We’ve heard (and I know from experience) before that grocery shopping on an empty stomach is bound to lead to carts that are too full (Cap’n Crunch, anyone?) and wallets that are too empty. Other research has shown that attempting to window shop – for non-food-related things – when your stomach is rumbling because you’re trying to diet is a similarly bad idea. We only have limited reserves of willpower. You may be able to resist the allure of the Cinnabon Shop down the passageway, but you’re going home with new shoes.
Today there are new findings that once again link food and financial behavior. But this time it’s your portfolio at risk. New research out of the UK published by PLoS ONE says that it’s not just our shopping behavior that’s affected by how much we’ve eaten, but also our general attitude toward taking risks and erring on the side of caution. Simply stated, when we’re hungry, we have a tendency to be hungry for a lot more than food. The study, which had students make gambling decisions on an empty stomach immediately after eating a 2,000-calorie meal, and an hour after that meal, found that the hungrier the student, the bigger gambling risk they were willing to take. That’s not a state of mind you want to be in when you’re rebalancing your 401(k).
“If a basic need isn’t met, you’re instinctively going to do something to fulfill it,” says April Lane Benson, PhD., and author of To Buy or Not to Buy: Why We Overshop and How to Stop. “The problem is that when we’re hungry, we don’t always know what we really need.” Benson’s research shows that we make bad money choices when we’re hungry because we don’t take the time to understand what we’re hungry for. Thus pining for an apple may make you buy several pounds more – of those apples – than you need. But it may also make you lose your resolve in the Apple store. Or cause you to shift an unreasonable allocation of your portfolio to Apple stock. Apple, by the way, is just the example here. I’m sure you get what I mean.
Benson certainly does. “No matter how many tank tops you buy at the mall, if you haven’t had lunch, you’re still going to be hungry,” Benson explains. “You can never get enough of what you don’t really need.” So whether it’s hunger for food, comfort, money or company – the questions to ask yourself are these: What do I need? Why do I need it? And will I still want it tomorrow?
If you’re not sure, then take a 24-hour breather. Pause. Walk away. That’ll give you the time to figure out what’s really going on before you spend – or invest – irrationally.