Rima Grace

I was not even worth a penny, right, in the eyes of the, you know, American capitalistic system.

And it took a long time to disassociate for myself that my self-worth has nothing to do with my financial worth.

Well, so, okay, if we tie this feeling of not having enough with things like our sense of self-worth, how does that affect the way that we make financial decisions?

In our lab, we've shown that over and above your objective financial situation, how you feel is more indicative and predictive of your financial behaviors than where you are.

Oh, that's interesting.

Yeah, we've done a couple of experiments showing that we give people the same amount of money, but we manipulate their subjective wealth, right?

So their feelings about how they feel.

And then we measure their likelihood of spending, how much they spend, their likelihood of saving.

And what we find is that, unsurprisingly, when you feel a little bit more financially constrained, you spend less.

Now, what's interesting about that is you would then immediately assume that you would also save more.

But that's not the case.

Okay.

When I feel like I don't have enough resources, I not only spend less, I save less.

Because how can I afford to save if I feel like I don't have any money right now?

Right, right.

You just don't.

Yeah, you don't do much with your money.

You just don't do anything.

You become paralyzed.

Like, of course I'm not going to save for my retirement.