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Showing posts with label Money. Show all posts
Showing posts with label Money. Show all posts

Thursday, March 15, 2007

Will Work for Food: How Food & Money are Linked

Guest Post By Wray Herbert Director of Public Affairs for the Association for Psychological Science.

The words are often scrawled on a piece of cardboard and always painful to read, because they remind us of life’s fragility. They also pluck a deep chord in our psyche, because they reduce life to our most fundamental needs. After all, the sentiment behind those poignant words can be traced all the way back to the African savannas, to a time when our earliest ancestors did indeed do just that. In the eons before minimum wages and credit cards and 401-Ks, the closest thing to earnings and savings was bounty from the hunt. Food was more than nourishment; it was an asset.

Given this deep and ancient connection, it’s not implausible to think that food and money might still be tightly intertwined in our psychology, even deep-wired in our neurons. And in fact, behavioral scientists are very interested in the links between scarcity and hunger and gluttony on the one hand, and frugality and charity and stinginess on the other. Put simply: Could comfort food translate into feelings of financial security? Might there be a link between satiety and generosity? Can we literally be hungry for money?

Psychologists at Katholieke Universiteit Leuven in Belgium decided to explore this dynamic in the laboratory. Barbara Briers and her colleagues did a series of three experiments designed to tease apart the connections between nourishment and personal finances. In the first, they deprived some people of food for four hours, long enough that they wouldn’t be starving but they would almost certainly have food on their mind. Others ate as usual. Then they put all of them in a real-life simulation where they were asked to donate to one of several causes.

Those with the growling stomachs consistently gave less money to charity, suggesting that when people sense scarcity in one domain, they conserve resources in another. Put another way, people with physical cravings are in no mood to be magnanimous.


In the second study, Briers actually let the participants eat as usual, but with some she triggered their appetites by wafting the scent of baked brownies into the lab. Then they played a computer game that, like the earlier simulation, tested their generosity.
Again, those with food on their minds were less willing to part with their cash. Interestingly, in this study none of the participants was actually hungry, meaning that the desire for brownies alone was powerful enough to make them into tightwads.


That’s pretty convincing evidence. But the psychologists decided to look at it the other way around. That is, they wanted to see if a heightened desire for money affected how much people ate. They had participants fantasize about winning the lottery, but some imagined winning big (25,000 euros) while the rest thought about a modest prize (25 euros). The researchers wanted the more outlandish fantasy to increase desire for money, so they had the winners further fantasize about what this imaginary windfall would buy them—sports cars, stereos, and so forth. They basically made some of the participants greedy and not others.

Then they had all the participants participate in a taste test of two kinds of M&Ms, although unbeknownst to them the scientists were actually measuring how much they ate. And yes, the greedy people scarfed down significantly more candy. It appears that the desire to accumulate money (and stuff) is a modern version of the ancient adaptation to accumulate calories. (For what it’s worth, people who were watching their weight did not break their diets, even if they were salivating for a large-screen TV. So perhaps we are not complete slaves to our evolutionary instincts. )

This final experiment is consistent with a classic study from the 1940s. In that study, poor kids consistently overestimated the size of coins, while rich kids did not. The new findings are also consistent with earlier research showing that poor men prefer heavier women. With both the poor kids and the poor men, financial insecurity was powerful enough to distort something as fundamental as perception.

The Belgian scientists (who report all three studies in the November issue of Psychological Science) speculate that all of this is wired into the brain.
Both food and money are rewards, they give pleasure, and it’s possible that both (and perhaps other rewards as well) are processed in the same clusters of neurons devoted to savoring rewards.


Whatever the underlying neurology, the findings could help explain a phenomenon that has long perplexed public health officials: the high prevalence of life-threatening obesity among society’s most disadvantaged.
It seems counterintuitive that those with the least money should be eating the most. But it may be, Briers suggests, that material success has become so important that when people fail in their quest for money, they get frustrated and their brains switch between two intertwined rewards. In effect, they're reverting back to a primitive state, when high-calorie food was the common currency. So those living hand to mouth do indeed work for food, but unhappily just not nutritious food.


Thanks to Will Chen of Wise Bread for the link. For more insights into human nature, visit the Association for Psychological Science website.

Friday, January 26, 2007

Pursuit of money linked to depression

British psychologist Oliver James warns that the compulsive pursuit of money and possessions is making people richer but sadder.

The idea that chasing material success doesn’t lead to happiness is not a new one. However, James’ book Affluenza is the first to explicitly link the pursuit of flash cars, boats and clothes to depression. According to James there is currently an epidemic of 'affluenza' throughout the world - an obsessive, envious, keeping-up-with-the-Joneses - that has resulted in huge increases in depression and anxiety among millions.

Studies in lots of different nations show that if you place high value on those things, you are more likely to suffer depression, anxiety, addictions and personality disorders


These findings, are supported by Martin Seligman, the father of Positive Psychology. In his book, Authentic Happiness, which discusses happiness and life satisfaction he proposes the following formula for happiness:

H = S +C + V

H: Your enduring level of happiness
S: Your set range (includes genetic predisposition to happiness)
C: Your life circumstances
V: Factors under your voluntary control

Seligman’s conclusion? Approximately half of your score on happiness tests can be accounted for by your gene pool (nature). The other half depends on what happens to you, how you react to it and the decisions you make in life (nurture).

Interestingly, being wealthy isn’t what makes you unhappy despite the cliché of the unhappy rich.

Wealth has a surprisingly low correlation with happiness level. Rich people are, on average, only slightly happier than poor people.
Real income has risen dramatically in prosperous nations over the last 50 years but the level of life satisfaction has been entirely flat in most wealthy nations

Instead, James and Seligman posit that people who value money more than other goals are less satisfied with their lives as a whole.

If you would like to participate in Positive Psychology research you can sign up here

For an online forum on depression click here

Sunday, December 24, 2006

Money Management - How organising your finances can reduce stress

Do you ever struggle to pay your bills on time? Are you always losing pieces of paper? Or do you simply have no idea what you earn and what you owe? Whatever your money management issues this article can help you sort out your money problems and get on top of your money paper war.

Organisation is frequently overlooked as a financial management tool. Being prepared and managing your time well can help you save money!

  • you'll have time to shop around for the best prices

  • you'll be able to take advantage of discounts

  • you can use the extra time to play with your children or catch up with friends


Where to start?
First, establish paper systems to file your bills/accounts for payment. If you receive a lot of bills (who doesn't!) you may want to file these in date order in a concertina file, otherwise manila folders are fine. Keep one manila folder for bills due this month, and another for bills relating to future months. Also include in the file all your receipts from ATM machines and credit card purchases. These can be put in envelopes.

Your bills due for payment folder should be reviewed at least once a month using the following steps:

  • Balance your cheque book so you know how much money you have available to pay accounts. (Ideally you should balance your cheque book weekly)

  • Identify all bills due for payment and use your receipts to check for errors on any accounts. Put aside any accounts you plan to query

  • Total the amounts due and check whether you have sufficient funds to pay all the accounts

  • If there is not enough money to pay everything then prioritise your accounts. Always pay utilities and mortgage first, next accounts which offer discounts. Ring the remaining creditors and negotiate extended payment terms, or return the goods

  • Record all the payments in your cheque book or computerised system, and recalculate your balance. Transfer funds as necessary

  • File the bills for future reference


You can save money and simplify your life by establishing electronic systems
This doesn't mean rushing out to buy the latest computer program - it can all be done cheaply and simply.

Identify your regular expenses such as rent, electricity, phone, insurance and even credit card payments. If you pay any of these by cheque, now is the time to make changes. You can set up an automatic payment with your own bank or ring your supplier and ask for a form to authorise the company to make direct debits. The advantages are:

  • never miss discounts

  • no more late payment penalties

  • reduced bank fees

  • save time and energy so you can go out and have some fun!

These tips will help you make peace with your paper war and save you some money, always a good thing with Christmas and holiday expenses.



Monday, December 04, 2006

Compulsive shopping affects men as much as women

Contrary to the expectations of researchers, compulsive spending affects as many men as women according to a study reported by ABC News.

Researchers previously believed that 90 percent of sufferers were women, but this study indicates otherwise.

A 2004 telephone survey of more than 2,500 American adults found that 6 percent of women and about 5.5 percent of men are compulsive shoppers.


I believe that some of the confusion relates to perceptions around compulsive shopping (shopaholics). A compulsive behaviour interferes with your life to the extent that shopaholics may lie about their shopping addiction, may be in extreme debt, are unable to control their shopping and experience the same symptoms as other addictive behaviours such as gambling, alcohol or drugs.

While women may as a generalisation enjoy shopping more than men this does not make them compulsive shoppers. It is also likely that men and women shop for different types of items. Men may look for "toys" to go with their hobbies - like the latest golf clubs and accessories, or gear for their car - and other large ticket items while women may shop for less expensive items. The end result is the same - if you are buying more than you can afford and experience stress and tension when you are denied the opportunity to spend then you may be a compulsive shopper.




If you are concerned that you are a compulsive shopper or shopaholic, check out our quiz here.

Wednesday, November 29, 2006

Emotional Eating is not cured by weight loss surgery

Overeating Replaced with Other Compulsive Behaviors in dealing with stress

According to researchers, many overeaters are poly addicted.
In short this means that they are addicted to a number of compulsive behaviours, such as overeating. After bariatric surgery patients transfer their addiction from eating to other compulsive behaviours such as shopping, drinking, gambling and sex (well I guess that would help burn a few extra calories).

The survey results show that many people eat as a way of coping with stress and emotional issues. When emotional eating is no longer a viable option (after surgery) individuals find other ways to cope - anything from smoking and drugs to compulsive spending, gambling and guzzling energy drinks. This suggests that learning healthy stress management techniques is the solution to overeating and emotional eating.

For more on compulsive spending check out my article on "shopaholics"

To read more about 'Overeating Replaced with Other Compulsive Behaviors' click here



Check out my free forum on emotional eating, depression, stress management and more...

Thursday, August 24, 2006

Quiz: Are you a Shopaholic?

A lot of people enjoy shopping, but for some people the enjoyment of shopping goes beyond mere bargain hunting and can be part of an addiction. There are many names for this addiction.

Excessive spending is known as compulsive spending, spending addiction or being a shopaholic. What it boils down to is recognising whether your spending habits are out of control. If you get urges to spend that you are unable to control then you may be a shopaholic or spending addict.

Take this simple quiz to find out if you are a Shopaholic!

Instructions:

Read the following list and count the number of statements that apply:

  • Being unable to pass up a "bargain"
  • Making impulsive purchases on a regular basis
  • Leaving price tags on clothes so they can be returned
  • Not using items you've purchased
  • Lying about the cost of purchases
  • Using shopping as a "pick me up"
  • Buying luxuries before necessities
  • Trying unsuccessfully to curb shopping impulses
  • Spending more time or money shopping than you intend
  • Devoting a large amount of time shopping and planning future shopping expeditions
  • Spending to an extent that interferes with your life (excessive debt) or relationships
  • Experiencing withdrawal symptoms from shopping
  • Giving up other social or recreational activities to shop

Results:

So how did you go? If you agreed with 5 or more statements, it's highly likely you are a compulsive shopper or shopaholic. If you agreed with 3 or 4 statements, then you are potentially at risk. Now is a good time to monitor your spending!

If you believe that shopping is in anyway causing self-harm or statement 11 is true (shopping interferes with your life), seek help.

Suggestions:

  • Keep a diary of your spending and your mood at the time
  • If you are in the United States, attend your local Debtors Anonymous meetings
  • If you are in New Zealand contact the Citizens Advice Bureau for budget advice
  • Read books, attend seminars or counselling on money management

Challenged by emotional issues?
Check out our free forum for stress management, emotional eating, depression and anxiety




Tuesday, July 25, 2006

Homes: To Own or To Rent?

Robert Kiyosaki in his book Rich Dad Poor Dad sparked controversy, when he announced that a home is NOT an asset.

Conventional wisdom says that anything you own is an asset – after all, you can sell a house, and many have made handsome profits doing just that. To say that your family home is not an asset challenges core belief systems, not only for homeowners but for bank managers, financial planners and accountants.

For the Kiwi, that likes to own the proverbial quarter acre block (although more commonly these days it’s going to an eighth of an acre), there is more to home ownership than financial gain. Certainly the idea of security, and a possible retirement package after trading the house for a less expensive one in sunnier surroundings is high on the agenda.

But Kiwis are unique in the world in their desire to be independent, and to have the freedom to put their do-it-yourself skills to work on a “do up”. Or if the television program of DIY fame is to be believed, we like to have somewhere we can destroy! Home ownership rates in New Zealand are among the highest in the world.

So, is Robert Kiyosaki right? First, let’s look at how Kiyosaki defines an asset. According to Kiyosaki an asset is something from which you derive an income. Following this logic, if you live in the house with your family, then you’re not earning any income from the house, so Kiyosaki would argue that it is not an asset.

In fact, he goes further… In Kiyosaki’s opinion a house is a liability. This is because you have to pay regular expenses to maintain a house, expenses such as rates, lawn mowing, and repairs. If you agree with his definition of a liability, then he is correct. However, if you subscribe to the more common definitions of assets and liabilities, he is not.

There are a number of good reasons for owning a home, and in my opinion it is the best course of action for anyone looking to accumulate assets. Purchasing a home:

  • Forces you to save
  • Focuses you on a specific goal
  • Increases pride and self-esteem
  • Enhances feelings of security
Of course, it is possible to achieve all of these things without buying a house, but most people don’t save unless they have to. Without a mortgage and specific goals they tend to fritter their money away, and end up with nothing to show for it. At least this will give you an asset (yes, that’s right an asset!) and help you develop the habit of putting money away each month.

If you’re one of the rare breed who has already mastered all these skills, then you may be better off renting a home and using your surplus income for investing in superannuation, shares and other investments.

The real problem with home ownership is the tendency to over-extend. So often, just as the mortgage is almost repaid, home owners sell and trade up to a more expensive home putting them back on the treadmill of back-breaking monthly repayments. The ideal scenario is to stay in your existing home, and put the money that would have gone into mortgage repayments into investments.

Book Review: The Millionaire Next Door

The Millionaire Next Door: The Surprising Secrets of America's Wealthy
by StanleyThomas, William Danko

According to authors Stanley and Danko there are seven wealth factors that set the wealthy apart from the rest of the population - and it isn't fancy cars, cigars and pinkie rings!


Check yourself off against this list and see if you've got what it takes…

  1. Millionaires live well below their means
  2. They allocate their time, energy and money efficiently in ways conducive to building wealth
  3. Millionaires believe financial independence is more important than displaying high social status
  4. Their parents didn't provide economic out-patient care i.e. they were left to make and correct their own financial mistakes
  5. Their adult children are economically self-sufficient
  6. They are profiicent in targeting market opportunities
  7. They chose an occupation that they enjoy and that best suits their talents
Essentially the book advocates frugality and caution with finances that at times borders on miserly, but the results speak for themselves. The individuals interviewed for the book amassed wealth and held onto it through economic downturns and trained their children to be financially independent. Food for thought!

This book has now spawned other titles including Millionaire Women Next Door