Our twisted relationships with money

Some more things to think about

The only thing better than a dip in a pool on hot day is a dip in a pool that also has cash.

I recently heard a new (to me) term from behavioral finance, tunnelling theory. The idea is simple: we all have only so much time and attention, and when we focus narrowly on one thing, we have less time and attention for all of the other things in our life. Especially for people living in poverty, the attention devoted to dealing with a lack of money can cause them to have problems in other areas of their lives, including areas that have nothing to do with money.

Tons of people are far from true poverty, but they may act as though they are one step away from it. Jobs aren’t secure, and the costs of housing, college, and retirement can make someone with plenty of resources feel as though they don’t have enough. A less-technical term is making the rounds, money dysmorphia (NYTimes gift link). It’s irrational insecurity about finances, or maybe it’s truly rational insecurity in a highly uncertain world. One big contributor to money dysmorphia is comparison to other people, and it will always bring you down.

Because here’s something I know about life, and you probably do, too: people lie all the time. Not necessarily out of malice, but out of insecurity, or hope, or fear, or any of the 50 million other emotions going through our brains at any one time (probably a time when we’re trying to concentrate on something else; see tunnelling theory.)

And, of course, the comparisons keep us from seeing where we’re doing well. Michelle Singletary, the Washington Post’s wise money columnist, recently wrote about the problem of lifestyle inflation (Washington Post gift link). By focusing on what we don’t have, we ignore what we do have. Too many of us are so busy trying to signal to those around us that we’re worthy that we overlook our actual, significant worth.

We all have our things. I get it. I’ve succumbed to every one of these biases at different times. I have no advice for people who are truly living in scarcity and very little advice for the rest of us, except that maybe if we know we do these things, we can manage it better.

What do you think?