Financial worries tax the brain so much they create a "cognitive deficit" equivalent to a 13-point loss in IQ, a study found. The problem is distinct from the effects of stress and results from too much "mental bandwidth" being used to fret about money.
Someone overwhelmed with worries about rent, feeding and clothing children, and paying household bills can suffer a genuine mental handicap, the research shows. This, in turn, may lead to poor decisions, such as racking up debt, creating even more difficulties in a vicious cycle.
Economics professor Sendhil Mullainathan, from Harvard University, Massachusetts, said: "When you're poor, money is not the only thing in short supply. Cognitive capacity is also stretched thin.
"What happens is your effective capacity gets smaller because you have all these other things on your mind. You have less mind to give to everything else."