Psychologists Explain How Money Matters Affect the Mind
In her book The Art of Money, author and therapist Bari Tessler writes, “We conflate it with our identity, our sense of worth, our definitions of success and maturity.” The “it” she writes of is money— specifically the concept of “money shame”—but she could easily be writing about sex.
In fact, money may actually be a greater taboo than sex today.
In an Elite Daily reader survey of 18-34 year olds, 88% of men and virtually all women (96%) said they don’t discuss money on dates. (Sex, on the other hand, is occasionally mentioned on dates.) Even people in long-term relationships try to avoid talking about money. In that same survey, a majority (54%) of partnered respondents said they talk money “only when necessary.”
We spoke with SoFi member and San Francisco-based psychologist Dr. Madeleine Katz about what happens when the messy business of money runs into the even messier stuff that goes on between our ears. Like many young professionals, Katz, who has BAs in Women’s Studies and Communications from Denison University, and a doctorate in clinical psychology from the California School of Professional Psychology, refinanced her student loans with SoFi.
Why talking about money is hard
It’s easy to understand why tallying up your debt might be depressing or dispiriting, but why is talking about income tricky as well? It’s because money invites both literal and figurative value judgments. “When you talk about how much you make, you are assigning a value to your worth, and that puts you in a really vulnerable position to be judged or discredited,” Katz says.
Private practitioners and entrepreneurs can dictate their own fees for services and products, but risk rejection from potential customers and competitive consequences in the marketplace. Even Katz is cautious about discussing her professional fee with fellow psychologists. “Are they going to say, ‘She’s not worth that amount’? Are they going to raise their own rates, or charge $5 less and be a better deal?”
The dynamics are different, but no less harrowing, when an employer dictates your salary. “There’s a lot more competition when you work in the corporate world—and there’s more shame because someone else is telling you what they think you’re worth,” Katz adds.
Not everyone is a safe person to discuss money with, but it can be therapeutic to talk about it all the same. Put yourself through a financial fitness checkup, then discuss it with someone you can trust. “Money is still taboo to discuss, but it shouldn’t be. It’s just like sex; the more information we have about it; the better off we’ll all be.”
How debt affects you
The good news about money is also the bad news: it’s always going to be a provocative and sensitive subject, no matter how much money you make or how much debt you or your friends are in. “Everyone experiences financial stress,” Katz says. “It’s a relative thing, whether we’re making six figures or minimum wage.”
Student debt carries special significance for many people, and not just because there’s $1.4 trillion of it. Going after higher paying professions means longer and costlier education, so when high earners begin their careers, they often need more help prioritizing spending, saving, and debt payoff than those who graduated with less debt. “People who want specific careers and specialized training have to pay for it, so unless you’re financially privileged, you have take a risk with student loans,” Katz says.
How debt affects relationships
Couples have fought over money since it was counted out in beads and shells, and that’s not changing any time soon. “When it comes to couples, a few problems are chronic, and money is one of them,” Katz says.
Although couples might fight over actual financial missteps or bad actions, a money dispute can appear to be about one thing, but actually stem from a much deeper issue. Katz advises looking for the subtext when relationship quarrels crop up around cash. “When a couple stresses out about finances, it might seem to stem from who’s buying the toilet paper this time, but it’s more likely a concern over what the relationship will look like down the road.”
Relationship strain seems to be caused more by what people do with their money, not how much they have or how much they can borrow. In a 2016 GOBankingRates survey, respondents were asked to select any or all of six financial deal breakers. Overspending was the top choice of 37.6% of the audience. Being too secretive and being too deeply in debt followed closely behind. A partner being “too cheap” was identified as a deal breaker by only 19.8% of respondents. And while a partner’s bad credit was a problem only 18.2% of the time, not making enough money was the least-common deal breaker, mentioned by just 13.9% of the respondents.
On the bright side, the traditional notion that men are more often the primary earners in marital relationships is fading fast. Katz credits that to higher incidences of women entering and staying in professional careers, gender equality in marriage, and shifting social patterns. “I don’t think people are worried about a partner’s income as much as they used to be,” she says. “If someone does have that feeling, it means there’s a hierarchy in the relationship, and that hierarchy is the issue—not the finances.”
Age and money
From buying life insurance to protect a growing family to developing strategies for retirement investing, we’re never too old to think about money. But is there such a thing as being too young to deal with debt and consequences? Perhaps. “The pre-frontal cortex, the part of the brain that allows us to think critically and make decisions, doesn’t fully develop until the early 20s for women, and the mid-20s for men,” Katz says. “Technically speaking, that is probably not the best time to be making big financial decisions.”
Then again, Katz concedes that she can’t imagine telling college aspirants that they’re too immature to borrow. “When I took out student loans, I had no idea what I was doing and knew nothing about loans,” she says. “But if someone had told me that because I was 25 I couldn’t be trusted to make the decision, I would have told that person to go you know where, and done it anyway.”
Healthier ways to think about money
One of the best ways to better your financial health is to not let how much money you earn dictate what you do and who you do it with. “A lot of Millennials, especially in larger cities, socialize around shared interests, not the amount of money they have,” Katz says. “Hikers and swing dancers have formed communities that aren’t built on how much money people have or what economic strata they fall into.”
Additionally, learn to use your brain’s money alchemy to your advantage. The effect that making or saving money has on your brain is similar to that of cocaine— it produces a high. A number of years ago, a study published by the National Academy of Sciences put casual wine drinkers in an MRI and scanned their brains while they tasted wine. When the subjects were told they were drinking fancy, high-priced wines, their brain activity showed they enjoyed the wine more—even when it was revealed to be bargain-basement booze.
Career-wise, knowing you’re being paid your fair market value can have a tremendous impact on how you feel about money. Recently, SoFi conducted a survey of 1,500 American professionals, and discovered over 54% of college-educated professionals are not confident they understand their market value. As a result, over 50% of professionals are not negotiating salaries at the level they should. Earning your fair share in relation to others in a similar field isn’t always easy, but by having the right conversations at work, your relationship with money (and others) will improve.
Finally, learn how to become financially fit, secure and independent. Budget accordingly, develop a plan for paying off high-interest debt, and begin investing early. Knowing your money is working towards longer term goals can keep both your brain and wallet focused on what’s really important.
For more advice on ways to talk openly about money and debt, and avoid financial stress, speak to a member of our Wealth Management team. In the meantime, share this article with a friend who might benefit from it.