What is Felt but Unnoticed and Killing Your Finances?

The Problem

The Government of India noted that farmers were committing suicide at a higher rate than any other occupation in the country. There were nearly 400,000 suicides from 1995 to 2018 (1). That’s about 48 suicides per day!

The Cause

Studies into these tragedies showed the immense distress these farmers faced. The suffering population were typically of a low socio-economic status with limited opportunities for advancement. The caste system in India means the underdog typically stays the underdog during their lifetime. As India moved to become an industrial country with a global focus, the funding that farmers were accustomed to begin to dry up, adding a greater level of financial pressure on the farmers. As lower-class citizens in rural areas, miseries piled up.

A separate study revealed the fact of a reduced ability to think clearly when experiencing financial stress (2). Farmers took two IQ tests, one during pre-harvest and the other, post-harvest. The results showed each farmer had a decreased IQ of about 13 points during pre-harvest when they are the most stressed. During this time, they are struggling to make ends meet, not knowing if the harvest to come will yield the financial results they need. As opposed to post-harvest when their mental bandwidth has rebounded from despair to comfort.

The 13-point decrease in IQ shows that financial stress has the same effect on cognitive ability as sleep deprivation.

The Solution

The government realized that the timing of communications can be restricted in response to the known levels of despair felt during pre-harvest. Any communication of changes to regulation, funding, and anything else impacting the farmers was restricted to be communicated during post-harvest only.

The Lessons

We may not be rural farmers, dealing with the strict rules of a caste system, however there are 2 major lessons I want to convey to help us on our financial journey:

1. Forgive Past Financial Mistakes:

Don’t carry the burden of past financial decisions, especially if those choices were made under stress or despair. We tend to create a cycle where a bad financial decision leads to more of the same. We allow the guilt of past decisions to weigh on our conscious, causing additional stress atop the decision. This further reduces the mental bandwidth we must get back on the right track.

2. Timing Matters:

Stress clouds judgment, leading to poor financial decisions. It's vital to recognize when we're mentally strained and avoid making significant financial commitments in those moments. Make sure you’re in the proper mindset to make any budgeting, investing and financial decisions.

3. Stay on Your Level:

We fail ourselves when we allow our socio-economic status to influence our spending. Spending more to appear that you are wealthier than you are is the trap of “Keeping up with the Jones’s.” This self-inflicted, socio-economic stress will cause your spending to be motivated by what others think and not on building wealth.

Conclusion

This is a call to action for understanding how deeply intertwined our financial decisions are with our mental well-being. This financial stress can be unnoticed, but the impacts are great. Increase your awareness of where your financial decision is coming from. Take time to identify if it is from a stressful position or from peace and comfort. This one simple step can be the thing that enables you to build wealth.