If I had been born poor, I would be more likely to spend more money during hard economic times. It's not logical, but it appears to be true. A team of researchers from MIT Sloan School of Management found that poor people weather difficult economic times by spending. Their stress response is to spend. My stress response, although I didn't grow up rich, is to frantically save. According to a recent article by DailyFinance, people from different walks of life have opposite ways of handling their money during stressful times or economic crises such as a recession or job layoff.
Being more cautious with money
I feel extremely validated by the recent study because I'm always hearing so-called financial experts shame people for being "too conservative" with their money. According to the researchers, people who grow up in rich households are more risk-averse during an economic crisis. I rather pay off my mortgage so that my future is more secure than risk the money or spend it.
Thinking about the future
I think most wealthy people have learned to delay gratification. I am always thinking about improving my quality of life in the future as opposed to making it better in the moment. My husband and I had to work out our different philosophies about money when we first go married. He couldn't understand why I didn't want to spend all the money we had. It only took a few years for him to realize that putting money aside would lead to an improved lifestyle. Within a matter of a few years, he was on board with the idea of saving more for retirement.
Reacting to the recession
When the recession hit, my family was thankful that we had been saving money on a regular basis. Even though our retirement accounts took a hit, we were able to get back to even by waiting it out. We didn't react to the housing bubble by letting our home fall into foreclosure or doing a short sale. Instead, we waited it out. We also did our best to work hard at our jobs so that we could keep our jobs as the unemployment numbers increased. We also gave up many of our luxuries such as gym memberships and vacations.
Understanding my upbringing
I grew up in a middle-class town. I lived in the same home for the first 18 years of my life. I saw how my parents were able to improve their middle-class lifestyle by building up equity in their home. When they sold their Maryland home and moved to Florida, they were able to buy a new home with a swimming pool. However, it took them two decades to get there. I also learned the importance of staying out of credit card debt. Even though my family used credit like most middle-class families, my parents seemed happiest when they had no debt. Now they are able to retire without any mortgage or credit card debt.
I don't know how a person can change their stress response as it relates to their money habits. After reading about the research, I'm spending more time talking openly and honestly with my sons about money. After living through the Great Recession, they are more inclined to decline credit card use and opt for saving as a habit.
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