With mindfulness, you can train your prefrontal cortex — and grow your bank account

How much of your day do you spend thinking about money or fretting over finances? 

According to a recent NextAdvisor survey, the majority of Americans admit to being very or somewhat anxious about money, with one-third saying it’s their biggest source of stress. When your finances are going well, life is happy. But when the bills rack up and the spreadsheets turn red, things can quickly turn sour.

As with most forms of anxiety, financial anxiety often stems from a felt lack of control. We often don’t know where money will come from or how much money a looming crisis might take from us. As we look at real or imagined financial storms appearing on the horizon, it’s easy to feel overwhelmed. 

But there are ways to help. As with all anxieties, there are tools to make things easier. One of the most popular and effective techniques of our times is mindfulness.

Impulse control

At the very front of your brain — a couple inches behind your forehead — you’ll find your prefrontal cortex. The prefrontal cortex is responsible for executive functioning, which lets your brain plan, predict, and focus throughout the day. 

This brain region is also responsible for our inhibitory controls. Throughout the day, we are pulled this way and that by various impulses, drives, and instincts, and it’s the job of the prefrontal cortex to say, “Oh, go on then,” or, “Nope, don’t do that, it’ll probably kill you.” 

Many human impulses — from the fight-or-flight response to hunger to sex drive — stem from the limbic system, the part of our brain which gives rewards or motivates us to do something. The prefrontal cortex is what suppresses or allows these limbic system impulses. It is as if, inside your mind, there’s a toddler begging for ice cream, but there’s also a parent there to say “no.”

We develop and mature our inhibitory controls in our teenage years. There are large structural changes when we hit age 11. As one study notes, there’s a “maturation of neural connections between the prefrontal cortex and the limbic system, which permits the better coordination of emotion and cognition. There’s also evidence to show that we can train and develop our inhibitory control by using it more often.

When it comes to our finances, this interplay of the limbic system and the prefrontal cortex influences our spending habits. For example, we know that an unchecked limbic system — a life without impulse control — can lead to compulsive buying which can have serious negative consequences, including landing in significant debt. 

How exactly can impulses lead to debt? The study above notes that consumers with low self-control tended to use quick-access credit products that “facilitate hyper-consumption.” What’s more, impulsive buyers do not positively adjust to fluctuations of income, address short-term liquidity problems, or change their lifestyle by smoothing consumption.

Financial mindfulness

Better regulating our impulses can help reduce some of the anxiety and negative emotions associated with debt and other financial issues. Financial mindfulness is one common way to work toward better impulse control. 

What is mindfulness? According to Headspace — the mindfulness app with 2 million active users — it is “the quality of being present and fully engaged… [and to not be] beholden to reactive thoughts and feelings.” Mindfulness teaches us to be more aware of our own mental life and to develop how we can steer it.

Over the years, studies have suggested that mindfulness can help treat depression, improve learning and memory, and (importantly for our purposes) improve executive function both in teenagers and adults.

To better understand how mindfulness can ease financial stress, we interviewed Dr. Jutta Tobias Mortlock, co-founder of the Centre for Excellence in Mindfulness Research. She offers a practical way of understanding the psychology of financial impulse control. 

Mortlock describes the feelings and experiences of financial stress — such as when “we don’t have enough money and cannot afford the things we need and want” — as the “first arrow.” These are impulses of the limbic system nudging us toward a certain behavior. 

But we also feel the pain of the “second arrow.” This is how we react to the first arrow. We create a narrative that adds additional stress and pain to our lives, Mortlock says. For example, perhaps we believe that maxing out credit cards, or ignoring angry looking letters, is the best way to deal with financial problems.

This is where mindfulness comes in. Mindfulness invites people to reflect on their feelings and their motivations — to closely examine their impulses and the nagging barrage of the limbic system. Calling our impulses “arrows” externalizes them, enabling us to better deal with them.

This framing allows us to develop our executive function’s inhibitory control, and also to feel less anxious. As Mortlock puts it, “Knowing that we have some choice over how we think or feel about a real problem can help us feel a little less stressed about it.”

How you can employ financial mindfulness

There are two main ways in which mindfulness can help with our financial worries. It can address broader, structural “mindset” issues, and it can also offer more specific strategies.

Changing your mindset

If you were asked how you are with money, what would you say? We each carry with us an identity when it comes to our spending habits. Faraz Ramji, founder of Norda Industries and mindfulness coach, offers a great example. 

Let’s say you form a particular narrative that says, “I’m not good enough or I will never have enough,” or one that says, “I will be happy when I get a bigger house, a nicer car, a newer phone.” What might happen next is that you spend more and more to satisfy this narrative. 

Ramji says that being more mindful about our financial habits and motivations can help reveal the narratives we tell ourselves about money. This can reveal what we truly value. 

“We may realize that we can achieve contentment with much less in the bank, as long as we have healthy relationships, or time in nature, or particular working conditions,” Ramji says. “There is no ‘one-size-fits-all’ formula as we all have different values and criteria for success. Mindfulness simply helps us to make sure that we are living a life aligned with our own values.”

Thoughts, feelings, and behaviors

Mindfulness is often most effective when combined with other strategies — what we might call “mindful therapy.” Mindfulness — the awareness of your mental life — plays a central and essential role in therapies like cognitive behavioral therapy (CBT). 

Both CBT and mindfulness often break down problems into three elements: thought, feeling, behavior. In Mortlock’s language, we have the “arrows” coming at us in the form of thoughts and feelings. A thought pops into the mind, or a feeling overwhelms us at a certain moment. But we also have considerable ability to choose how we react and create narratives about ourselves in these moments, which is the second arrow. Using this paradigm, we can work toward better financial decisions. 

Mortlock recommends that we find somewhere quiet and comfortable and then do three things:

1. Write down a few words on what your money goals are (and what you want money for).
2. Looking at your money goals, write down what stories form in your mind (such as your experience with money, past situations, etc.).
3. Now consider what financial choices you could make right now in your life. Write down one good choice you can make now, then turn that choice into action in your life.

When we write things down, we can better see the thought-feelings-behavior cycle. By recognizing this pattern, we can gain control over our impulses instead of being controlled by them. All of this might sound too good to be true, but much of mindfulness therapy simply asks us to try something new. It wants us to be more aware of our mental life, and to take stock of what works and what doesn’t. So, for instance, you might choose to delay “unnecessary” purchases by 24 hours after the impulse and then see how it affects your emotional state. You can try distraction techniques (like counting your breathing or being aware of your body) and see how it affects your thoughts.

Closely scrutinizing your thoughts, feelings, and behaviors around money can be difficult at first. But with practice, you’ll find that it gets easier to recognize patterns and develop better financial habits over time.

A lot of mindfulness is simply about trying something new — trying to put a stick in the spokes of a vicious cycle. So take some time to reflect. Look inward. You have in your prefrontal cortex one of the most powerful tools of behavioral regulation the planet has ever known. It pays to use it thoughtfully.