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19 Psychological Facts About Money | Cash, Cards, and Consequences

If just mentioning the word “money” gives you a stomach ache, don’t worry — you’re not alone. Money is an ever-present part of our lives, influencing not only our bank accounts but also our emotions, relationships, and overall well-being.

Finances are linked to many personal sentiments, including feelings of success, and there’s no denying that money makes the world go round. But have you ever wondered how it affects us from a psychological viewpoint? Or if money really can buy happiness? 

These interesting psychological facts about money will give you some insight into how it affects your mental health.

19 Psychological Facts About Money

Ready to take a closer look at the intricate relationship between money and psychology? Let’s get into it.

1. Money Is One of the Leading Causes of Divorce

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Maintaining romantic relationships is generally hard. Add money problems to the mix, and things can become even more complicated.

In fact, financial disagreements are one of the top causes of divorce in the US. According to this Forbes article, a recent study found that 38% of couples report arguing about financial problems as the reason for their marriage ending.

Psychologists state that financial dishonesty can have the same effect on marriages as sexual infidelity. For example, if a spouse is hiding a private bank account, secretly overspending, or not being honest about debt, it will break the trust within the relationship.

2. Retail Therapy Can Actually Make You Feel Better (Temporarily)

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You might have heard people say: “When the going gets tough, the tough go shopping.” Surprisingly, from a psychological perspective, this is true to some extent.

When you finally buy something you’ve had your eyes on for a while, the body releases oxytocin. This hormone is generally associated with positivity, relaxation, and confidence.

The only snag? The released hormone is quickly absorbed within the bloodstream, so the positive emotions it gives you only lasts around an hour. But if you’re having a rough time, one hour of happiness is better than nothing, right?

So next time you’re feeling down, go ahead and buy yourself a little treat — just don’t expect it to fix all your problems instantly.

3. Money Itself Can Become Addictive

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Psychologists agree that the pursuit of money can become addictive. A compulsive need to constantly acquire more funds is considered a behavioral addiction. This class of addiction refers to an uncontrollable fixation on behaviors like gambling, sex, eating, and, yes, money.

People obsessed with making money are unconsciously manipulating their brain chemistry to release chemicals like dopamine. This causes a “high” similar to drug-induced euphoria, which can ultimately lead to negative consequences, like committing fraud to get more money.

4. Money Habits Are Shaped During Childhood

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We all know that early childhood experiences greatly influence us as adults, including our exposure to financial matters. For instance, if parents constantly fight about finances, it can negatively impact their kids’ understanding of relationships with money and future partners.

On the flip side, financially savvy parents can instill responsible behaviors in their kids and help them develop money management skills. Parents who give their children pocket money give them a valuable opportunity to learn about financial responsibility.

By receiving an allowance, children can start understanding concepts like budgeting and savings, which will come in handy when they’re grown up.

5. Money Only Contributes to Happiness Up to a Certain Point

Everybody wants to know: can money buy happiness? The simple answer is that there’s no direct correlation between income and happiness. Research has shown that money can only contribute to life satisfaction up to a certain point.

Once you reach an income level that covers your basic needs, the link between money and happiness weakens. Instead, relationships, health, and a sense of purpose become increasingly important for your overall well-being.

6. Women Experience Financial Stress More Than Men

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As we know, money is a stressor for the majority of people. However, experts say that women tend to be more stressed about finances than men. Possible reasons are the gender pay gap and pink tax, as women often earn less than their male counterparts, which causes more stress.

A recent financial wellness survey indicated that 68% of female participants over the age of 27 don’t save money because they are only earning enough to get by. Of course, this causes stress and anxiety, and 56% of the female respondents said money harms their mental health.

The survey also found that 10% more women than men reported that this stress affects their home life, work, and physical health.

7. Buyer’s Remorse Is a Real Thing

We’ve all been there — you buy something amazing, but when you get home, you realize you spent your money on something you don’t want, need, or like. We know this as buyer’s remorse, a common psychological phenomenon.

As human beings, we must constantly make decisions, whether small or large, and each choice comes with consequences. Sometimes, you might question or regret your spending, and these thoughts can lead to stress and hurt your psychological well-being.

You might enjoy my article on psychological facts about beauty.

8. Suddenly Coming Into a Lot of Money Can Be Psychologically Taxing

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Who doesn’t want to win the lotto or hit the jackpot at the casino? Or maybe you’ve fantasized about a mysterious, long-lost relative leaving you a sizable inheritance?

All these scenarios will be a dream come true. But as with most things in life, be careful what you wish for.

On an emotional level, you might experience strained relationships with friends or family who can have materialistic expectations. Unexpected wealth can also lead to financial issues, like bankruptcy, in the long run.

9. Being Wealthy Can Lead to a Sense of Moral Entitlement

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In movies and television shows, we often see the stereotypical wealthy character who seems to be entitled and out of touch with the struggles of others. To see if this stereotype applies to real life, Ph.D. students at the University of California, Berkeley, conducted an experiment in San Francisco.

In the city, it’s required by law to stop for pedestrians at crosswalks. The researchers observed that luxury car drivers were four times less likely to yield to pedestrians than those in less fancy vehicles. This led to the conclusion that wealthy people believe their money puts them above the law and gives them a higher moral ground.

10. Money Can Make You Depressed

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It’s no secret that money tends to stress you out quite a bit. Unexpected expenses, job losses, and fears about saving for the future can all hurt your mental health.

In a recent financial wellness study, around 52% of American participants stated they suffer from clinical depression or anxiety disorders. Out of these participants, 82% said that the economy and personal finances are the leading causes of their mental health struggles. So, it’s clear that understanding the psychological impacts of money is important for our overall well-being.

11. Social Pressure Can Cause Overspending

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Most of us have had the experience of going out to dinner with friends, and next thing you know, you spent more than the budget you had in mind. In fact, it’s not uncommon for us to completely overspend when we’re with people because we naturally and unintentionally mimic their behavior. 

Psychologists say that social pressures like the desire to fit in, impress others, or avoid social stigma cause this subconscious mirroring.

12. Credit Cards Mess With Your Mind

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Credit cards are a funny thing. Even though you’re spending money, it somehow feels better than forking over cold, hard cash. This might be because the funds aren’t instantly withdrawn from your bank account or wallet. So, you think you have a more generous budget to spend than you do.

A study by the Sloan School of Management at the Massachusetts Institute of Technology found that using a credit card activates your ventral striatum. This is the reward center in your brain, so you’ll get an extra dopamine kick from simply swiping your card. But don’t get carried away — you don’t want to get a nasty surprise when the bill arrives.

13. Spending Money on Experiences Is Better for You Than Buying Things

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Buying yourself something nice might make you happy for a short period. Still, psychology suggests that spending your money on experiences rather than material objects is better for your well-being in the long run.

Experiences, especially those shared with loved ones, create happy memories that provide you with a sense of positive reflection, which improves your enjoyment and gratitude. While there’s nothing wrong with buying objects, prioritizing experiences can lead to a more fulfilling and mentally healthy life.

14. Financial Decisions Are Mainly Based on Emotions

Surely, most of us want to believe that we rationally handle our money — using our heads and not our hearts. But Nobel Prize-winning psychologist Daniel Kahneman’s research showed that financial decisions are based 90% on emotion and only 10% on logic.

He stated that emotions like fear, happiness, and anxiety can cause impulsive or irrational decisions. These emotions can also impact how we perceive risks. For instance, the fear of losing money may lead us to avoid investments that, rationally, might be good opportunities.

15. Generosity Can Increase Happiness

Have you ever felt that warm glow that spreads through your body after helping someone less fortunate or donating to charity? Psychology says that giving money or resources to others can lead to increased happiness and satisfaction.

Just like when you swipe your credit card or buy yourself something nice, your brain’s reward center will release dopamine. This means that acts of generosity and charitable giving can have a positive impact on your overall well-being.

16. Wealthy Children May Be More Troubled

Research shows that children from high-income families are more likely to struggle with anxiety, depression, substance abuse, and eating disorders than their lower-income peers. Various factors contribute to this, such as parents being absent due to working day and night or having extremely high expectations from their kids.

Now, this doesn’t apply to all rich kids, but in general, children from affluent communities face their own challenges. 

Because they can afford it, parents might push their kids into many extracurricular activities and pressure them to succeed. This can cause issues within the family and have a negative influence on the child’s mental well-being.

17. Greed Is a Natural Human Instinct

Greed is an inherent human trait from our evolutionary history. Its origins can be traced back to our ancestors’s survival strategy of gathering and hoarding resources. So, from a psychological viewpoint, all humans are somewhat greedy.

Greed becomes an issue when it leads to a never-ending desire for more, which can lead to destructive behaviors. For example, greed can cause individuals to act unethically or engage in fraud or theft to fulfill their longing for more money.

18. Your Age Influences Your Relationship With Money

You’re never too young or old to start saving and learn valuable lessons about money. But it’s generally accepted that mature people, usually over 30, are better at saving and handling their finances. There is actually a scientific reason for this.

An interesting fact about the brain is that the prefrontal cortex, which is responsible for decision-making, only matures fully after the age of 20. This suggests that our ability to make critical financial decisions might not peak during our late teens and early twenties.

19. More Money Can Mean Less Empathy

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Researchers believe that having lots of money can actually make people less empathetic. A study by the American Psychological Association states that wealth gives people a sense of freedom and independence, which can make them care less about other people’s feelings.

The same study found that those with lower economic status were better at reading facial expressions than wealthier individuals — a key indicator of empathy. The study, therefore, concluded that less affluent individuals feel more empathy and compassion for others struggling.

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