We human beings think we know our nature pretty well, yet science never fails to come up with new and fascinating insights into our behavior.
One recent study, reported in the journal Science, found that the mere presence of money can change human behavior. It doesn't even have to be actual dollars. Human behavior changes when people are faced with a picture of money, or words reminding them of the concept of money.
The study contained a series of experiments in which college students were asked to do puzzles or tasks. Some were exposed to or reminded of money. Others weren't. (That's probably another good example of the power of money. Where would psychology be without the contributions of college students hoping for some extra cash to buy beer?)
In general, the results found that students exposed to money tended to be more self-reliant -- or less social and more self-centered, depending on how you want to interpret the findings. Students without exposure to money during the experiments turned to others for help sooner, donated more money to charity, and picked social activities over individual pursuits.
It's fascinating, and it could probably prompt a lot of holiday dinner debates over whether money changes people for good or evil. I'll leave you to battle that out with Uncle Fred over turkey and mashed potatoes next week.
The question it brought to my mind concerned windfalls, sudden and often unexpected collections of cash that we probably weren't prepared to handle. Do our thoughts and behaviors about money change with the simple act of looking at the money?
Windfalls can come in all shapes and sizes. You might find a dollar on the street or get a forgotten $10 rebate check in the mail. A tax return is a windfall of sorts, since many people don't factor that cash into their regular budgets. Then there are the really big windfalls, like sudden spikes in the stock market, booming housing prices, and inheritances.
What happens when we get one of these windfalls? We look at the money and we feel a little euphoric, and rich -- maybe even richer than we actually are. We start to daydream about all the ways this money will improve our lives. We may forget all the sober and calculated ways we usually manage money, because, we think, "Heck! This is a bonanza!"
That's right, money can make us a little crazy before we even spend a dime.
That's when it's time to step away from the cash and just stop looking at it for a while. Let it hang out a little bit and get used to it, like a new piece of furniture or a new haircut. Here are some additional ideas for preventing a windfall from clouding your otherwise sane judgment:
- Review your old goals. What did you want to do before the windfall made you dream of pearly white beaches and shiny new cars? New money can put you on the path to achieving your long-term goals sooner than planned. That could mean early retirement, a planned change in careers, or the opportunity to fund your kids' college. Achieving those goals may give you more satisfaction in the long-run than any gratification you get with short-term fun.
- Think about new goals. Will this money give you the ability to achieve something you've always wanted to do but couldn't because you never had enough cash? This is the part where you get to dream a little bit. Just don't rush out and try to do it immediately. Make your dreams concrete by figuring out how much money it will take to achieve any new goal. Don't assume you can do everything because you have a seemingly limitless pot of money. (Unless it really is a limitless pot of money, of course.)
- Remember, it's just money. A dollar inherited is a dollar earned. You may not have been expecting it, but treating money from a windfall differently from money earned through work may lead to spending sprees, bad investments, poor decisions, and a temptation to pay a high-priced financial advisor way too much to just deal with the whole thing for you.
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