Struggling to give? Focus on freeing fiscal bandwidth
It’s Giving Tuesday. The appeals have already been showing up in your email inbox, your voicemails and the radio. You know this is a joyful act, in theory. But instead, you might be overwhelmed and finding it difficult to have insight into the bigger picture of your money or your time.
You might be in a crisis of scarcity.
Before I get into this theory, it is important that I remind folks from time to time that some people just don’t make or have enough money. The government draws a line, nonprofits draw lines, but I leave that up to people to decide for themselves based on their specific circumstances.
If you do make enough money, I challenge you to give and to give generously. But sometimes difficult situations in our lives can create tunnel vision in our brains. Our brains get consumed by these difficulties and don’t have the bandwidth for weighing other priorities.
Two researchers, Sendhil Mullainathan of Harvard University and Eldar Shafir of Princeton, looked into the impact of scarcity on the brain. In an interview with Hidden Brain, they described it like this: “When you’re really desperate for something, you can focus on it so obsessively there’s no room for anything else. The time-starved spend much of their mental energy juggling time. People with little money worry constantly about making ends meet.”
It seems that scarcity reduces our bandwidth to think and plan long-term. Then we make our situation worse by taking actions in the short term that are often detrimental to our future selves.
Shankar Vidantam explored the notion of scarcity and specific examples of the brain’s reaction to it. He delved into scarcity of food, scarcity of time and scarcity of money. It turns out that in times of true scarcity, our hunter-gatherer brains kick into high gear and work like the dickens to get us to take extreme actions to alleviate
the pain of the moment, with little ability to consider how those actions might affect us long-term.
In World War II, conscientious objectors who wanted to support the cause volunteered for a starvation experiment. They were given little food in a controlled environment, and the folks running the study wanted to see how they would react.
One would think that a natural reaction would be for the participants to distract themselves from the hunger, but they could not; their brains were consumed by it.
They spent their time reminiscing about meals from their past. Even when watching movies meant to distract their brains, they would fixate instead on the meals portrayed in the movies.
The bottom line is the hunter-gatherer signals were on high alert. Brainpower was being concentrated on food and nothing else. The brain knew the body was starving, and it mustard, I mean mustered, all brainpower to think only about food and summon urgency to find it.
I would imagine few people reading this can relate to hunger, but what about time? I almost had to turn the podcast off when the speakers gave the example of a man with a major work deadline the next day. He went home to his family but was not really there. His brain was so consumed by the looming deadline that he had no bandwidth for his family.
Guilty. Guilty. Guilty. How many times have I not brought work home but really brought work home because it consumes my thinking?
I find myself preparing dinner and trying to think through a tough situation at work, and my kids dare to disrupt my thinking? I get annoyed, they act out more, and we end up in a total losing situation.
That is bandwidth deprivation. My scarcity of time affects me and my family.
The only way out? Well, I have tried negotiating with the time authorities to grant me 25 hours in a day, but to no avail. The next answer might have to be to let things go, to physically block time in the calendar to be present. Think of it like living below our time means.
Now let’s get to money. Take this example from the interview.
A woman lost her job. Then her husband left her alone with her kids. She remembered at the moment being low on toilet paper and juice boxes and low on saved money. In a moment of panic, she applied for a credit card and got accepted for one with a $500 limit. She immediately went to Walmart and spent the full amount stocking up on piles of toilet paper, juice boxes and other items for the household. Initially, she described the feeling of safety and security from having these emergency supplies, but soon she came to the devastating reality that she couldn’t fill up her gas tank. A month later, the credit card bill came, only worsening the financial situation and scarcity brain loop.
In the interview, she recalled the inability to think very far in advance. She eventually ended up with a financial counselor and learned how to budget and plan for the future. She had six months of money for expenses saved in an emergency fund.
Looking back, she believed that, had she done that same process, she would have been able to think ahead on near-term needs such as gas and for long-term priorities that could have prevented her from getting into such a financial hole.
Maybe that situation is extreme, but many people can find themselves in shortterm, desperate situations when they live paycheck to paycheck and have a disruptive financial event like a job loss or unexpected medical bill.
It’s difficult to be generous during such cycles of scarcity. Maybe the answer for some is truly making more money. But I believe that for many, it can only come from adjusting our lifestyles to live below our means.
Think about taxes and how abundantly you give to the government. Those come off the top. You don’t give to charity and tell your company to stop withholding taxes so you can give even more. First off, you would go to jail. Second, you never considered that money to be yours in the first place.
Imagine if you could consider savings for future financial demands just as tangible and necessary as taxes. Could you safeguard your brain from a scarcity mindset and ultimately be more generous?
What if 10% of your pay went to retirement? Who else is going to take care of us in our old age? What if a little money went into a fund to pay for future car repairs? If our car broke down, would we opt out of fixing it? If we own a home, maybe we should put aside a little money for fixing the house. A mortgage is necessary to pay.
Taxes are necessary to pay. What about when stuff breaks?
So imagine a world where you can stop working if you get sick and still be able to support yourself.
You can fix the stuff that you rely on to function, like a home and a car, when it breaks.
Do you see the bandwidth being added? Does charitable giving suddenly seem possible?
This is the essence of financial planning, folks. Many think it’s about hoarding money or depriving themselves, but in the end, it is really about giving yourself the bandwidth to live life with intentionality. I find in my countless conversations with clients and retirement plan participants that for many, living with intention frequently includes the ability to give charitably.
If charitable giving is important to you but not feasible right now, first you might have to free up some bandwidth of time and money. It’s so worth it. Happy saving. Happy giving.
Sarah Catherine Gutierrez is founder, partner and CEO of Aptus Financial in Little Rock. She is also author of the book “But First, Save 10: The One Simple Money Move That Will Change Your Life,” published by Et Alia Press. Contact her at sc@aptusfinancial.com.