music. He was born deaf, and a successful surgery at the age of two unlocked sound for him. He has embraced music ever since. By his early 20s, Greg had learned to sing, write music and play the guitar. He performed at local gigs and on international stages. Yet, as he became more and more successful, accomplishing the stardom he always thought would make him happy, he felt drained by his music label’s relentless push for commercial hits, which diminished his drive for creating artful and meaningful music. 

Greg went to Hawaii for a year-long reprieve and rediscovered flow in music. He looked back at his “best” performances, where he felt deep flow states, and recognized that it didn’t happen at sold-out shows. Instead of pursuing commercial success, he focused on making music at private workshops, writing songs for people, and performing at wellness and yoga festivals.

Now, more than 20 years later, Greg’s life is filled with flow moments that involve his music. In Hawaii, he built a life with meaning and purpose. It’s no longer about chasing success, money and big hits. 

His new life comes with challenges, of course, especially when it comes to finances. And when I asked Greg if he would change anything, he responded with a big smile: “Would I like more money? Sure, but I wouldn’t change a thing. My [happiness] bank account is through the roof. I have a great life.”

How to invest in self-care and flow states

The takeaways from Greg’s example and Csikszentmihalyi’s research are to integrate more flow states into our lives (and ultimately our finances) by doing the following steps:

1. Write out the activities you find flow in. What are you doing when you feel in the zone? What captures your full attention? List the activities and think about how to prioritize them in your life.
2. Budget for flow moments. Dedicate money to these activities you truly love. Think of it as investing in your well-being. Cut out activities you’re doing just because you think you should be doing them. 
3. Be smart with your self-care choices. Balance flow with your need for financial security—they’re not mutually exclusive. Don’t risk essential expenses for flow states. However, you can still evaluate your expenses (housing, transportation, food, etc.) to discover ways to decrease those costs.
4. Don’t do it alone. Sharing your flow experiences with others can deepen them. Can you join or create a group aligned with your interests?
5. Reflect and adjust. Just like you do with your annual budget or investing portfolio, regularly check in on your flows. Reassess how your spending affects your ability to achieve flow. Be flexible and reasonable, and adjust as needed.

Why should you care about flow? If you care about your money, you will

When reflecting on our lives, we hope that when our time on this Earth is over, we can say, “I did it. I lived a good life.” Of course, a “good life” doesn’t mean it was easy—life is always full of challenges, obstacles and setbacks. But scientific research shows that the more we invest in our well-being, the more resilience we have during challenging times. Flow states offer us emotional regulation and life satisfaction.

By intentionally spending time and money on areas in our life that bring flow and happiness, perhaps we can experience not just how money makes the world go around, but also how we can use it to sing and dance a little more. 

I say that’s money well spent.

You can hear my conversation about Greg’s money story on The Most Hated F-Word Podcast Episode #7 “Time or Money?” Additionally, you can hear my conversation with Dr. Jordan Hutchison on The Most Hated F-Word Podcast “Finding Flow: Your Path to More Money Joy.”

Read more A Rich Life columns:

• What is financial freedom in Canada?
• What is the PERMA model? Can it help Canadians to spend better?
• Does money buy happiness?
• How to live a rich life

About Shaun Maslyk, CFP

Shaun Maslyk is a Certified Financial Planner and host of The Most Hated F-Word podcast. He integrates psychology and coaching to help people awaken their money stories.

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