Financial Stress: How Bad Can It Get?

Experts say no matter how hard the fall, who you are may determine your stress.

Sept. 24, 2008 — -- After the disastrous few weeks in the economy -- banks failing, corporate bailouts and wild rides on the stock market -- stress experts expect some people will be pulling out their hair, but others will just shrug their shoulders.

The difference, psychologists say, does not always depend on the amount in someone's bank account. In fact, financial distress can go from a minor headache to a full-blown phobia depending on the person.

"You can experience the same [financial] loss as another person but it's how you perceive that loss, how you've been able to cope with loss in your past, and the accompanying anxiety, that will dictate how much stress you experience," said Kathleen Gurney, CEO of Financial Psychology Corporation.

Gurney has researched people's feelings about money for two decades. In that time she's found what she calls "money personalities": the High Roller, the Hunter, the Achiever, the Perfectionist and others.

When financial loss and troubles hit, Gurney said, "…the Hunters, Achievers and Perfectionists, for example, experience distress, which is more dangerous as it lasts longer, causing more physical side effects and ailments.'

"The High Rollers actually enjoy the thrill of highs and lows in the market -- so the ride is as important as reaching the destination or achieving the goal," said Gurney, author of "Your Money Personality: What It Is and How You Can Profit From It."

Yet while the High Rollers at investment firms usually take the ups and downs better than the person who is a perfectionist with money, a complete obliteration of jobs and goals can change the playing field. A lost job might be different than a loss in a day.

Is Financial Stress Different From Any Other?

"With things like a relationship or a chronic medical condition there's going to be a course of things," said Katherine L. Muller, director of the cognitive behavior therapy program at the Montefiore Medical Center, in Bronx, N.Y.

"Financial stress seems to be often time unexpected and that's why we think people tend be more reactive," Muller said. "It's harder to predict where it's going, and you don't have as many signals to predict when it's coming."

Although Muller has noticed people deal better with stress that has a foreseen conclusion -- such as final exams, weddings or even break-ups -- rather than the uncertain stress of unemployment, she says the reaction to that stress trigger can be the same responses.

"The stuff that happens in your body is the same," Muller said. In the short term, stress may increase stress hormone levels, heart rate or cause temporary insomnia. In the long term, stress can cause inflammation, chronic insomnia, muscle injury and weaken the immune system.

Muller said financial stress can even take the place of other, more common phobias and psychological problems.

"We've seen folks who are so terrified by their financial situation that they're terrified of dealing with it. People don't want to look at their bills, they won't open their mail, they won't pay their mortgage -- all in attempts to numb themselves or make it go away," she said.

"We see it all the time in other phobias: If you're afraid of elevators you avoid them. If you're afraid of dogs you avoid them," Muller said.

According to Dr. Gregory S. Berns, who studies neuroeconomics, financial concerns have far more in common with any other fear or desire than most people would guess.

Money, Love, Food: One Brain Currency

"All the things out there in the world that people pursue -- whether it's money, material goods, food or sex -- ultimately seem to go through a common dopamine pathway in the brain," said Berns, a professor of psychiatry and behavioral sciences at Emory University School of Medicine in Atlanta.

"All the rewards are converted into this common signal, or currency, and then it's a question of exchange rate," Berns said. This means people react in the same way whether the reward in an experiment is money or food, or the absence of pain. The only difference is the threshold that makes them act.

Therefore, according to Berns, what differs from person to person in financial distress may just be the "exchange rate" of financial concerns for other desires.

But while individuals may differ in their financial fears and values, Berns said what really can drive financial worry is a universal herd mentality.

"There are the financial losses, but then there's also the fact that you see people freaking out," he said.

"Our brains evolved in social groups and because of that our brains are wired to accept other people's opinion as readily as if it came from our brain," he said. "It puts the brain in the panic mode, when you see other people panicking."

Richard Sherman, a psychologist in private practice in Tarzana, Calif., has seen herd mentality reactions in his patients thousands of miles away from Wall Street.

"Even if somebody is OK themselves, when they hear about it every day on the cable channels and in the headlines, some people who have this nature anyway, tend to obsess about it," Sherman said.

Sherman thinks that while stress over money may be complicated and deeply ingrained, actually treating the stress can be simple.

How to Help Financial Stress

"People are very resilient, and they can juggle a lot," he said. "But if they are having to deal with a health issue and a financial issue, or one gets very intense, it can throw them off balance."

To get back in balance, Sherman suggests a few simple steps.

"It's not that it's so profound, but sometimes we, all of us, forget to do the obvious," said Sherman.

First, breathe and look objectively at the situation: Are you really going to be homeless soon? Second, look for a simple and logical step, like cutting back dining expenses, to help. Third, exercise.

The most important advice, though, Sherman said, is to open up.

"People tend to get embarrassed that maybe they're feeling the financial crunch more than their neighbor, but they don't know that," he said. "When people feel that other people are going through similar situations, people feel better."