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Hormones and your Wallet:  What you need to Know Now

| March 03, 2017
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It goes without saying that hormones influence how humans behave – there are enough supporting studies (and parodies) to last us a lifetime.   But did you know that our hormones go beyond the stereotypical irritability or amorous behavior, and stretch into other actions?

I recently read a study entitled “Money, Status and the Ovulatory Cycle”, published in the Journal of Marketing.  Professor Kristina Durante and a group of her colleagues studied how hormones can influence our financial behavior.  While not entirely surprising, the results highlight a need for awareness.  Here are a few takeaways I thought were worthwhile:

Beware of Keeping up with the Joneses

Women appear to be more concerned with relative positional wealth, making decisions that are adverse to their own personal well-being in order to achieve a higher relative status among a group.  Durante’s group asked women if they would choose a $50,000 a year salary or a $100,000 salary for the same job.  No brainer, right?  Or not.  When the women were told that if they chose the $100,000 salary, other women would get $200,000 annually, and if they chose the $50,000 salary, other women would receive $25,000 annually, more than HALF of the women chose the lower salary! 

Feeling Frisky, Getting Spendy

According to Durante’s group, ovulation may trigger a greater focus on relative positional wealth.   In their studies, women in a highly fertile period in their cycle chose to increase their own position rather than their own relative wealth.  Women were offered the choice between a $7,000 ring, and other women would receive a $15,000 ring, or a $5,000 ring and others would receive a $1,000 ring.  For the more fertile ladies, 42.5% chose the cheaper ring!  Their counterparts who were not in a fertile phase only chose the cheaper ring 28.8% of the time. 

Going Against Our Own

Cue the jokes about cattiness and mean girls: women across all of the fertility stages of their cycle chose the relative positional wealth position (i.e., the cheaper ring just to make sure she was ahead of her peers) way more when they were comparing themselves to women vs. men.  In other words, if a woman was told that she could have a $350K house but others would have a $500K house, or she could have a $250K house but others would have a $100K house, when the “others” were men, the women were way more likely to choose the $350K house. 

There’s an App for That

Want to dig deeper?  There are many apps for your phone that will help you track your cycle.  If you’re interested in seeing how your cycle might impact your behavior, compare your recent spending with where you were in your cycle.  Did you buy some amazing clothes on Day 6 that gave you buyer’s remorse on Day 10?  Awareness is the first step in gaining control over your finances, and knowing how you might be unduly influenced by Mother Nature could have an impact on your credit cards! 

The Bottom Line

Our hormonal cycles can hit our wallets.  Hard.  Before you make an emotional or hormonal choice with your money, think twice, and remember the most important relative wealth concept isn’t about your wealth vs. other’s wealth, it’s your inflows vs. outflows and your assets vs. debt.  Someone making $100K a year could have more positive cash flow, credit rating, and retirement success rate than someone making $500K a year – it’s all about how much you spend and how much you save and invest.  Don’t let those pesky hormones, or the Joneses next door, get in your way!

 Want to read the study?  Check it out here:

Prof Durante’s TEDx Talk is here:

The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual.

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