Financial stress appears to have a serious effect on your brain’s ability to function.
Nobody wants to get dumber, but you might just be experiencing a drop in critical thinking skills and IQ each time your financial stress level rises.
Financial Stress Affects IQ
Researchers found similar results between Indian farmers under financial duress until the end-of-season when their crops were sold and NJ mall shoppers who respond to scenarios of having small or large car repair bills.
Testing results from both lab and field studies indicate thinking skills and IQ decrease when each group is faced with the threat of financial insecurity. The situation is compared to the similar effects of trying to function without a night’s sleep.
We think of our IQ level as being fixed and a reflection of our intelligence and ability to navigate life.
Actually, IQ can vary over a lifetime.
However, this study shows how quickly financial stress can lower IQ level and affect everyday brain performance.
The results suggest increased financial stress creates consuming thought patterns based on fear and agitation.
These thought patterns become dominate and crowd out thinking skills of good judgment and decision making.
Once, financial security is restored IQ and thinking skills increase, meaning IQ is more impressionable than previously thought.
The Financial Stress of Being an Entrepreneur
Being an entrepreneur certainly, comes with more stress as you seek to build a profitable business. In the process, there is an initial investment in training and coaching, business set-up, and monthly maintenance costs.
Financial stability doesn’t occur until there is an income generating funnel.
Even then, income can be inconsistent between each product launch cycle, unless there are multiple product-oriented services to even it out.
Financial stress for the entrepreneur is not only greater, by also, has greater consequences when making business decisions during this time.
When Financial Stress Occurs
- IQ and critical thinking skills are not optimal
- The effect is not permanent and improves as financial circumstances improve
- Recovery from long-term financial stress may take longer
Counter Financial Stress by …
- Not acting in haste
- Setting aside time to think things through plans and decisions
- Nourishing the body and your mind with healthy foods and water
- Using physical exercise to relieve stress build-up
- Getting feedback from those you trust
- Seeking professional financial counseling
When you’ve been financially challenged in your business, have you noticed a change in your ability to make decisions?
Study: by Harvard economist, Sendhil Mullainathan, and PrincetonUniversity, Eldar Shafir, professor of psychology
Source: http://www.businessweek.com/ap/2013-08-29/financial-stress-may-hit-your-brain-and-wallet
Image: Pixabay 1718436 CCO, Creative Commons
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Financial stress can definitely be a challenging situation. It can work for you or against you. You can either be motivated or surrender. I wouldn’t be surprised with the connection of the brain.
Hi Lorri, Most of us think of stress as being negative, but it can also be a positive motivator. It’s the negative part unfortunately, that affects IQ. I’d like to see research that indicates positive stress raises IQ even higher.
Stress in business does affect health – just like any other stress. I had a situation that felt out of control and I thought I aged 6 years in 6 days. Anyway you can avoid any kind of stress is good for your health. Thanks for a good post!
Stress is a big issue in business because so many things can change at a moments notice. Having good health and nurturing that good health is key to surviving stress. Keep up the good work as a health coach.
Thank you for the indepth research, Joyce, which shows that financial stress has a negative impact on our IQ. In essence, our entire being. We already know the effects on our physical body so becoming aware of the mental implications makes it even more important to minimize the impact. Not very easy as an Entrepreneur. Your recommendations to counter this are appreciated.
Starting small in any new venture is important because if it doesn’t work out, the investment in time and resources, and hopefully the IQ will be affected to a lower degree.
Thanks for sharing, Yvonne. I think people are starting to reassess about starting out in business. Before, it seemed the advice was to jump in and build it into a successful venture. If you failed, you weren’t committed enough. Starting small makes more sense. Make your mistakes early and learn from them. I may increase your level of disappointment, but it certainly lessens your frustration and build your confidence in the long run.
I didn’t know that IQ could be affected by financial stress, Joyce, although it does make sense, especially when one’s ability to think clearly gets affected.
I remember the time I became redundant and had a mortgage to service that could have led to financial stress had I not planned before things got bad by talking to the bank and making a prepayment with my redundancy package.
The bank was wonderful and told me about changing my loan terms that allowed me to take advantage of floating interest rates. My mortgage was at a fixed interest of 13% and over time the rates had fallen to 7%. The bank helped me restructure the package and I ultimately paid off the entire outstanding amount with 2 years because my principal amount in the emis had increased.
You offer a good suggestion Vatsala. When we find ourselves in a financial bind, it a good idea to have an independent party asses the problem and offer solutions that we might not have thought of due to the stress we’re under. You were indeed fortunate to have your bank give you an option to pay your mortgage off in record time.
Fascinating but your point makes perfect sense Joyce. One of the most financially stressful periods in my life was when my husband and I first separated. I still don’t know how I managed to survive the pressure of working 3 jobs trying to cover basic necessities on top of a hefty mortgage payment, trying to sell the house and organizing the divorce. I have no doubt my IQ must have taken a major hit during those days because there was “me” time was a luxury when I was barely surviving. On the other hand, feels good to know that I DID make it and actually ended up better off for the experience. 🙂
Divorce is listed as one of those high-stress events, but the focus is on the separation itself. Little is said about all the other related stressful events that are part of it and continue afterward. Congratulations for making it out the other side and ending up better for the experience.
Hi Joyce,
This is such a great article. To answer you question, yes, I do not deal well with financial stress at all. I basically freeze and become unable to caring on with my daily tasks when something is not doing good financially. I am amazed at all the things that can derive from it. The IQ part really strikes a cord for me. Wow! if anything, under financial stress, we must be able to keep our wits if we are to be able to solve the issues. Thank you for sharing Joyce!
I think Nathalie that you speak for many of us when we are under financial stress. The best part of this research tells us that when we find ourselves there, we need to be more aware of the decisions we are making.
In answer to your question, yes, I absolutely found that financial stress was very detrimental to my health. I would like to hope it didn’t lower my IQ, but the research you shared is very thought-provoking, Joyce. So often we think stressors of all kinds impact our physical health, but it does make sense that our mental health (our IQ) could be impacted too. My stress was compounded by already severe health issues that often stopped me from doing too much physical activity. If my memory serves me, I was still able to conduct business, even when in pain, from the ‘comfort’ of the floor in my family room. Thanks for your tips on how to combat financial stress, as it seems for most people starting a business, it will be part of the experience.
I’m very grateful that you are so open about stress and your health issues as you were conducting business at the same time, Beverley. It certainly is a challenge but you have been diligent about healing. You won’t be one to let financial ups and downs affect you in the future.
I had no idea that IQ levels could vary, Joyce – fascinating. I know that I tend to make silly decisions when I’m feeling stressed, but had put it down to preoccupation rather than lower IQ.Terrifying to think that when you need to make smart business decisions the most, you could well be working with a lower IQ. Great tips for combating this.
I found it curious too that IQ could be so closely linked.But, it means that we have to take better care of ourselves if we are going to make wiser decisions.