Our capacity to understand someone else's point of view can enhance our resilience. So can experiencing a sense of freedom to speak with candor. One...
Money Matters: Resilience in the Face of Financial Scarcity
When our finances are low, our resilience may suffer. In the absence of cash flow, what can be done to recuperate our adaptability? Find out what the recent literature indicates, here.
Author: Tyler Phillips, Research Psychologist and Lead Content Specialist
‘Money doesn’t buy happiness’. Behavioral science confirms this platitude, with the relationship between income and happiness revealed time and again to be illusory. However, research has shown that income has a stronger relationship with life satisfaction (i.e. how a person thinks and feels about their life in general). How can it be that more money may mean greater life satisfaction, but not greater happiness?
Recently, a group of social scientists proposed that higher income may facilitate greater life satisfaction not by ‘adding’ happiness, but instead by ‘subtracting’ distress, or the intensity of it. Basically, money represents a means to remove an upsetting barrier – or to remove the perception that an upsetting barrier even exists. A useful example the authors provide is being caught in the rain while on a grocery shopping walk. A high-earning individual may be able to buy an umbrella on the spot, hail a ride to the store, or opt for delivery of their groceries. For a low-earning individual, none of these options may be available to them, yet they still need to eat. Lack of money changes unexpected rain from being just a slight inconvenience (a low-intensity distress) into a genuine obstacle potentially in the way of a person’s survival (a higher-intensity distress).
Notice also that by not having the means to overcome the obstacle of rain, a lower-earning individual may feel that they have very little control over the situation. In contrast, a higher-earner may have an array of options for them to choose from. For this reason, the scientists above added ‘perceived control’ into their model examining the relationship between financial scarcity, distress intensity, and life satisfaction. In a sample of more than 500 adults, they found that financial scarcity did correlate significantly with life satisfaction, but that the relationship was mediated by perceived control and distress intensity in a serial fashion. Put differently, the lower a person earns, the less agency they see themselves having when confronting a hassle, the more distressing the hassle seems to them, and the less satisfied they tend to be with their lives.
Though the analyses were not causal (meaning another arrangement of the variables may be possible), these results make a lot of sense in the context of resilience. For example, having a sense of control over stressors is a key ingredient of resilience, and not having this sense may contribute to a learned condition of helplessness in the face of new obstacles. Thankfully, like most ingredients of resilience, the perception that a person has at least some degree of control can be cultivated. It can be honed through practices such as cognitive reappraisal (i.e. taking a step back to reframe initial interpretations in different ways). This practice might reduce distress intensity in the above equation, since cognitive reappraisal can improve negative emotions present in both anxiety and depression.
On top of these strategies that focus on managing the emotional experience of financial scarcity, there are more direct ways to improve a person’s ‘financial resilience’. According to one model of financial resilience, it can be enhanced if a person has access to support services for financial matters, and if they improve their financial knowledge and align their spending and saving behavior with it.
Another strategy in this model may provide a person with both practical help (i.e. some form of financial assistance) and emotional help (i.e. a means to reduce distress intensity). That strategy is reaching out for social support. Friends, family, and community connections may be able to provide some financial knowledge (if not actual monetary assistance), and some form of comfort through empathetic concern. A sense of scarcity, after all, can very quickly conjure impulses to isolate, which does not help a person’s resilience.
So, if you find yourself under the shadow of financial scarcity, consider all of these means to a greater sense of resilience. Making use of cognitive reappraisal (for managing emotions and your perception of having control over at least some things), services of support and knowledge for managing your finances, and your social network could point you in the direction of pressure relief. Even if you don’t land up with millions, these strategies might show you that you don’t need money to make your way out of distress.
How can we help you?
We specialize in training professionals who use a coaching approach to optimize their people.
Contact Cuan Macnab-Holding, Neurozone Consultant: Business Development & Organizational Resilience