Money on the mind

It's easy to fall into traps when we think about money. It is, after all, treated as the world's biggest status symbol – whether we like it or not.

So how can we make sure we have a positive relationship with our pounds?

It's easy to fall into traps when we think about money. It is, after all, treated as the world's biggest status symbol – whether we like it or not.

So how can we make sure we have a positive relationship with our pounds?

Strange effects

Money affects us in a variety of ways, changing the way we perceive ourselves, others, and the world around us.

It makes us think we're better than others

In a 2013 study conducted by researchers from the Universities of Illinois and California, academics discovered that well-to-do members of the upper classes saw themselves as genetically better than those who earned less.

These individuals used this explanation to both describe why they were doing so well in life, and to secure their relatively unequal financial footing (compared to the rest of the population).

Aside from being a rather strange way of viewing the world – none of us worked hard for our genes, after all – this way of thinking ignores all sorts of environmental issues, including inheritance, the increased educational opportunities that wealth brings, and sheer luck.

Worse still, it dangerously paints poorer people as inferior, unable to turn their lives around through fault of their own.

When people buy into this way of thinking, blaming themselves for their own lack of money, it can be a serious problem.

More cash, less empathy

Being a compassionate, empathetic individual is something that's generally highly prized as a good character trait, but research has shown that the more money a person has, the worse they will be at reading other people's emotions.

The better a person is at doing this, the more likely they will offer assistance to someone in need.

This is mainly because of the different environments that rich and poor people live in. Relatively poorer people are likely to have to rely on others more for support, both financial and personal, and will have a better understanding of what it's like to fall on tough times.

This translates itself into a person being more generous, helpful and kind.

More money, more problems

Lots of studies have shown that cash makes us engage in behaviours that are typically frowned-upon, showing that money isn't necessarily the root of happiness.

In one published in 2012, scientists discovered that those of a high social class were seen to be more likely to lie, cheat, steal, and act unethically, in part because they saw traits such as greed as being good to have.

When the wealthy participants of the study were shown videos depicting child poverty though, displays of these traits were reduced, and other studies have found that wanting more and more money may be the reason why wealthier people are generally unhappier than the poor.

Another study, this time concentrating on the effects of wealth on younger individuals, discovered that those with rich parents were unhappier, more stressed and more anxious, being more likely to turn to drugs and alcohol to cope as a result.

A positive relationship

While the above might seem pretty gloomy, there are all sorts of ways we can make sure our finances affect us in a good way.

The perfect wage?

According to Nobel Prize winners Daniel Kahneman and Angus Deaton, the more money people earn, the happier they feel – up to a point, that is.

In their 2010 study, the academics found that, on average, people felt happiest on a day-to-day basis when they earned £48,000, with this daily satisfaction remaining the same as wages increased after that point.

In terms of thinking about the state of their lives, more money equalled more satisfaction – although as we found out in the section above, this cash has the potential to lead to some rather negative ways of thinking and acting.

Now this amount of money is by no means the same for everyone – it costs more to live in Kensington than it does in Blackpool, of course – but it does show that we don’t necessarily need that million-dollar mansion to ensure our happiness.

Positive experiences

Part of making sure we don't have a bad relationship with money could be down to the ways in which we spend it. Studies have shown that we are more likely to gain happiness from money if we spend it on experiences, not possessions, mainly because it's hard to compare these experiences to those of other people.

This means that £200 trip to the shopping centre won't give you as much joy as a long weekend away, even though the items bought may last a lot longer.

Indeed, by using anticipation as a marker of happiness, the researchers found that those waiting for possessions were more likely to feel impatient instead of excited – hardly a positive feeling.

There's a lot more to life

Things such as partners, children, experiences, hobbies – whatever the life experience is, chances are we'll find more enjoyment in it than we will with the equivalent amount of money, however much security that cash gives us.

Money can come and go, but after all, it's our experiences that stick with us and make us who we are.

Money has the potential to make us feel down, but by thinking about it as a means to enjoying life, not an end in itself, we can have an all-round better experience.

Check out our blog for more money saving tips.

Remember, do not buy what you can’t afford, and think carefully before taking out a loan for any non-essential purchases.