Does state of mind affect financial decisions?
BBC Lab UK’s Big Money Test explores the relationship between personality and money behaviour in a bid to find out if financial decisions are governed by emotion.
According to psychologist Adrian Furnham, creator of the Big Money Test, the following emotions are the ones most frequently associated with money (in ranked order): anxiety, depression, anger, helplessness, happiness, excitement, envy, resentment.
Brian Capon, an assistant manager at Midland bank branches back in the 1970s, has said that in the UK our emotions do tend to affect the way we think about money.
“Someone who has just found the car or house of their dreams can be so focused on borrowing the cash to buy it that they might not be too bothered about the interest rate they pay, or how accurate the information is.” He said.
According to Capon, who now works for the British Bankers’ Association, many individuals get so caught up in actually borrowing the money that they don’t give enough consideration to whether they can afford to make the repayments.
Personal debt levels started to balloon in the 1980s when rules were relaxed making lending and borrowing much easier than before. However, despite the debt mountain rising and now sitting at an enormous £1.46tn, the majority still remain uneducated in the ways of best managing their money.
Today, schools have begun to teach pupils how to read bank statements and decipher certain financial jargon. Editor of Which? consumer magazine, James Daley, has said that those who were schooled before these changes in the curriculum were introduced rarely seek advice, unless they reach crisis point.
He has suggested that the government introduce shock tactic campaigns which educate people to the dangers of debt.
“I’m surprised we don’t have public safety films about over-spending and debt like the ones for smoking. That would break through to the older generations.” He said.
For further information about the Big Money Test and it’s mission, and to take the test yourself visit the site here.
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