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A Better Way to Money
Why We Worry About Money (And How to Stop)
00:22:34
Worrying about the future is inevitable, but it doesn't need to be all consuming. Kate Sweeny, Professor of Psychology and Associate Dean for Graduate Academic Affairs at the UC Riverside Life Events Lab, has spent her career studying how we approa...
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- [00:00]
A
I like to think of this as kind of taking a little control back from the universe when you can think, okay, well I can't control if I have cancer. What I can control is knowing my insurance coverage, knowing my work leave policies, thinking about how my kids will get to school if I have to be hospitalized for a period of time. You hope you never need them, but that kind of planning can be really reassuring in that moment because at least you feel ready. And there's something to be said for that.
- [00:25]
B
Whether it's waiting for medical results, navigating a career change, or managing your money, uncertainty can stir up stress, fear, and even full on avoidance. That's what today's guest spends her time trying to understand. Dr. Kate Sweetney is a professor of psychology at the University of California, Riverside, where she studies how we navigate life's most uncertain moments, from bracing for the worst to the emotional rollercoaster of waiting. Dr. Sweetney has spent over two decades researching the psychological tools that help us copy hope and how we can make decisions with more clarity even when outcomes are unknown. In this episode, we'll talk about why uncertainty can sometimes feel even worse than bad news, how flow states can bring relief, and what strategies can help cope with financial uncertainty. If you've ever spiraled in the what ifs or struggled to move forward in moments of not knowing, this conversation is for you. Remember, if you enjoy this episode, please leave the show a rating or review and head to northwesternmutual.com to download and print our readiness checklist to help you prepare for your first meeting with your advisor. All right, let's dig in. So, Kate, first off, tell me a little bit about yourself and how you got into your line of study.
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A
Yeah, so I went to graduate school many years ago to study social psychology. That's kind of a vague title, but it basically just means kind of the ways in which humans interact with the world socially and otherwise. And when I went to grad school, I worked with someone who was studying at the time a phenomenon called bracing for the worst. This is something I've studied quite a lot since then. It's the idea that people tend to be really optimistic in general about their outcomes, and yet when we start to approach some moment of truth. So in one of his original studies, he was looking at students taking an exam before the exam. They all felt like they were going to ace it after the examination, maybe a little more realistic. And then right as he was handing the exams back, you saw people become really pessimistic, so they all thought they failed. And I was really intrigued by this idea because I had experienced this many times as a student, and so I saw him give a talk. I thought, that sounds pretty cool. I went to grad school to study that kind of. That little phenomenon of this transition from optimism to pessimism at the moment of truth. And then 25 plus years later, I've kind of taken that idea and broadened it out and thought about the ways in which that process interacts with other ways that we cope with uncertain periods in our life.
- [02:57]
B
Wow. Like, I'm just amazed that, like, something so specific you've made, like, not only, you know, your degree, but, like, your studies and everything you're sharing now. I'm like, wow. Like, I think that's true. Like, sometimes right before you, you know, something big happens, you're like, oh, what if something bad happens? You know, so what, like, what is the emotional impact of uncertainty and how, like, does it weigh more heavily than maybe the outcome itself?
- [03:29]
A
When we're uncertain, there's a kind of particular emotional profile that tends to really go with that particular kind of mindset. We are always uncertain about countless things, right? There's lots and lots of things that we don't even think about, that we don't know how they'll turn out, how the future will unfold. So we really aren't studying all the various things that we don't know. We're studying the kinds of uncertainty that is like, front of mind. So when you're walking into that doctor's office to get a medical test result like that, uncertainty of what is my diagnosis is very prominent in our minds. When you're getting a major exam result back, of course that's really front of mind. So when we're experiencing those kinds of really acute kind of intense uncertainty, we tend to feel a lot of anxiety. We tend to feel worry and kind of have the thoughts that go along with worry, which is kind of. That spiraling. We all know it. The spiraling kind of what will happen, what will happen, what will happen, that kind of anxious, repetitive thinking about the future. And that is really unpleasant. I'm sure I don't have to tell your listeners. And so sometimes for. For people, for many people, in many circumstances, even if they get some kind of bad news, the diagnosis is not what they hoped for. The exam did not go the way they hoped. Nevertheless, that kind of. There is like a relief of not feeling that anxiety anymore, to not having to kind of cope with that worry and being able to maybe take some kind of action, to kind of move instead of feeling that, that paralysis of uncertainty. So it's not to say that getting bad news feels good, it certainly doesn't. But it does reduce anxiety. And in some ways that is again, a relief.
- [05:01]
B
They're kind of preparing for that a little bit. So. Okay, before we get into that, I'm curious. You mentioned bad news like walking into a doctor's office and, you know, worried about that diagnosis. You might hear what are some of like the major or most common sources of uncertainty that people feel throughout their lives?
- [05:21]
A
You know, there's big existential kind of life uncertainties. You know, I hesitate to bring this up because it's a little depressing, but one of my grad students used to say life is one big waiting period, you know, for how or when it's going to end. And that is kind of at some fundamental level, always present. But of course, again, we're not usually thinking about that. There's also of course, financial uncertainties. There's, you know, relationship uncertainties, there is health uncertainties. Those are some that I've studied quite a bit. Professional uncertainties. And then. Right. The little kind of mundane but nevertheless emotionally impactful kind of stuff we experience in our day to day life.
- [05:56]
B
And then what are some of you talked about anxiety before they can come with that. And one thing you mentioned was financial uncertainty. So what are some ways that people can manage that? Like I know sometimes people. I've, I've had other discussions with other people on this podcast about how a lot of times we just want to say, oh, I don't want to look at it. If I don't see it, it doesn't exist. You know, I don't have to look at it, this kind of avoidance. So I'm, I'm guessing maybe that's not the way to handle financial uncertainty.
- [06:28]
A
Best Good question. I actually have also studied information avoidance because of course it's part of this whole picture of how we navigate uncertainty. Whether it's good or bad depends on the circumstances. I think information avoidance can be incredibly productive and good for coping if you don't need the information right then. So, you know, sometimes we will get in kind of a loop of, you know, going down a Google rabbit hole or probably chatgpt these days, rabbit hole of, you know, asking kind of more and more questions about something we really can't take action on. So, you know, when you've had that biopsy and you're waiting to find out the results, you know, there's not much you can really be doing. You could get Informed, but at some point that stops being productive. And I think, you know, dose of avoidance is not the worst thing in those cases. On the other hand, if you are, you know, concerned that your bank account is dwindle, dwindling down, and those bills are about to come due, that's probably not the time for avoidance, though it may be incredibly tempting in that moment because it does manage anxiety. And that can be kind of the, you know, the front priority at the time. But right in that kind of situation, of course, you risk getting yourself into a much worse situation and you're not doing your future self any favors by taking that strategy. But it is one that people take. Sometimes we, we, we seek information kind of frantically when we're uncertain. Sometimes we avoid. A colleague of mine, Jenny Howell, and I just published a paper very recently on how that kind of information back and forth happens sometimes when we're worried. And again, what we found is people seek and people avoid information in those moments. It's kind of this, you know, this balance you're trying to seek of in one moment thinking, well, more information will be helpful in another moment. Never mind, information is terrible. You know, I'm not going to look up anything. Yeah. So that's all part of the process of coping. Again, unfortunately, none of it works very well. That's another thing I've learned in my research that that kind of like very intense uncertainty we experience very often in our lives is frankly just really hard to cope with. And we try lots of things, not all of it works. I've certainly tried to identify kind of a, at least a small toolbox of tools that might help us. But if someone hearing this finds it really hard to cope with that kind of uncertainty, they're definitely not alone. That's kind of how we're built.
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B
Yeah. Hey, I want to open that toolbox. Like, what are some things that people can use to manage some of those feelings that they're going through?
- [08:48]
A
Right. So the thing that we found that I think is the, I guess easiest in some ways to implement is a state called flow. So this is an idea that's been around since The, I think, 60s, maybe 6070s. There was a researcher named Mike Csikszentmihalyi who was really kind of popularized and studied this idea of flow. And probably lots of people have heard of it, but basically what it is is this kind of state of exquisite distraction where you are completely absorbed in whatever you're doing. There's no other thought in your mind because there's just no room for it worries fade away, time passes, you don't even notice it's happening. For lots of people, that's some kind of gaming. So people who make video games are very aware of the research on flow and they seek to put people into that state because. Because then they'll keep playing it, they'll keep buying the games. But lots of things can get us in flow. And so you kind of want to find that thing that for you kind of drags you into the activity such that you're really not thinking about anything else. And go figure, that is really good for quieting those worries and thoughts and kind of calming the whole system so that you're not as kind of as freaked out, to use a technical term. And it doesn't work forever, right? So once you kind of put the game down or close your computer for the day, you know that you may meet those worries again right there. But I think very often when we're in that really intensely anxious state, any kind of relief is beneficial and might kind of help us to cope a little bit better. So that's one tool that's probably my favorite one because anybody can do it at any time, almost especially since we're carrying around little gaming devices at all times. And I think it can be really helpful as kind of a. A dose of relief during those periods.
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B
I think sometimes, you know, a lot of us maybe like, put our noses up to that or think like, that's not productive, that's not getting us anywhere. And obviously, if you, like, spend too much time in that, like you said, eventually you have to close your computer and come back to life. But, but giving yourself time to get into, yeah. That flow and feel okay and step away from that anxious feeling I think is really good advice.
- [10:55]
A
Absolutely. I agree. I think sometimes we, yeah, we might judge ourselves harshly for kind of engaging in these, like, guilty pleasures. But frankly, many guilty pleasures, you know, they're pleasurable because they're getting us into that flow and. Exactly. You have to know the right amount in the right time. And you have to, you know, not get in that flow state 10 minutes before you have an important appointment. But, you know, if you kind of dose it right and time it right, I think it's a really powerful tool.
- [11:20]
B
Dr. Sweeney's research really shines a light on something many of us feel. Sometimes it's not the outcome that's the hardest part, it's the waiting. Up next, we're going to dig into the strategies that can help restore a sense of control during uncertain times. But first, let's hear from Northwestern Mutual on how you can prepare your finances for life's uncertainties.
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C
Having a plan can give you a sense of peace when facing the unknown. When it comes to your money, having a solid financial plan and sticking to it can help you feel ready for just about anything. Sure, most plans focus on growing your wealth through investments, and that's definitely important. But research has shown that investments alone may not be enough if you're looking to stay financially secure and stable in the long run. That's why we recommend taking a more holistic approach, one that combines investments with the right kind of insurance products like life insurance and income annuities. This way, your investments can help your wealth grow over time, while the insurance can offer protection against unexpected events. Research from EY and Dr. Hal Hirschfeld has shown that a comprehensive approach like this can lead to better outcomes, both financially and emotionally. So if you're ready to feel more prepared for the future, head over to northwesternmutual.com podcast and download our Readiness Checklist. It'll help you get organized for your first meeting with your advisor.
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B
So have you had anyone that you've met in your community or maybe something you've noticed in your research where people have been able to navigate these feelings of uncertainty really effectively?
- [12:50]
A
Our research shows if you're optimistic, there's other personality traits that can be a bit of a liability. In the classic big five of personality traits that personality psychologists love to talk about, one of them is neuroticism. And that's because basically being kind of emotionally all over the place, having a lot of negative emotions, go figure, that doesn't help us out when we're in these periods of uncertainty. So I think my dad is a, is an optimist who is very low in neuroticism and lucky him. But, you know, I think for even the most optimistic, you know, emotionally stable person, one thing that I think has been revealed in a lot of the work I've done is that, like, no one is immune. I think even for the most hearty kind of resilient person, there are some of these periods of really deep uncertainty that will sort of take us apart, which is, I guess, bad news, but again, also very humanizing. Like, everyone experiences this. And so, you know, there's something about that that I think can be somewhat comforting to know we're not alone.
- [13:47]
B
I feel like I'm that person in my family that's like, kind of optimistic sometimes to a fault. And my husband's like, you didn't think about this. You didn't plan this, you didn't, you know, he's more. I'm like, it's going to be fine. We go with the flow. Do you feel like planning can kind of help restore that sense of control or maybe help people with their anxiety?
- [14:08]
A
It definitely can, and that's true more for some people than others. So there's a concept that was identified, I don't know, a few dozen years ago called defensive pessimism. I would bet all the money in the world that your husband is a defensive pessimist. And the idea there is basically that. The idea there is basically that there are people who, and I'm a little bit this way too, for whom like, thinking the worst will happen. Getting anxious about it is really motivating. And it doesn't necessarily make us feel too, too bad. You know, I'm sure he's still excited about the vacation, enjoying himself. But that kind of feeling of, I'm motivated, I'll prepare, you know, I have this under control, is really comforting for other people. Strategic optimists, they're called, and this might be you. That would be like the worst thing in the world if someone said, think of all the worst case scenarios and plan for them. You know, that's going to be really undermining for you. And maybe. Or if you are in fact a strategic optimist, you know, and instead what you really want to think about is here's how it's going to go great and everything's going to be fine. And that's sort of the best way to motivate you to kind of, you know, ready yourself and, you know, get the vacation taken care of. So it is the case that people differ in that way. But I think also for, for maybe everyone to some degree when there is a really stressful experience of uncertainty, you know, let's take a familiar one for my research, and that is, you know, waiting for, let's say, a biopsy result for, let's say breast cancer. I've talked to many women who've undergone that kind of uncertainty, who have said that in that period where they're waiting for the result. Planning is really comforting. Like there's nothing really you can do, right? You're, you're out of control in that moment. And that's very distressing. And so I like to think of this as kind of taking a little control back from the universe when you can think, okay, well, I can't control if I have cancer. What I can control is knowing my insurance coverage, knowing my work leave policies, thinking about how My kids will get to school if I have to be hospitalized for a period of time. You know, those are the kind of things that maybe you never need them. You hope you never need them. But that kind of planning can be really reassuring in that moment because at least you feel ready. And there's something to be said for that.
- [16:11]
B
Yes, no, that makes sense to have something that you can do. I like how you called it taking some control back from the universe. Because sometimes we feel like, okay, it's all out of our hands, there's nothing we can do. But, you know, like you mentioned, you know, looking at the insurance benefits or what would, you know, you can kind of take some steps to help manage that. That's, that's a really good tip. So Kate Hal Hirschfeld, a professor at ucla, did some research with Northwestern Mutual and found that clients with a financial plan and both risk and wealth products said they feel almost 22% more optimistic about their financial futures than general consumers. So when it comes to finances, having a plan really seems to help. Why is planning especially important when it comes to money?
- [16:54]
A
You know, I think that sort of tells us two things. One, having a plan feeling like you've kind of, you know, thought ahead, thought about all the contingencies and worked through them is psychologically reassuring. But it also, of course, makes it much more likely that you are in fact, ready when those problems occur. And so again, if you're in the position to make those plans, I think that that is, of course, course, financially a really important strategy.
- [17:15]
B
That phrase hope for the best, plan for the worst, like in the ways that you're describing some of these things, it sounds like it's not just a saying, but an actual psychological strategy.
- [17:28]
A
Yeah, that's exactly right. So, you know, I actually have studied a long time ago with a long time ago collaborator that kind of interplay between hope and expectations are bracing in the way that we think about it in my research. And really what, what we've found is that, you know, you can do both in some ways, so you can kind of still hope that something good will happen. You know, again, think of something really small like a student taking a midterm exam. You know, they may keep hoping for that a while, nevertheless kind of grappling with the reality that, yeah, maybe this isn't going to be their, their best outcome. They didn't really study like they should have. And so, you know, that hope and that that expectation or kind of bracing for the worst can coexist. And I think that, that in some ways, if you can pull it off. It's a delicate dance. But if you can pull it off is in some ways the best case scenario. So you kind of get to maintain that, you know, the positive feelings that hope brings. And again, at least for some period of time, kind of riding the high of like, hey, maybe everything will work out great, but you're not letting yourself be completely caught off guard if things don't go well, and you're maybe, you know, nevertheless grappling with the reality of what's more likely to happen again while still maintaining that positive feeling of hope. And so I think it can be hard. I think more often we probably vacillate really quickly, kind of go back and forth between, maybe it'll be great. Oh, no, it probably won't. Maybe it'll be great. Oh, no, it probably won't. And that can be kind of tiring, I think. But, you know, if you can find that kind of, you know, thread that needle, find that balance between hope and bracing, I think it, it's the best of both worlds.
- [18:55]
B
Yeah. And I know you've given us so many tips, but I'm wondering if you have one last piece of advice for listeners who are facing uncertainty right now.
- [19:07]
A
Yep. I can do my best to kind of synthesize, you know, all the things I've learned over all this, all this research. And that is, I think there's kind of a step by step process you can go through when you find yourself really beset by worry. Like, you're not sleeping well, you're not focusing, you know, you're not being productive at work because you're just worrying. What I think the best kind of strategy is, is to first ask yourself, is there something I could do to actually change the outcome. So if I'm worrying about my financial future, could I actually take some actions that would ensure a better financial future? That's a good thing to do. And it can be hard, as we've talked about, to face that problem and to face that uncertainty and to actually engage with it enough to, like, take those actions. If you're miserable, you may as well try that. Maybe it'll work. And so first check that box. Like, is there anything I could be doing to actually change my future? If you've run that down, there's nothing more you can do. The next question is, is there anything I can do to prepare? So maybe you can't change the future, but you can start to emotionally prepare, psychologically prepare. You know, we talked about if you're worried you're going to get a diagnosis. Maybe you check your insurance coverage. If you've kind of run that whole checklist too, and you've done everything you can, you're as ready as you can be, then you're really just in a worry management position. And so then you're really going to be looking for those flow activities that you can kind of just take your mind off of the worry for a period of time. We've also studied mindfulness meditation. It's not for everyone, but if you are open to trying it, that kind of just sitting quietly, trying not to let your mind run away with thoughts of the future can be really helpful. You know, if you've got a good hobby that you like that makes you feel good, go do that. Spend time with your kids, play with your dog, whatever. The thing is that makes you feel better in the moment. And if you've kind of done all the other stuff, that's about the best option you have. And it might not work perfectly, but maybe you'll get a little few moments of relief in that worrisome time.
- [20:53]
B
A big thank you to Dr. Sweetney for sharing her insight with us today. I love how she explained the idea that uncertainty is universal, but with the right tools, you don't have to feel powerless in it. Whether it's finding a flow activity, asking what's in your control, or creating a plan, uncertainty doesn't have to be all consuming. And when it comes to your finances, having a plan in place can be one of the best ways to take some of that stress off your plate. If you're ready to feel more optimistic about your financial future, visit northwesternmutual.com podcast. There you can download and print our Readiness Checklist to help you ensure you've got what you need to meet with your advisor for the first time. Thanks so much for listening and we'll see you next time.
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C
Hal E. Hirschfield Assessing the Value of a holistic advisor 2024 EY how life insurers can provide differentiated retirement benefits 2022 no investment strategy can guarantee a profit or protect against loss. Northwestern Mutual is the marketing name for the Northwestern Mutual Life Insurance Co. NM and its subsidiaries, including Northwestern Mutual Investment Services LLC Investment Brokerage Services, a registered investment advisor, broker, dealer and member of FINRA and SIPC and Northwestern Mutual Wealth Management Co. NMWMC Investment Advisory Services, a federal savings bank. NM and its subsidiaries are in Milwaukee, Wisconsin. Not all Northwestern Mutual representatives are advisors. Only representatives with advisor in their title or who otherwise disclose their status as an advisor of Northwestern Mutual Wealth Management Company NMWMC are credentialed as NMWMC representatives to provide advisory services. Kate Sweeney is not affiliated with Northwestern Mutual, and the views expressed by Kate Sweeney do not necessarily represent those of Northwestern Mutual or its subsidiaries.