How finances affect problem solving

If you went to college, there’s a good chance you spent your fair share of nights awake, hunched over textbooks, flashcards or a flickering computer screen. By the time morning came, everything was a blurry mess and you were basically operating on autopilot, letting routine and personal momentum carry you from one class to another.

And if someone were foolish enough to try to ask you a question they might get an answer, but chances are good it would be some combination of rambling, incoherent or completely incorrect.

That’s because your thinking had been scrambled by sleep deprivation.

Now scientists have discovered that when you’re worried about money, your mental capacity is essentially the same as a sleep deprived college student.

The study

The study, which was led by a psychologist at Princeton University and an economist at Harvard University and published in the journal Science, had two parts.

The first half of the study involved asking patrons in a New Jersey mall to solve puzzles. Before the puzzles began, however, researchers asked each participant a question about money. Lower income participants solved the ensuing puzzles just as well as higher income participants when the solution to the financial question had involved a small amount of money. When the amount of money needed to solve the problem increased, lower income participants did significantly worse on the puzzles that followed.

The second half of the study involved farmers in southern India. These farmers make money only once a year – after the sugarcane harvest. Researchers presented the farmers with IQ puzzles before the harvest (when they were at their financial breaking point) and immediately after the harvest (when they were financially stable once again). The farmers performed significantly better on the IQ tests after the harvest, when money was not a worry.

The findings

You probably know from personal experience how much mental capacity money concerns can take up. So it’s probably not a surprise to find out that financial stress decreased participants’ ability to solve problems by at least 25 percent, which is similar to the impact of having pulled an all-nighter.

It’s not an issue of poverty. Research was primarily aimed at those who are “financially stretched” and struggle to pay the bills every month. That represents about half of all US households.

This means that half of us aren’t reaching our potential. Half of us aren’t as productive, creative or engaged as we could be because too much of our mind is taken up with worrying about money. That’s a real, tangible effect, and it’s being felt every day at work, at school and at home.

What you can do about it

Worrying is a part of life and your aim shouldn’t be to remove it entirely, but to challenge it.

The reason MONEY! looms so large in your mind and takes up so much brain space is because it feels like a problem without a solution. The amount of money coming in is usually fixed; the amount going out isn’t. So if there’s a gap between the two – if there are needs or even wants that you can’t seem to address because of that gap – then you’re left to worry, because what else can you do?

The truth is that you might not be able to completely solve your money problems. But that doesn’t mean you can’t make things better. The worst part of worrying is feeling helpless – and that’s the part you can change.

So here’s what you do:

Figure out what scares you; what steals your precious mental energy.

And do something about it.

Don’t worry about solving it. Don’t worry about making it go away. Just attack it. Go after it.

If you need help, talk to your family or friends. Give us a call if you’re not sure where to start. Just start chipping away.

You might not be able to solve all your problems, but you can at least make them smaller. And the smaller they are, the less room they’ll take up in your mind. Which means more room for work and school and, most importantly, home.

For more information on identifying and addressing lingering money worries:

Information from the article from NPR.org was used in the creation of this article.

Jesse Campbell is the Content Manager at MMI, focused on creating and delivering valuable educational materials that help families through everyday and extraordinary financial challenges.

  • Better Business Bureau A+ rating Better Business Bureau
    MMI is proud to have achieved an A+ rating from the Better Business Bureau (BBB), a nonprofit organization focused on promoting and improving marketplace trust. The BBB investigates charges of fraud against both consumers and businesses, sets standards for truthfulness in advertising, and evaluates the trustworthiness of businesses and charities, providing a score from A+ (highest) to F (lowest).
  • Trustpilot Trustpilot
    MMI is rated as “Excellent” (4.8/5) by reviewers on Trustpilot, a global, online consumer review platform dedicated to openness and transparency. Since 2007, Trustpilot has received over 116 million customer reviews for nearly 500,000 different websites and businesses. See what others are saying about the work we do.
  • Consumer Federation of America Consumer Federation of America
    MMI is a member of the Consumer Federation of America (CFA), an association of nonprofit consumer organizations that was established in 1968 to advance the consumer interest through research, advocacy, and education. Today, nearly 300 of these groups participate in the federation and govern it through their representatives on the organization's Board of Directors.
  • Department of Housing and Urban Development Department of Housing and Urban Development
    MMI is certified by the U.S. Department of Housing and Urban Development (HUD) to provide consumer housing counseling. The mission of HUD is to create strong, sustainable, inclusive communities and quality affordable homes for all. HUD provides support services directly and through approved, local agencies like MMI.
  • Council on Accreditation Council On Accreditation
    MMI is proudly accredited by the Council on Accreditation (COA), an international, independent, nonprofit, human service accrediting organization. COA’s thorough, peer-reviewed accreditation process is designed to ensure that organizations like MMI are providing the highest standard of service and support for clients and employees alike.
  • National Foundation for Credit Counseling National Foundation for Credit Counseling
    MMI is a longstanding member of the National Foundation for Credit Counseling® (NFCC®), the nation’s largest nonprofit financial counseling organization. Founded in 1951, the NFCC’s mission is to promote financially responsible behavior and help member organizations like MMI deliver the highest-quality financial education and counseling services.