Your money and your life

Financial stress is ruining lives and costing the UK economy £120 billion a year. But research shows a look at our real needs could bring relief.

When the finance start-up Neyber commissioned research  (http://blog.neyber.co.uk/blog/we-have-a-great-opportunity-to-get-financial-wellbeing-right) on the cost of employee financial stress in July 2016, its aim was to get employers to buy into its loan scheme for workers. The report, which surveyed 10,000 employees, showed that 17.5 million working hours were lost in the UK to money-related distress. 70% of those surveyed admitted to spending a fifth of their working hours worrying about finances, “costing the economy £120.7 billion pounds a year”.

Neyber, an alternative lender working with employers to offer decent finance deals to workers, wanted bosses to see how much they had to gain by alleviating money stress.  But a growing body of research shows that cash-flow problems and budgetary management are only part of the picture when people get into difficulties.

The BBC’s LabUK’s Big Money Test (http://www.friendsprovidentfoundation.org/wp-content/uploads/2013/10/Open-University-Analysing-the-Big-Money-Test-Summary.pdf) , a large-scale survey of 109,000 people in 2011, looked at people’s emotions and attitudes towards money, and found that they outweighed financial capability in their impact on outcomes.  Four key money attitudes, which map onto fundamental needs defined by psychologists, were identified: security, power (status/control), love/generosity, and autonomy/freedom.  It found that ‘those who associated money with power were more likely to experience adverse financial events,’ whereas for those who associated it with security, the opposite was true.

The way we project our needs onto money can and does have a significant impact on our financial management.  Managing our money is only a part of the battle – more important is how we manage ourselves, and our needs.

Does money make us feel safe and in control? A secure home, food and clothing are fundamental to our survival, and to getting our other needs met. But what when it goes wrong, and leads to hoarding, living behind locked gates for fear of being robbed, or using money to control partners and children?

This is the power/control association, which the BBC survey showed led to poorer financial outcomes.  In the scenario above, it’s an obstacle to fulfilling our need for social connection and corrodes intimate relationships.

Does money help us to gain status and feeling of competence? How far is that damaged when financial crisis hits? Do people who get a sense of purpose and identity from unpaid activities like charity work suffer less if they lose their job because they’re getting their emotional needs met elsewhere?

The picture emerging through psychological studies is that money has conditioned us to locate our needs in consumer culture, when in fact that is not always where they lie.  The pursuit of money has also led to the erosion of space for other essential needs, according to Dr Edward Diener, quoted in the American Psychological Journal (June 2004) (http://www.apa.org/monitor/jun04/discontents.aspx ) : ‘a strong consumerist bent… can promote unhappiness because it takes time away from the things that can nurture happiness, including relationships with family and friends.’

So why are we going so wrong in locating our true needs? Dr Alan Kanner, author of Psychology and Consumer Culture, believes it’s down to the way we have been conditioned by money. 

"Corporate-driven consumerism is having massive psychological effects on people and an impact on the planet as well. Too often, psychology over-individualises social problems.  In so doing, we end up blaming the victim, in this instance by locating materialism primarily in the person while ignoring the huge corporate culture that’s invading so much of our lives."

The true purpose of money is to enable us to meet our needs and it’s only by understanding what those are and how to get them met that we can manage our relationship to money well.

Authored by guest blogger Laura Haydon

Laura Haydon worked as a Belfast-based journalist for the BBC, The Guardian, MSNBC.com and Deutsche Welle for 20 years. She is now a journalist and educator based in France.