Mind Over Money

Mind Over Money is the ultimate guide to understanding the psychology of personal finance, explaining how your beliefs about money began forming when you were very young and what you can do to make your brain your financial friend instead of your enemy.

At what age would you say kids have a grasp of the importance of earning an income? If you thought it was 10 or 12-years-old, you’d be wrong. Research shows that children at least as young as six already know about the importance of money!

A study of Finnish kindergarteners shows proof of this. Researchers gave these six-year-olds the task of putting on a play and let the children make all the decisions for it.

In the entire six weeks that scientists observed the kids, they found that money was the main topic of all their conversations regarding the event. The children talked about how much ticket prices should be and how to make extra money by selling merchandise, for instance.

Other research confirms that young people also understand how money affects social status. Researchers in another study showed kids pictures of a run-down house or a well-kept home. The children thought that the people living in the shabby house would be mean and lazy.

The point is, don’t be too hard on yourself for your money woes. You struggle not because you’re a terrible person. It’s hard because nobody’s taught you the right way to manage your finances.

But also remember that there is great potential in being open and honest with your kids about money from an early age! And even better is setting a good example for them.

It might seem obvious that money can motivate people to do all kinds of things. But the research shows some surprisingly varied results on this topic. Berry pickers, for example, don’t tend to work harder with raises. Instead, their incentive to be productive skyrockets when employers start paying them by how many baskets they fill. Doctors, bankers, and others in fields that require specific technical skillsets can even have their productivity hampered when they’re given more money. That’s because people in these types of jobs tend to work due to intrinsic motivation. In other words, they love the work itself. A study where researchers had journalism students write good headlines with some being paid and others unpaid also shows how precarious the motivation-money relationship can be. The research found that those who didn’t receive any money for their exceptional titles worked twice as fast and attended brainstorming sessions more often than those who were paid. Don’t let all of this negative talk of money motivation hinder you from giving unexpected bonuses, though. It’s been shown that…