How to be smarter with money
With surging energy prices, inflation, tax hikes and an uncertain Christmas ahead, many are facing some tough financial decisions. So what’s the best way to ensure you make wise choices when it comes to money?
Would it surprise you if I suggested you start by dressing warmly and enjoying a wholesome snack? Research shows that if you’re cold or hungry, your emotions are likely to swamp your logic, and your desire for immediate comfort will override budgetary considerations.
Alison Jing Xu at the University of Minnesota asked 77 adults to rate their hunger. She then gave them a list of items, some food and some non-food, and asked them to rate how much they liked each item, then how much they’d like to acquire it. Although hungry participants liked the food options more, their desire for having everything on the list was significantly greater than their sated counterparts.
Next, Jing Xu interviewed 81 adults as they exited a department store selling mainly non-food products. She asked them to rate their level of hunger and mood, estimate how long they were in the shop, and reveal how much they’d spent.
Hungry participants had spent approximately 60 per cent more than those who weren’t hungry.
The culprit is thought to be ghrelin. This gut hormone is produced when the stomach is empty, triggering the desire for something rewarding, irrespective of whether it’s necessary. Eating a protein and healthy-fat-based snack – a few almonds, for example – reduces ghrelin levels.
If hunger makes us acquisitive, being cold encourages us to make emotional rather than logical decisions. In a series of experiments in which participants were asked to describe their thoughts and feelings and make financial decisions while exposed to cold or warm temperatures, Rhonda Hadi at Oxford and Lauren Block at City University of New York found participants who were uncomfortably cold felt warmer and more comfortable when they made emotional rather than logical decisions. By contrast, uncomfortably warm participants regained thermal comfort if they adopted a cognitive (logical) decision-making style.
The take-aways? Next time you go shopping, eat a healthy snack before you leave home. If you’re creating a Christmas budget, taking out a bank loan or buying an insurance policy, bundle up first.
Making financial decisions on your own is one thing. In a relationship, money is too often used as a means of power and control. If money issues arise during an argument, call time out so you can both cool down. Then schedule the discussion for another day, just as you would a work meeting. Bring facts to the discussion – up-to-date bank statements, current costs of whatever you’re considering. If you’re still worried tempers might flare, meet in a public place you both like. Write down your shared conclusions before you leave.
Linda Blair is a clinical psychologist and author of Siblings: How to Handle Rivalry and Create Lifelong Loving Bonds. To order for £10.99, call 0844 871 1514 or visit books.telegraph.co.uk