British banks have begun to work more intensively with customers who have poor mental health or who are vulnerable for other reasons. One new initiative is to offer customers a block that prevents their account from being used for impulsive shopping or gambling.

Why do people with little money make so many bad decisions?

Psychologist Ingvild Stjernen Tisløv says that people with payment problems need more professional help. This year, thousands of bank employees in Norway are being taught basic psychology.

How much do things cost? How much money is coming into my account this month? When will the money arrive?

“Having too little money is a full-time job,” says Ellen Katrine Nyhus.

A lot of people spend almost all their energy on keeping track of their finances, she says. Nyhus is a professor and researcher in personal finance at the University of Agder.

Thinking short-term

“Research shows that living under constant financial stress takes so much of the brain's capacity that people don't have any energy left over to make smart decisions,” Nyhus says.

– Den høyere renta har redusert nordmenns kjøpekraft, sier professor Ellen Katrine Nyhus.
Having little money is a full-time job, says Ellen Katrine Nyhus.

The consequence can be that people often think too short-term.

“Some people become paralysed. Others begin to take too great a risk,” she says.

This happens not only to people who are poor, but also to individuals whose finances are tight, as is shown by American research that Nyhus refers to.

Anxiety and depression

Payment issues and financial worries become so great for some that it affects their health.

Ingvild Stjernen Tisløv knows this well. She is a social psychology specialist associated with the WellDebt research project at OsloMet. The project studies the connection between debt problems and poor health.

The link between anxiety and depression – and payment issues – is particularly strong, according to Tisløv.

“The causal arrow goes both ways. Having a mental health problem can lead to payment problems. But not being able to pay for things can also cause people to develop mental health issues," she says.

For the past two years, Tisløv has worked with Norwegian banks, which she believes have an important role to play in preventing mental health problems.

British banks are leading the way

Tisløv recently met with a bank in London that is taking targeted measures to support vulnerable customers.

“The UK has implemented a change in the law which states that financial institutions must take vulnerable customers into account. To this end, British banks have started to work much more closely with customers who have poor mental health or are vulnerable for other reasons,” she says.

One initiative being taken by banks is to offer block features to their customers. This is a block on the account that prevents the account from being used to pay on websites where it is possible to impulsively spend money on shopping or gambling.

Social psychologist Ingvild Stjernen Tisløv travels to banks and conducts trainings in basic psychology.

Customers have to turn off the block manually. They can select the length of time before they are able to gamble or shop again, ranging from 48 hours up to 12 months. They can also add a personal reminder to themselves about why they chose to block these transactions.

“This intervention is based on studies where people who were reminded of their motivation for saving money – like a picture of the family in front of the piggy bank – were more likely to achieve their goal,” says Tisløv.

Would like to see a legal framework

Tisløv believes that having banking services that prevent people from incurring too much debt would benefit customers, banks, and society – as well as bank customers’ health.

She would like to see legislation in Norway that requires greater inclusion and care for customers in life crises or in need of adapted services.

“The banks in London regard this as support rather than as a barrier to good banking operations,” she says.

Basic psychology training

Tisløv is helping to develop an initiative on mental health and finance under the auspices of the Financial Industry's Authorization Schemes (FinAut).

Banks are very interested in this training, she says.

“They want to know what happens when people are in a life crisis or functioning poorly due to health problems,” she says.

Don't start by setting up a budget

Norway’s Financial Contracts Act states that banks must have relevant competence in providing financial advice for customers.

The Act also states that the advice must be clear, so that the customer can understand it, says Siv Seglem, CEO of FinAut.

She says that banks have seen a big boost in competence building in recent years. Now, 10,000 advisers are being trained in the relationship between finances and mental health.

“Bank employees can’t be psychologists, but they should have enough factual knowledge to understand how financial stress can affect customers. For example, they shouldn’t start advising customers by setting up a budget for them. First, they have to listen to what the customer shares about their own situation,” Seglem says.

Shows greater understanding

Tisløv says that bank advisers experience a change in attitude as a result of the training.

“They realise how important their service is to people's lives. Advisers can help customers prevent serious financial problems, as well as health problems,” she says.

During the training, bank employees also gain a better understanding of why people have payment problems.

“Customers are rarely irresponsible consumers or don’t care. Most often, sudden financial changes, stress, illness, or life events are what trigger or perpetuate payment problems,” Tisløv says.

She believes financial problems can happen to anyone if they find themselves in a difficult situation in life.

More people struggling

More and more people in Norway are experiencing financial problems.

In a survey carried out by Sentio Research for in January this year, 13 per cent of the respondents say they are very worried about their own finances.

In addition, 32 per cent are somewhat worried about their finances.

Christian Poppe, a senior researcher at Norway’s National Institute for Consumer Research (SIFO), says that the figures indicate that the level of concern has increased in the population.

Psychologists need to ask more questions

Tisløv believes that her own profession, psychologists, also need to become more aware of the connection between finances and health.

“We know that patients have a high risk of not taking care of their finances if they develop severe depression, for example.”

“Just being able to talk about the issue can help. I wish psychologists would ask their patients even more systematically about their financial situation.”

Finances have a strong impact on people’s lives

The most important follow-up for patients is having good collaboration with NAV, Tisløv points out. NAV, the Norwegian Labour and Welfare Administration, has much more room for action than many people think.

“A lot of the interaction is about giving people an experience of hope, while at the same time helping them gain an overview of their situation,” she says.

Tisløv suspects that a lot of the psychological struggle is actually about financial problems.

“If, as psychologists, we fail to uncover this connection in therapy, then we’re using the wrong tools to help the patient. We’re treating the symptoms without understanding the underlying cause,” she concludes.


Translated by Ingrid P. Nuse

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