Mindfulness, the meditation practice that brings one’s attention to present experiences, is gaining traction in the business world.

Researchers have long known that being mindful causes physical and mental benefits such as better brain health, decision-making and stress resilience. Major companies such as Google, Aetna and Intel offer mindfulness training programs as a way to boost employee well-being and productivity.

Building on this trend, financial products and services are starting to use the term “financial mindfulness” as a way to appeal to consumers. For instance, Fidelity talks about the importance of mindfulness in saving and investing, while PNC and Vanguard focus on regulating your emotions during financial planning.

Retailers offer financial mindfulness journals that claim to help people distinguish needs from wants and set financial goals. Books such as “Mindful Money” and “The Mindful Millionaire” explore how to achieve peace and prosperity through money management. Fintech has hopped on the financial mindfulness bandwagon, with apps such as Financial Mindfulness, Allo: Mindful Money Tracker and Aura, a mindful money management platform designed to “help you put your money to work and anxiety to rest.”

But not everyone agrees on what “financial mindfulness” means – and does it even matter?

The short answer is yes.

What financial mindfulness is

Together, our team has 32 years of experience investigating the psychology of consumer finance. Georgetown professor Simon Blanchard and I, along with Cornell Ph.D. student Lena Kim, conducted the first large-scale academic study on financial mindfulness.

We began by conducting a dozen hourlong interviews to ask: “What does financial mindfulness mean to you?” The people we interviewed were from various life stages, from their late teens to early 60s, and they could speak to different kinds of financial stressors: everything from how to best manage college debt, to how to navigate the financial and emotional stress of a divorce, to how to stay on track with retirement saving.

Our interviews revealed two main abilities that consumers associate with being financially mindful: high levels of financial awareness, or knowing what you have and what you owe; and high levels of financial acceptance.

To be clear, this doesn’t mean being complacent. Instead, it’s about being able to face unpleasant financial decisions without letting your emotions take over.

We used these two components to create an eight-item scale to measure how financially mindful someone is.

Why financial mindfulness matters

We then wanted to examine whether financial mindfulness actually results in better financial decisions.

Past research has shown that practicing general mindfulness makes people less likely to fall prey to the sunk cost bias: the tendency to continue working on something just because you’ve already invested large amounts of money, effort or time.

As an example, people are told that an investment strategy they developed over several months is not working, and there is no way to recover their lost time or money. Those who show the bias decide to continue with their current investment strategy even though they know it’s not working.

Importantly, when we measured how generally mindful someone is, as well as how mindful they are about finances in particular, we found that their level of financial mindfulness is a better predictor of the decision to change their investment strategy. Put differently, people with a good awareness of their finances, and who are willing to accept their financial situation, are better able to resist the sunk cost bias, since they are better able to manage emotions surrounding their money.

In addition to collecting our own data, we also partnered with two fintech apps that allowed us to administer our financial mindfulness scale to their customers.

With Aura Finance, a wealth-management app that targets young, high-earning women, we examined each user’s percentage allocation of stocks versus bonds, a common measure of investment risk tolerance. There is no optimal split level between stocks and bonds, but younger people are typically advised to take on more financial risk. Although we did not include the Aura data in our published paper, when we matched users’ scale scores to their portfolios, we found that financially mindful users were willing to take on more risk in their portfolios.

With Debbie, an app that helps customers track progress toward repaying debt and provides rewards when they achieve goals, we found that those who are more financially mindful have higher credit scores. Every 1-point increase in financial mindfulness was associated with a 14.8-point increase in credit score.

Increasing financial mindfulness

In the current economic climate, financial stress is a major concern for many Americans, leading to anxiety, depression and other mental health issues. Here are some practical steps to bring mindfulness to your finances:

1. Build financial awareness: Track and monitor your spending habits using available software, tools and apps, such as those offered through your bank. This will help you understand your relationship with money and build financial awareness. You can’t have financial mindfulness without knowing what’s going on with your own money.

2. Develop financial acceptance: You also need to accept your financial situation, even if your finances are not where you want them to be. Take advantage of services such as money coaches or online communities for money matters. Talking about money helps.

3. Learn about your money personality – your core beliefs about whether money can solve problems and what financial goals are most important to you. This will help you to develop better coping mechanisms.

Incorporating mindfulness into financial practices and habits can help people navigate their financial journeys. Based on our research, we believe that financial service providers should continue to offer not only awareness-related services but also acceptance tools – helping their customers lead financially happier lives.

Our research team partnered with Aura Finance and Debbie to collect some of the data discussed in this article.