Why do money problems cause so much stress? Here's what happens to your brain when you worry about money
Photo-Illustration: by Stevie Remsberg; Photo: Getty In My Two Cents, advice columnist Charlotte Cowles answers readers’ questions about personal finance. Email your money conundrums to mytwocents@nymag.com
In theory, the threat of coming up short should have spooked me into making smarter financial decisions in the long run , and research does show that it can incentivize people to stretch their money further. But that effect is only temporary, and it can backfire. According to several studies, people’s brains function differently when they perceive or anticipate scarcity.
Many people don’t just experience this abject terror every once in a while, like I did — they live with it all the time, says Zhao. If it’s not at the forefront of their brains, it’s squatting somewhere in the back, weighing down their cognitive bandwidth and inducing that fluttery dread when a bill arrives, even when they can technically afford what’s on it.
Zhao and her research colleagues refer to this behavior as “tunneling”: “People think, I don’t have any other options. This is the best that I can do. And they lose perspective,” she says. To make matters worse, most people are pretty powerless once they’ve dug in. “When I’m tunneling, there’s not much I can do to yank myself out of that mind-set — it’s too hard, because of the cognitive impairment it causes.
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