Financial Stress and Well-being: A Psychologist’s Perspective

What Debt is Really Doing To Us

The Personal Implications of Financial Stress

People facing stressful financial circumstances are everywhere around us. While the US economy has rebounded from the recession of 2008, many new jobs are not paying enough to be able to live comfortably, wages are stagnant and though unemployment has returned to around 5%, many jobs offer no sense of security whatsoever. Personal debt is at record levels and there is a nagging perception across America that things are not going to improve.

While these statistics are deeply concerning, they only describe the conditions that seem very likely to adversely affect millions of people.

How can we begin to understand financial wellness if we don’t understand the symptoms people living in these conditions experience as well as the severity and scope of these symptoms?

I believe that, in part, the debt we incur is at the heart of this tension.

We accept debt as a result of a pervasive feeling of emotional emptiness, reinforced by consumerist marketing campaigns and a growth-fueled mindset evident among the financial service industry. The net result leaves us trying to fill our needs with material things when we may need emotional comfort of another kind. In essence, we’re compensating for our sense that things are out of balance by spending money we don’t have, and the debt this results in is making us sick.

This demands to be taken seriously.

The facts are clear: People are literally falling apart from the anxiety debt and uncertain financial futures bring.

Financial stress is leading nearly a quarter of Americans to experience disordered thoughts, behaviors and emotions at clinically dangerous levels, and we need to begin a conversation about how to fix these epidemic problems.

There are in fact solutions, but before we arrive at them, it’s useful to understand the many issues that converge here.

How I Got Here

I’ve spent my career working to better understand people on a psychological level. My years in academic research were spent working primarily in two areas: psychometrics, the development of tests that measure psychological and cognitive traits, and in the study of how hormones, primarily stress-related, impact the brain.

If reading science journals isn’t your thing, you’re likely to be familiar with my work in psychometrics at eHarmony. It was there where I first applied my psychometric and research skills to develop the instruments and methodologies that have now been demonstrated to successfully match people for long-term romantic relationships, by the millions.

It was this experience of uncovering the tremendous value of understanding an individual’s unique personality that brought me to what I do today, where I examine the intersection of money, personality and well-being. From my experience in helping people connect with others with whom they shared basic personality traits, I became convinced it was possible to both understand and quantify personality over the internet and to use this information to help people better understand their own needs, to take action to improve their lives and their relationships, and here, specifically, improve our relationship with money.

We know that stress wreaks havoc on the mind and body and now we know how impactful financially induced stress really is. It’s time to understand and crack the code of how our brains deal with money. By understanding it, we can improve it. Once improved, I believe we can live healthier lives.

Our Brains and Money

Money is a relatively new thing in human history. The first documented use dates back to trading obsidian around 15,000 BC.

While that may sound like a long time ago, humans have been evolving for countless millennia, developing unique personalities to match the capabilities of our brains and bodies. Based on what we’ve see in terms of how damaging to the mind, body and well-being debt can be, we’re seeing an epidemic of stress as a direct result of the levels of debt carried by Americans of all kinds. In no time at all, we’ve gone from having this new tool, credit, to seeing it destroy lives.

Our Brains and Debt

Financial institutions — as well as the vast majority of advertising and marketing efforts — are overt in promoting the message that more money equates with higher personal value.

My research has shown me otherwise.

For example, many of us value our relationships with people more than our careers, or are better suited for creativity (with a distinct aversion for linear, in-the-box thinking) than those for whom spreadsheets are a passion. These nonlinear cognitive traits aren’t features of personalities that work well within the traditional financial mindset, with its institutional one-size-fits-all approach to money, which is derailing so many people.

Once derailed, many people spend a lifetime with the debt incurred years earlier hanging over their heads. Powerlessness, dysfunctional thoughts and illness flourish. They’re unable to pursue their best interests because they’re beholden to interest payments that limit their ability to pursue their dreams.

In many ways, we’re starting at the beginning, though all of us have been in a relationship with money all of our lives. Though debt has no emotions, thoughts or feelings, the people carrying it are as different from one another as can be. Without knowing how our individual personality influences our relationship with money and governs our decision-making, how can we work within a system that isn’t designed to recognize our individuality?

Much like we’re all entirely unique from a personality perspective, our financial personalities are no different. The dichotomy between some personalities and the way of thinking currently demanded by financial institutions is creating deeply destructive relationships with money, debt and savings. While some people can succeed within these confines — the well-organized, those who plan for the future, those who follow more traditional paths — a large percentage of people are left with chronic financial issues they can’t address alone. This can lead to feelings of personal failure, avoidance and anxiety (also known as stress), and we become increasingly disconnected from what matters to us and farther away from our well-being.

Why does this matter? Because we can’t get right with money if we don’t know what motivates us and how both nature and nurture are working together to guide and undermine us.

Armed with a better understanding of the destructiveness of financial stress, debt and powerlessness, I am proposing a new way to approach finances. A re-invention of our collective relationship with money is now a requirement, because without it, we’re only going to incur more debt and suffer the ever increasing health consequences of this problem.

I am confident that by beginning this discussion, we can look at this with sober, clinically focussed eyes and reverse this tide, heading toward saner, more financially sound personal decisions. Let’s take a collective deep breath and spend a minute thinking about why we spend the ways we do, what we’re really in search of and how it is impacting our long-term health.

This is just the starting point, and our team is focussed on developing the tools that will help us understand our brains on money. Soon, we’ll begin a conversation based on the data we have uncovered that illustrates just how serious an issue this is.