Money can help people who are secure with their financial situation exert power over their future during chance events, according to a new study in the April Journal of Personality and Social Psychology (Vol. 90, No. 4). In turn, that feeling of control helps them feel happy and secure, the study suggests.
"Say you're in a car accident and you're fine but your car is wrecked," says lead researcher Wendy Johnson, PhD, a University of Minnesota, Twin Cities, psychology research fellow. "If you're in tight financial circumstances, that could pose a big problem-a lot of your financial wherewithal is tied into car maintenance and as a result the situation will cut into your life satisfaction. But if you're rich, you can simply buy a new car or get it repaired. It doesn't matter to the same degree at all."
In the study, Johnson and her colleagues asked 719 same-sex twin pairs ranging from 25 to 74 years old to provide information about their annual income in several categories, including personal and spousal earnings, as well as information about their marital status, number of children living at home and the amount of money they disburse to children and other relatives.
The researchers also surveyed participants on their attitudes about their finances, such as whether they felt they had less or more money than they needed, and their perceptions of control with questions such as, "How would you rate the amount of control you have over your health these days?"
The researchers found that people's actual wealth is independent of how they feel about their financial situation-even among twins. This implies that those who perceive that they have an adequate amount of money are more likely to have satisfied their material desires and to set aside some savings, making them more likely to feel as though they exert control over their life. As a result, when such negative life events as a car accident occur, they are less likely to feel a substantial blow to their life satisfaction due to happenstance's costs than people who are looking to spend that money on a new stereo, clothes or other material item.
"Money buffers people from the bad effects of unfortunate occurrences," Johnson says.