Why you're hardwired to be bad at money

How to save $1,000 this year
How to save $1,000 this year

Why are money decisions so stressful?

No, it's not because you're broke.

It's because your brain is fundamentally challenged when it comes to financial choices, according to neuroscience. And going it alone only makes it worse.

"Our brains are really good at avoiding major risks and keeping ourselves alive," says Dr. Sam Barnett, a neuroscientist at Think Alike Labs and chief executive of SBB Research, a quantitative investment firm, who was the lead researcher. "Our brains were not designed to make the kind of complex decisions our financial realities demand, the kind that have many correct answers."

There isn't just one right way to save money, for example. You could put your money in a shoe box, a high-yield savings account or a money market fund and each is a correct solution. Figuring out the benefits and drawbacks of each, especially when you don't feel fully up to speed on the options, is where the stress arises, says Barnett.

The researchers looked at the stress on brains that crowd-sourced information -- like reading finance articles, talking to co-workers, getting prompts from finance apps or meeting with a financial adviser -- and how that compared with brains that went DIY.

Turns out, people really need help when it comes to making financial decisions.

The study showed that neural signals associated with relaxation and recognition increased by 21% and 29%, respectively, for "assisted" scenarios compared to "unassisted" scenarios. When they had help, those brains were more relaxed and able to focus calmly and showed a stronger ability to recognize and understand the crucial concepts they were considering, compared to when they did not receive assistance.

And the attention demands that cause stress were 20% less in assisted situations over unassisted. In other words, people like to have their hands held when it comes to their money.

"This research revealed that assisted and unassisted brains are strikingly different," said Dr. Barnett. "Even a seemingly minor piece of advice or a more organized presentation of the same information significantly impacted the neural signals we studied."

The stress is no joke. According to a study conducted earlier this year by Northwestern Mutual, at least eight in ten adults feel some anxiety due to the rising cost of health care, money emergencies, income and savings.

What these findings suggest is that getting financial information can greatly improve the ease of making decisions, even if it means going out of our comfort zones and asking for help.

Another finding in the research showed that people got bigger brain boosts on topics related to their own experience.

For Millennials, the biggest boost came from getting help with budgeting tools and paying for college. Older age groups benefited most from getting assistance on home buying and retirement.

The smallest boost for young people was when they got assistance on retirement -- it is hard to get something that far in the future to feel real to your life now. But the research showed that any outside assistance, even if you ultimately disagree with the advice, can give you a quick brain boost.

"It is important that people understand there is no bonus for going it alone financially," said Dr. Barnett. "There's no extra credit. You're just disadvantaging yourself."

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