4 Ways Science Says Money Affects Your Mind


How we think about money can make it easier — or more difficult — for us to handle our finances well. These studies reveal some interesting information on our money mentality, and how these thoughts can affect our day-to-day money decisions.

1. When you don't have enough money, you don't think as clearly

Without the money you need to pay your bills and meet your regular expenses, something strange happens to your brain. Because of the stress induced by financial scarcity, you can actually lose some cognitive functioning ability. That means you're less able to process information, analyze and prioritize conflicting needs, and make long-term decisions. (See also: Poverty Makes You Stupid)

In 2013 researchers conducted two different studies. One involved shoppers at a mall in New Jersey who were asked to consider a hypothetical problem, such as how to pay for a car repair. They were then given unrelated spatial and reasoning tasks to complete.

In the study, lower-income individuals performed poorly on those unrelated tasks if the cost of the car repair was high. They did better on the tasks when told the cost of the repair was lower. Higher income participants performed well, no matter what the cost of the hypothetical repairs were. The greater stress the lower income participants felt when faced with high repair costs seems to have affected their ability to perform other kinds of tasks.

In another experiment on the other side of the world, sugar cane farmers from India were asked to perform a series of tasks both before their harvest, when they were poor, and after the harvest, when they were rich. The farmers performed better at cognitive tasks after the harvest than they did before. Researchers concluded that poverty-related concerns leave less mental resources for other types of tasks.

You, most likely, are neither a New Jersey shopper nor a Tamil Nadu sugar cane farmer. However, your brain responds in the same way to financial stress. When you lack the resources to pay bills and buy groceries, or to handle a financial crisis of some sort, a huge amount of your cognitive ability is taken up in figuring out how to handle the problem. That means, of course, that you have less cognitive ability left to make decisions in other areas of your life.


As much as possible, avoid making big decisions in any area of your life when you're under financial stress, whether it's temporary or extended. Try to give yourself more time, and get help when possible until your financial situation is resolved. Realize that the financial stress will have a direct effect on your cognitive ability, and normal tasks may seem harder. Reduce any obligations you can.

2. When you have a lot of money, you think you deserve all your advantages

You work hard for your money; so, in a sense, you deserve the advantages you gain from it. However, other advantages and the results of chance or "good luck" aren't something you earn or deserve. When you're doing well financially, however, you'll tend to give yourself credit for all the good stuff that comes your way, no matter how unrelated it is to your hard work or financial smarts.

In 2012, psychologist Paul Piff conducted an experiment on wealth's impact on ethical behavior. Stationed at the University of California, Berkeley, Piff had over 100 participants play a game of Monopoly. Anyone who's ever played Monopoly with competitive family members knows how dangerous that can be. In this situation, however, one player had almost no chance of winning; the two players were given different rules.

Player One got $2,000 at the beginning of the game, received $200 every time he passed Go, and got to roll two dice. Player Two, on the other hand, received only $1,000 at the beginning of the game, got only $100 on every trip past Go, and got to roll only one die. The mood of the game was interesting; as the players progressed, Player One, who was advantaged, became increasingly dominant and rude toward the other player, smacking pieces around the board and loudly celebrating their victory.

What does this mean for you?

It means that, if you're human (and we assume that you are), you, too, are subject to this type of mental attitude toward having plenty of money. The more financially secure you feel, the more you might assume you have the right to be financially secure. This cognitive bias could easily affect your financial future by leading you to treat your money casually and assume that everything will work out for the best.

Perhaps more chilling is the effect that this mental response can have on how you treat other people. A 2012 study by The Chronicle of Philanthropy showed that, surprisingly, lower-income households give a bigger portion of their discretionary income to charities than the wealthy do. In other words, not only can plenty of money make you think you inherently deserve all the advantages you have, it can make you think others don't deserve them … at least, not quite as much as you do.


It's easy, and almost automatic, to feel invincible when you're in a good financial position. But this feeling of invincibility can prevent you from doing important financial planning, making prudent decisions, making wise investments, etc. You may also become less generous and less empathetic to the needs of others if you're feeling quite wealthy.

Generosity, however, is a key way to strengthen your social network and build a support structure that will be with you even through difficult times. You should never assume you'll always have the advantages of wealth, or that they're inherent to you somehow.

3. Thoughts about money ease pain and social distress

Money does matter, and we wouldn't pretend otherwise. But you know that money isn't the only thing that matters in life. You can have plenty of money, but without fulfilling work and deep relationships, you'll be missing out on what is essential for a happy life. Unfortunately, your brain is often convinced otherwise, and thinks of money as a substitute for connection and as a valid way to relieve pain.

In a 2009 study on money's impact on pain and social distress, participants were invited to a lab where they were told they would be tested for finger dexterity. One group was tasked with counting a stack of currency; the other group got to count blank pieces of paper. After they counted, some of the participants were asked to put their fingers in a bowl of hot water — 122 degrees F — and rate their level of discomfort.

The results?

The participants who had counted currency expressed much lower levels of discomfort than the participants who had counted paper. The study, combined with earlier research, points to a strange tendency we have to equate money with strength, acceptance, and social connection.


When you have plenty of money, be aware of the tendency to focus on your wealth and ignore the other needs in your life. It's great to have things that make you feel better, and there's nothing wrong with being appreciative of your financial security. However, put effort, thought, and attention into the relationships and community that surround you — those last longer and ultimately do more for you than money ever could.

4. You think money improves the odds of getting what you want

It can be intimidating to ask other people for help. You don't want to be a burden. You don't want to inconvenience people. And you don't want others to help you out of some sense of obligation, when secretly they're fuming over the delay and effort. It's easier to ask people for help when you can offer them something in return; that way, you think, it's not so much "help" as it is a trade. And what better to trade with than cold, hard cash?

Past research has shown that people tend to underestimate their ability to get others to help them, or, in other words, to say yes to whatever is being requested. In five different studies, researchers showed that the requesters don't underestimate their ability to get others to comply as much when they're able to offer money in exchange.

In the various studies, participants were asked to make a small request of others; before they did so, they were asked to estimate the likelihood of their success. When the participants knew they could offer a monetary incentive in exchange for the request, they were much more accurate in their prediction. In other words, participants equated the ability to offer money with their own chances of success. Also interesting is that being able to offer money made participants feel more comfortable with making a request.


You may think you have to offer value, in particular cash value, in order to get cooperation and help. However, while money is motivational, it's not the most powerful motivation by any stretch. The studies showed that monetary incentive helped the requesters more accurately assess their own ability to get help. That ability was always there; they just weren't able to accurately see it until they had cash-in-hand to offer.

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