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- Herausgeber: John Wiley & Sons
- Kategorie: Fachliteratur
- Sprache: Englisch
A look at the psychological barriers to financial success and how to create a better financial future When it comes to our relationship with money, we are in the Stone Age. Despite the relentless barrage of information and warnings from financial experts, the average American is in terrible financial shape. It turns out that human beings are just not wired to do the right things around money--such as saving and not overspending. That's why financial success is so difficult to attain. When it comes to our financial instincts, we are no more evolved than our ancestors who hunted the Woolly Mammoth 400,000 years ago. Recent findings from the field of financial psychology could help the many Americans who know what they need to do but just can't seem to make it happen. If you fall into this category, consider Money Mammoth: Evolve Your Money Mindset and Avoid Financial Extinction. This book looks at financial well-being from a psychological and evolutionary perspective. It reveals the obstacles that prevent people from taking their first critical steps towards financial wellness. It examines how our instincts and beliefs about money influence our financial behaviors. It explores money beliefs, how they develop, and how they drive our money behaviors As the world's leading experts in financial psychology, authors Dr. Brad Klontz, Dr. Ed Horwitz, and Dr. Ted Klontz can help you: * Discover how the experience of your ancestors are impacting your finances * Understand how your friends, family members, and tribe may be holding you back * Overcome mental roadblocks to wealth and success * Harness the power of your emotional brain to transform your relationship with money * Build confidence in your ability to take control of your financial future In Money Mammoth, the authors reveal the secrets to harnessing the power of your psychology to reach your financial goals.
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Seitenzahl: 434
Veröffentlichungsjahr: 2020
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Table of Contents
Cover
Title Page
Copyright
Dedication
About the Authors
DR. BRADLEY T. KLONTZ, Psy.D., CFP
®
DR. EDWARD HORWITZ, Ph.D., CFP
®
, FBS, ChFC, CLU, CSA
DR. TED KLONTZ, Ph.D.
Foreword
Introduction
YOUR MONEY MAMMOTH
OUR EXTINCTION LEVEL EVENT
TODAY'S REALITY
SO WHO ARE YOU?
YOU ARE WIRED TO SPEND
YOU ARE WIRED TO TRY TO KEEP UP WITH THE JONESES
ALL THE RULES HAVE CHANGED
WE MUST EVOLVE
THE WINDS OF CHANGE
A HISTORICAL MOMENT
TIME TO EVOLVE
NOTES
SECTION I: YOUR ORIGINS
CHAPTER 1: Your Ancestors
THE ANCESTOR ROOM
SO WHAT'S IN YOUR ANCESTRY ROOM?
WHY AREN'T YOU RICH?
DEATH TO SAVERS
NOTES
CHAPTER 2: Your Parents
YOUR PARENTS
BECOME YOUR OWN ANTHROPOLOGIST
WHEN MONEY HELPS
WHEN MONEY HURTS
FINANCIAL ENMESHMENT
A FAMILY STORY OF FINANCIAL DESTRUCTION
PARENTS KNOW BEST?
THE 2008 HOUSING CRISIS
NOTES
CHAPTER 3: Your Children
CAN MONEY MAKE YOU INSANE?
WERE YOU A SPOILED CHILD?
THE COLLEGE ADMISSIONS SCANDAL
MONEY IS A POWERFUL REINFORCER
HUMANS ARE LAZY
FINANCIAL ENABLING AND FINANCIAL DEPENDENCE
CUTTING THE FINANCIAL UMBILICAL CORD: FIVE STEPS
RAISING FINANCIALLY HEALTHY CHILDREN
IT'S NOT SO SIMPLE
A BIG HEADS-UP
QUICK START TIPS FOR HEALTHY FINANCIAL HABITS
ALLOWANCES
A FAMILY ALLOWANCE
TALK ABOUT MONEY (BUT NOT TOO MUCH)
NOTES
CHAPTER 4: Your Mate
GENETIC DIFFERENCES?
THE GIVER VERSUS THE SAVER
INTERDEPENDENCE VERSUS INDEPENDENCE
BOOBY TRAPS
WHERE FROM HERE?
HOW ARE YOU DOING WITH MONEY?
FINDING THE RIGHT KIND OF HELP
THE CONVERSATION INTERVENTION
SETTING THE STAGE
NOTES
CHAPTER 5: Your Tribe
YOUR EXTENDED FAMILY
THE HILL
WHAT SAVES YOU MAY KILL YOU
RELATIVE DEPRIVATION
HOW CAN WE KEEP THEM DOWN ON THE FARM
WHAT THE TRIBE EXPECTS
THE MODERN-DAY TRIBE—RISK SHARING
FEELING AT HOME IN OUR TRIBES
YOUR TRIBES
TRIBAL INFLUENCE
TRIBAL ENTITLEMENT
HOW TRIBES HANDLE SUCCESS
PROFESSIONS AS TRIBES
JIM'S REALITY MEETS PROFESSIONAL REALITY
KILL DR. PHIL
WHEN SHOULD YOU SEEK A NEW TRIBE?
USING TRIBAL EXPECTATIONS TO EVOLVE
ALEX HARNESSES HIS MONEY MAMMOTH
NOTES
SECTION II: YOUR ADAPTATIONS
CHAPTER 6: Your Instincts
MARTHA AND HER INSTINCTS
TOM AND HIS INSTINCTS
OVERCOMING MINDSETS
OUR MONEY MINDSETS
OUR FINANCIAL INSTINCTS TOWARD SAVINGS
OUR ANTI-HOARDER BIAS
THE GIVE-AWAY
THE MODERN SAVERS
THE DRIVE TO SHARE IS HARDWIRED
OUR SUBCONSCIOUS CO-PILOT
BEHAVIORAL FINANCE
NOTES
CHAPTER 7: Your Environment
DEMOGRAPHIC COMMUNITY
SCHOOL SIZE AND DIVERSITY
COMMUNITY JOB ENVIRONMENT
JASON'S STORY
ECONOMIC TIMING
THE STORY OF RICK AND CARRIE
THE BELIEF STEW
THE ANCHOR OF YOUR PAST
YOUR CHOSEN ENVIRONMENT
WHO TAKES CARE OF YOU?
NOTE
CHAPTER 8: Your Financial Flashpoints
ANCESTRAL FLASHPOINTS
FAMILY FINANCIAL FLASHPOINTS
YOUR FINANCIAL FLASHPOINTS
CULTURAL FLASHPOINTS
FILLING IN THE BLANKS
CORONAVIRUS FLASHPOINT
DEPRESSION FLASHPOINT
FLASHPOINT CONTEXT AND GROWTH
CONCLUSION
NOTES
CHAPTER 9: Your Money Scripts
®
MONEY SCRIPTS
®
THE KLONTZ MONEY SCRIPT
®
INVENTORY
SCORING PROCEDURES
ANALYSIS
CHANGING OUR MONEY SCRIPTS
®
CAN BE TOUGH
REWRITING YOUR MONEY SCRIPTS
®
CHAPTER 10: Your Financial Behaviors
FINANCIAL BEHAVIORS
FINANCIAL BEHAVIOR CHANGE STRATEGIES
NOTES
SECTION III: YOUR EVOLUTION
CHAPTER 11: Your Transformation
SIX-STEP PROCESS OF CHANGE
CHANGE IN ACTION: RESULTS OF A FIELD TRIAL
THE EMPLOYEE RETIREMENT PLAN MEETING DILEMMA
TELL ME A STORY. PAINT ME A PICTURE. SHOW ME!
SUMMARY
NOTES
CHAPTER 12: Your Vision
AVOID THE “WHEN-THEN” TRAP
DISCOVERING WHO YOU ARE
ACHIEVING YOUR FINANCIAL GOALS
WHAT WE FOUND
WHAT THIS MEANS: SEVEN STEPS TO ACHIEVE YOUR FINANCIAL GOALS
BONUS TIP: SOCIAL PRESSURE
SUMMARY
NOTE
CHAPTER 13: Your Relationship
1. ASSUME 100% RESPONSIBILITY FOR YOUR 50%
2. SPEAK YOUR TRUTH
3. LISTEN NOW OR PAY LATER
4. KNOW THE ODDS
5. LOVE IS NOT ENOUGH
6. LOVE THYSELF
7. NO CARRY-ON BAGGAGE ALLOWED
8. BEWARE OF INVADERS
9. CHILDREN NEED NOT APPLY
10. SAFETY FIRST
EXERCISE: CREATING YOUR RELATIONAL FINANCIAL VISION
THE SHARED VISION PROCESS
NOTES
CHAPTER 14: Your Plan
ARE YOU READY TO TAKE ACTION? (IT'S OKAY IF YOU'RE NOT)
MONEY MAMMOTH EVOLUTIONARY PATH
START HERE: BUILDING YOUR MAMMOTH FOUNDATION
SURVIVAL
HUNTING AND GATHERING
ADAPTATION VERSUS EXTINCTION
PROGRESS MEASUREMENT TOOLS
NOTES
CHAPTER 15: Your Success
YOUR FINANCIAL SURVIVAL GUIDE
YOUR EVOLUTION
BECOMING YOUR MONEY MAMMOTH
IT IS YOUR TIME TO EVOLVE
THE BLUE PILL OR THE RED PILL
Index
End User License Agreement
List of Tables
Chapter 5
TABLE 5.1
Guide
Cover Page
Table of Contents
Begin Reading
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Money Mammoth
Harness the Power of Financial Psychology to Evolve Your Money Mindset, Avoid Extinction, and Crush Your Financial Goals
by
Dr. Brad Klontz
Dr. Ed Horwitz
and
Dr. Ted Klontz
Copyright © 2021 by Brad Klontz, Ed Horwitz, and Ted Klontz. All rights reserved.
Published by John Wiley & Sons, Inc., Hoboken, New Jersey.
Published simultaneously in Canada.
No part of this publication may be reproduced, stored in a retrieval system, or transmitted in any form or by any means, electronic, mechanical, photocopying, recording, scanning, or otherwise, except as permitted under Section 107 or 108 of the 1976 United States Copyright Act, without either the prior written permission of the Publisher, or authorization through payment of the appropriate per-copy fee to the Copyright Clearance Center, Inc., 222 Rosewood Drive, Danvers, MA 01923, (978) 750-8400, fax (978) 646-8600, or on the Web at www.copyright.com. Requests to the Publisher for permission should be addressed to the Permissions Department, John Wiley & Sons, Inc., 111 River Street, Hoboken, NJ 07030, (201) 748-6011, fax (201) 748-6008, or online at www.wiley.com/go/permissions.
Limit of Liability/Disclaimer of Warranty: While the publisher and author have used their best efforts in preparing this book, they make no representations or warranties with respect to the accuracy or completeness of the contents of this book and specifically disclaim any implied warranties of merchantability or fitness for a particular purpose. No warranty may be created or extended by sales representatives or written sales materials. The advice and strategies contained herein may not be suitable for your situation. You should consult with a professional where appropriate. Neither the publisher nor author shall be liable for any loss of profit or any other commercial damages, including but not limited to special, incidental, consequential, or other damages.
For general information on our other products and services or for technical support, please contact our Customer Care Department within the United States at (800) 762-2974, outside the United States at (317) 572-3993, or fax (317) 572-4002.
Wiley publishes in a variety of print and electronic formats and by print-on-demand. Some material included with standard print versions of this book may not be included in e-books or in print-on-demand. If this book refers to media such as a CD or DVD that is not included in the version you purchased, you may download this material at http://booksupport.wiley.com. For more information about Wiley products, visit www.wiley.com.
Library of Congress Cataloging-in-Publication Data
Names: Horwitz, Ed, author. | Klontz, Brad, author. | Klontz, Ted, author. | John Wiley & Sons, Ltd., publisher.
Title: Money mammoth : harness the power of financial psychology to evolve your money mindset, avoid extinction, and crush your financial goals / by Dr. Ed Horwitz, Dr. Brad Klontz, & Dr. Ted Klontz.
Description: Hoboken, New Jersey : John Wiley & Sons, Inc., [2021] | Includes index.
Identifiers: LCCN 2020028689 (print) | LCCN 2020028690 (ebook) | ISBN 9781119636045 (cloth) | ISBN 9781119636069 (adobe pdf) | ISBN 9781119636052 (epub)
Subjects: LCSH: Finance, Personal—Psychological aspects. | Money—Psychological aspects. | Financial security.
Classification: LCC HG179 .H598 2021 (print) | LCC HG179 (ebook) | DDC 332.024001/9—dc23
LC record available at https://lccn.loc.gov/2020028689
LC ebook record available at https://lccn.loc.gov/2020028690
Cover Design: Wiley
Cover Images: (Wooly Mammoth): © CSA Images/Getty Images (Money Bag): Wiley
Dr. Brad Klontz
Dedicated to you, the reader, for having the courage to tackle the most stressful topic in the lives of three out of four people. IF you evolve your money mindset, you CAN transform your financial life.
Dr. Edward Horwitz
I would like to dedicate this book to my wife, Chris, for her love, support, and insights throughout the writing process, and along our road in life together. I would also like to dedicate this book to the millions of people who struggle with money issues. Over decades of seeing the generational financial devastation caused by mishandling personal financial decisions, my passion for finding a solution burned. Too many families and children have been destroyed by bitter divorce simply because their parents didn’t know how to engage in positive money discussions or guide their children with correct financial wisdom. Therefore, I dedicate this book, and a lifetime of thoughts, reflection, research, and experiences, to all of you. I sincerely hope you find the insights and solutions to discover financial security and contentment for you and all your financial relationships.
Dr. Ted Klontz
To my friend and wife, Margie, and to my children, who remain my best teachers, and to the countless folks who have allowed me to walk with them on their journey of finding peace in their relationship with money. To all those who wonder if they are the only ones who don’t “do well” with money: The answer is a resounding “NO.” May this book help you find your way.
About the Authors
DR. BRADLEY T. KLONTZ, Psy.D., CFP®
Bradley T. Klontz, Psy.D., CFP®, is an expert in financial psychology, financial planning, and applied behavioral finance. He's an associate professor of practice at Creighton University Heider College of Business, co-founder of the Financial Psychology Institute, and Managing Principal of Your Mental Wealth Advisors. In addition to Money Mammoth (Wiley, 2020), Dr. Brad Klontz is co-author/co-editor of Facilitating Financial Health (NUCO, 2008; 2016), Financial Therapy (Springer, 2015), Mind Over Money (Broadway Business, 2009), Wired for Wealth (HCI, 2008), and The Financial Wisdom of Ebenezer Scrooge (HCI, 2005; 2008).
Dr. Klontz is a Fellow of the American Psychological Association, and a former president of the Hawaii Psychological Association. He was awarded the Innovative Practice Presidential Citation from the American Psychological Association for his application of psychological interventions to help people with money and wealth issues and his innovative practice in financial psychology for practitioners across the country.
Dr. Klontz has been a columnist for the Journal of Financial Planning, On Wall Street, and PsychologyToday.com. His work has been featured on ABC news shows 20/20, Good Morning America, and in USA Today, The Wall Street Journal, The New York Times, The Washington Post, The Los Angeles Times, Time, Kiplinger's, Money Magazine, National Public Radio, and many other media outlets and professional magazines and journals.
In 2019, he was appointed to the CNBC Financial Wellness Council and in 2018 received the Montgomery-Warschauer Award from the Journal of Financial Planning, honoring the most outstanding contribution to the betterment of the financial planning profession. He has partnered with organizations including Capital One, JP Morgan Chase, Mutual of Omaha, and H&R Block in efforts to help raise public awareness around issues related to financial health and financial psychology.
Learn more about Dr. Brad Klontz at www.BradKlontz.com, his Money Mindset channel on YouTube www.YouTube.com/c/drbradklontz and @DrBradKlontz on social media.
DR. EDWARD HORWITZ, Ph.D., CFP®, FBS, ChFC, CLU, CSA
During his 35-plus-year career in the financial services industry, Dr. Horwitz has educated tens of thousands of agents, financial planners, wealth managers, and consumers in the field of personal finance and risk management. He holds a Ph.D. from Kansas State University, an MBA from Creighton University, and an undergraduate degree in finance from the University of Iowa. In addition to his academic degrees, Dr. Horwitz also holds numerous professional designations in the fields of insurance risk management, financial planning, and applied financial behavior. Dr. Horwitz currently serves as the chief risk and compliance officer for Creighton University, holds the Inaugural Mutual of Omaha Endowed Chair in Risk Management, and is an associate professor of practice in the Economics and Finance Department at the Heider College of Business at Creighton University. Dr. Horwitz serves as the program director for Creighton's finance programs in enterprise risk management and was the developer and director for programs in financial planning and financial psychology and behavioral finance.
Dr. Horwitz is a regular industry speaker, author, media contributor, and applied financial psychology intervention researcher. His contributions have appeared in numerous national and local media outlets, in-print and online, including Money magazine, The Wall Street Journal, CNBC, and MSNBC. He is considered a creative leader, educator, and financial behavior futurist who brings his experience and academic research perspective to find unique solutions to consumer and organizations. Dr. Horwitz has provided advice and counsel to all likes of individuals from lower-income people struggling with debt issues, to Rock and Roll Hall of Fame musicians, members of the entertainment industry, professional athletes, and professional sport teams.
Dr. Horwitz's published research is focused on applied financial psychology-based solutions. He has authored several chapters in leading industry text books including Client Psychology (Wiley, 2018) and Financial Therapy—Theory, Research, & Practice (Springer, 2015). Dr. Horwitz is considered a leading industry contributor in the field of financial planning, behavioral change, financial psychology, and strategic enterprise risk management, both in his research and the breadth of his experience and practice. His insights and creative approaches to breaking through financial behavioral issues are highly respected.
DR. TED KLONTZ, Ph.D.
Dr. Ted Klontz is an associate professor of practice at Creighton University's Heider College of Business and founder of the Financial Psychology Institute. He was a founding official of the Financial Therapy Association.
Ted has an extensive international private practice, including troubleshooting, strategic planning, advising, and consulting. He is a pioneer of and has been working in the field of financial psychology for over two decades, authoring six other books on the topic.
Foreword
Our attitudes toward money and wealth have a far-reaching influence on how we live and lead our lives. Perhaps more so than any other aspect of our social development. In my case, as a boy growing up on a farm in northeast Nebraska, I saw my parents wrestle with farmland debt, soaring prices on farm equipment, and bankruptcies that made it nearly impossible to keep the family business afloat. Though we made it through, the impact of seeing that struggle forever changed the way I thought about money. It changed the way I foresaw achieving financial security and led me to a career as a financial advisor. Nearly 40 years later, I've built a top-ranked financial services firm serving tens of thousands of clients around the country, teaching them an undeniable truth about their financial behaviors: They underestimate the extent to which emotion plays a defining role in the success of their financial future.
Chances are you have your own story with your own unique values, life lessons and attitudes toward money. They've taught you some valuable lessons and probably exposed a few mistakes along the way, too. It's a relationship, really. We have our own connection with money that influences how we save it, invest it, or spend it. What is so profoundly powerful about this book is that it shines a light on how you develop these postures toward money and, more importantly, what you can do to adjust your own habits so you can make your financial situation work for you.
At Carson Wealth (carsonwealth.com), we help our clients pursue True WealthTM, which is what we define as “all that money can't buy and death can't take away.” Using a holistic approach to financial planning and aided by technology, we discuss the emotions behind the decisions being made in a financial life. This experience connects the dots between life and wealth, making their financial situation easier to understand.
A top client of ours recently came into the office for her annual review and, as she and the advisor were getting caught up, she seemed flustered. Long-time friends, the advisor's and client's children went to school together. The advisor picked up on her uneasy position and asked if she was feeling okay.
She responded, “You've known me for a long time and we've trusted each other, so I'm going to be direct with you,” she replied. “I'm more scared coming in to see you than I am seeing my doctor.” Surprised, the advisor asked why.
“I just get nervous about money,” she continued. “At least with the doctor, I know my results are either positive or negative. When it comes to money, I don't know exactly where I stand, and I feel intimidated by this area of my life because of how little I know. I want to do what's best for my kids, but I don't understand any of this and it makes me really nervous.”
There are tens of thousands of stories just like this one. It underscores a scary reality about the psychological component interwoven into the fabric of our financial lives. Our anxiety over money is an issue that's as old as money itself.
So, where do you go from here? Start by recognizing that financial psychology is the future of financial planning. The author's make a solid case for this and brilliantly outlines how this issue is no longer simply an academic one. It's a personal one, and it will impact each of you in your own unique way. With every chapter, you'll be carried into a deeper layer of understanding of your own financial habits and, more importantly, equipped with an action plan on how you can make smarter decisions for your financial future.
Think about the numerous beliefs you have about money. How have they influenced you up to this point in your life? What healthier habits can you adopt going forward? How can you go about building a more secure financial life for yourself and your family, equipped with this knowledge? These are all questions that will be answered in-depth in Money Mammoth. My advice, as a financial advisor who sees just how far we've fallen when it comes to financial literacy, is to take these concepts and share them with everyone you know.
Really, that's what I see being so powerful about this book. It forces you to not only look at yourself holistically but also opens your eyes to the multi-faceted way money infiltrates your thinking, your desires, your attitudes and your future. If we intend to make smarter financial decisions and raise financially savvy children, this book makes it clear we must first start with ourselves. The more holistic your planning, the better your ability to make the right financial decisions.
Whether you're a saver, spender, or investor, we are fortunate to have so much opportunity sitting in front of us. If you get nothing else from reading this book, know this: Every piece of who you are, whether psychologically, spiritually, emotionally and physically, subtly intertwines with your feelings about money and shapes the way you see the world.
The good news is the tools, concepts and exercises in this book put the power in your hands to better understand your belief system and your habits and how adjustments can be made to live more fully. As an advisor, I wish all my clients came to the table with the knowledge this book provides.
A tip before you dive into the book. Stop defending what you think you know and embrace the unknown. Open yourself to the realization you have much to learn, and often it's sitting within the depths of who we are, the people we associate with and the environment in which we grow.
What I'm talking about here is a lesson we often share with our clients. Let us help you live your life by design, not by default. As you read on, use the principles in this book to be purposeful in your approach. To move forward in a smarter way. Because the future favors the prepared.
Ron Carson
CEO/Founder
Carson Group
Introduction
YOUR MONEY MAMMOTH
Mammoths ruled their domain. Enormous creatures and majestic in their being, they lived at a time long after the dinosaurs were gone. Mammoths roamed the land of Western Europe and Northern America, eating grass, raising their young, and enjoying life. Changes in the mammoths' environment were happening all around them, but they failed to see and adapt to the effects. Over their time, the earth cooled, and as the tundra started to freeze, their food sources began to disappear. The mammoths started to migrate to find more sources for food, but they encountered new challenges. Neanderthal cave dwellers learned to communicate within tribes and learned to work together to hunt. Prehistoric humans evolved from the scavenger to the hunter and quickly ascended the food chain. The mammoths were slow moving, large sources of meat protein, and sadly, easily killed. In the end, early human's social hunting skills, a changing environment, and their species' failure to evolve and adapt was the source of the mammoths' eventual extinction.
OUR EXTINCTION LEVEL EVENT
Throughout history, species adapt and evolve over time to changing conditions or they become extinct. It is a cruel truth of nature and natural selection of survival of the species. However, don't be fooled into thinking these events only occurred millions of years ago. In fact, they are happening every day on our planet; you just may not be aware that they are occurring. While we instinctively look to environmental changes, like climate change, for examples of these events, they are not the only signs. Historically, environmental changes were the source of many early excitation events, but they aren't the only source of excitation level changes.
Some theorize that the extinction level event that will impact humans may come from social versus environmental changes. Is it possible that the social phenomenon of not being able to properly handle our personal finances could lead to enough social unrest to cause a civil war? Can the underlying divide, or political exploitation, between the “wealthy” and “poor” grow to the point that the inequality destroys our social environment, leading to a quantum shift in our lives and society? In fact, it might not be the warming earth, pandemic disease, carbon emission, or a giant meteor that wipes us out. Consider the real possibility that our inability to address financial inequality and the number of people living in poverty as the foundational sources of our ultimate demise.
TODAY'S REALITY
When it comes to our relationship with money, we are stuck in the Stone Age.
According to the American Psychological Association (APA), money is a significant source of stress for three out of four Americans.
1
Forty-five percent of Americans have no savings whatsoever.
2
The average person age 60 or older who does have savings has about $150,000, certainly not enough to stop working.
3
Almost 40% of American adults wouldn't be able to cover a $400 emergency with cash, savings, or a credit card charge they could quickly pay off.
4
The median American household has only $11,700 in savings.
5
Among elderly Social Security beneficiaries, 48% of married couples and 69% of unmarried persons receive 50% or more of their income from Social Security. In 2019, the average monthly Social Security retirement benefit for a new retiree was about $1,500.
6
The level of credit debt in the United States during the height of the most recent economic expansion (2019) was over $35,000.
7
It's painfully obvious that the average American is in terrible financial shape. Despite the relentless barrage of information and warnings from financial experts that saving for the future is not a luxury but a necessity. In our society, people who don't save are looked down on. We blame them for being irresponsible without realizing that today's bad financial behaviors were our ancestor's essential survival behaviors.
SO WHO ARE YOU?
Ask yourself if the environment you were raised in was one of financial independence or one of interdependence. Independence in this case means that every family unit within your tribe was expected to, and generally did, take care of itself. Or was it interdependent, meaning that everyone shared, when necessary, financial resources. If the latter, you may find it very difficult to save while others close to you have significantly less. If your case is the latter, you may feel a great sense of responsibility for people who are in need. You may find that they expect you, if you have more, to share what you have, and if you don't, they may cut you out of their lives.
YOU ARE WIRED TO SPEND
You are wired to share and not save. That makes it a significant challenge to deal with modern personal finance. But we have another significant challenge: We are also hardwired to spend. Not all that we gathered is given away. We use it; we spend it now; we don't invest in our future. So why do we have that impulse? It's the same reason we have a problem with obesity. We can blame our DNA.
Your ancestors did not live long by engaging in moderation. When there was something to eat, they ate as much of it as they could. They didn't say, Oh, I think I have had enough, I'll quit now, and save some for later. They didn't avoid eating fatty or sugary foods; they thrived on them. There were probably those who thought they should eat in moderation, but in prehistoric days, when people didn't know when or where their next meal would come, they were less likely to survive to pass on their DNA. So, the survivors, our ancestors, were consumers. Consuming as much as they could, even beyond when they were full. They did so because the next meal was not a guarantee and any food that went uneaten would quickly spoil.
This consumer programming helps to partly explain our current obesity crisis in America. We are no better at managing our calorie intake than we are at saving money. In many ways, money is our food. We love to consume it as we find it!
If we get the chance, we will consume more than we need. But now we have the ability to consume more than we even have. We call this buying on credit. Businesses understand this human need and seduce us to consume our money, borrow more, and consume that too. They are just capitalizing on human nature. So modern society has created a situation in which our ancestral programming sets the stage for our becoming obese and broke.
YOU ARE WIRED TO TRY TO KEEP UP WITH THE JONESES
In tribal life, ancestors' status within a tribe was a matter of life or death. One of the greatest threats to their survival was finding that they no longer belonged in the group and they no longer had a community to help keep them safe. Our ancestors left on their own would not live long enough to pass on their DNA. So, today, we are incredibly sensitive to whether we belong in a group or not. We are wired to be on constant lookout for cues that we might have lost our place.
In the past, it was critically important that our ancestors kept up on the latest gossip and rumors. Tribes typically consist of 100–150 individuals, so it was a daily task for our ancestors to see where they stood. It was important to know who was mad at whom, and who was in good favor with the leaders of the tribe. Given that our current society is so much larger, we rely on social media and the news to make sure we are not caught by surprise. Watching the news, whether accurate or not, triggers our pleasure centers and gives us hits of dopamine similar to those we get from food and sex. Our brain rewards us for keeping up with the Joneses. For our ancestors, keeping up with the news was a matter of life or death.
ALL THE RULES HAVE CHANGED
Within the past two generations, there has been a dramatic shift away from this tribal social system. Part of the responsibility of the tribe was taking care of each other, including as older people. Over time, as we moved from small tribes to larger groups, this responsibility was passed on to institutions, corporations, and the government. Several decades ago, such entities were there to take care of the tribe. Your company would fund your retirement, and Social Security would step in to take care of the remainder. You saved a little for vacations and holidays, but when and how retirement would occur was not a concern.
What about all this debt? Our grandparents didn't have credit problems. They didn't struggle with credit card debt. Were they wiser? More disciplined? Perhaps, but that's not why they didn't carry massive amounts of debt. The fact is that they couldn't have gotten access to unsecured debt if they wanted it. There was no such money mechanisms as credit cards. The only unsecured credit they were likely to get was from the local grocer, who wasn't likely to extend it more than $100 or less. In the past few decades, we have been given access to easy and fast credit.
But recent cultural shifts have dramatically changed the landscape. Corporations have shifted from defined benefit plans, such as pensions, to defined contribution plans, like 401(k)s. These somewhat subtle shifts have changed the responsibility of saving for retirement from the institutions back to the individual. So we shifted the responsibility of taking care of our aging members from small tribes to the government. In the past few decades, institutions have been discharging this responsibility, but now there are no tribes left to fall back on.
So now it is all up to the individual. This has never happened in human societal evolutionary history, and it is significant to note. You heard this message if you remember the daily briefings after the corona virus outbreak, when self-reliance was called for and lack of government reliance became a reality. This dramatic shift alone helps explain, to a large degree, our society's current financial problems as well. Look at the total global economic impact of the corona virus–related disruptions for businesses, organizations, individuals, and government, and the unintended results from these shifts of societal personal responsibility. Who was most impacted? The poor and the elderly, those groups least able to take on the personal responsibility and who were more dependent on government systems.
WE MUST EVOLVE
So, what can we do? The first step is to move away from lecturing, scolding, shaming, blaming, judging, scapegoating, and treating ourselves or others as if we are flawed or broken. We describe shame as an emotional gluetrap that keeps you stuck. Shame is not helpful. Second, we need to develop strategies to overcome this basic wiring that was essential for our ancestors to survive in the ancient world but works against us in today's world. This book is designed to help you understand your financial psychology, why you do the things you do around money. But we don't stop there. In each chapter, we offer tools to help you both tame your inner Money Mammoth and harness its powers to help you achieve your own ideal financial mindset.
THE WINDS OF CHANGE
The message here is that, indeed, change is all around. Change is the one inevitable constant in our existence. Some change is for the better and helps us live happier and richer lives, but some change can threaten our literal existence as a species. How can we tell the difference and be prepared? After all, what doesn't kill us makes us stronger, right? However, if we become so smart as a species that we create automated workarounds to address these changes, will it make us weaker and softer? Will those changes sneak up on us like the proverbial lobster in the pot, unsuspectingly boiling us alive? Will we think we are living high and happy, relaxing in the hot tub of life, only to discover too late that we are becoming extinct?
A HISTORICAL MOMENT
Will we look back to this moment in time and identify these financial trends as the cause of societal collapse which foretold our future? Is this the cause of our extinction? Are we like the mammoths, living in a world that is changing faster than we can comprehend or address? Or will the smartest and most enlightened of our species lead the way to change the trends that threaten our existence? Make no mistake, making behavioral change is hard, and doing so while fighting your genetic instincts will take some expert guidance.
TIME TO EVOLVE
Let's learn from the woolly mammoth and early humanity, and adhere to the lessons evolution has provided. To avoid a life of pain and struggle, let's explore how to take action now through financial awakening and rewiring our financial behavioral actions. Let's evolve and become a new species, the Money Mammoth, who confidently roams the earth and thrives in this new, constantly changing world.
NOTES
1
. American Psychological Association, American Psychological Association Survey Shows Money Stress Weighing on Americans' Health Nationwide, February 4, 2015,
https://www.apa.org/news/pressreleases/2015/02/moneystress
.
2
. Kathleen Elkins, Here's How Much Money Americans Have in Savings at Every Income Level, CNBC, September 27, 2018, updated October 11, 2018,
https://www.cnbc.com/2018/09/27/hereshowmuchmoneyamericanshaveinsavingsateveryincomelevel.html
.
3
. Kathleen Elkins, Here's How Much the Average Family Has Saved for Retirement at Every Age, April 7, 2017, updated July 31, 2017,
https://www.cnbc.com/2017/04/07/howmuchtheaveragefamilyhassavedforretirementateveryage.html
.
4
. Federal Reserve Survey, Report on the Economic WellBeing of U.S. Households in 2018, May 2019, Board of Governors of the Federal Reserve, May 24, 2017, updated July 31, 2017,
https://www.federalreserve.gov/publications/2019economicwellbeingofushouseholdsin2018dealingwithunexpectedexpenses.htm
.
5
. Kathleen Elins, Here's How Much Money Americans Have in Savings at Every Income Level, CNBC, September 27, 2018, updated October 11, 2018,
https://www.cnbc.com/2018/09/27/hereshowmuchmoneyamericanshaveinsavingsateveryincomelevel.html
.
6
. Social Security Fact Sheet,
SSA.gov
,
https://www.ssa.gov/news/press/factsheets/basicfactalt.pdf
.
7
. Bill Fay, Consumer Debt Grows as U.S. Economy Expands, August 27, 2019,
https://www.debt.org/2019/08/27/consumerdebtgrowsasuseconomyexpands/
.
SECTION IYOUR ORIGINS
CHAPTER 1Your Ancestors
This is the story of James and Alex, both of whom grew up in wealthy families. Both have more money at their disposal than they could spend in a lifetime. Both are surrounded by conspicuous luxury, and they have had the best education that money can buy. They eat the finest foods; they wear the finest clothes, and they run in the most elite social circles. They are financially set for life. In terms of material possessions, they have it all. Their wealth is not only profound, it is generational. Both come from families that have been wealthy for generations. Even though they come from similar places, they are very different people.
James is a spoiled brat. His life consists of parties late into the night and sleeping in almost every day. He doesn't do anything productive. He doesn't work. He mistreats service providers. In fact, he can be downright cruel. Even though his parents have given him everything he wants, he resents them. He drinks too much; he eats too much, and he gambles incessantly. Inside, he feels bad about himself. He feels lost, purposeless, depressed.
Alex, in contrast, lives a very different life. He wakes up early each morning, and spends much of the day strategizing how he can leverage the financial gifts he has been given in ways that are consistent with his and his family's basic value of making the world a better place. He feels a sense of responsibility to be a good shepherd of the gifts he has been given. He is interested in knowing how he can increase his wealth so that he can do even more good things. He exercises rigorously to keep himself in peak physical condition. He is a practitioner of meditation and yoga. Though he didn't have to, he joined the military service, risking life and limb for his family and his country. He has spent years forgoing all of the pleasures that his family's money could have provided for him in an effort to make a name for himself and enhance the family legacy. He hopes to gain prominence as an officer and return home to enter politics. He is deeply connected to his family history. He appreciates what his parents, grandparents, and great grandparents have done for him and his family. In fact, he knows all about each of them: how they each made a living, what they worked at, and what they accomplished. He is driven to elevate his family's wealth and its status, and to pass this legacy down to his own children and grandchildren as he helps make the world a better place.
These two young men come from similar wealth, but have developed into very different people. Both were given every opportunity. One is passionate, appreciative, and ambitious. The other is depressed, resentful, and purposeless. It is human nature to seek pleasure and avoid pain. So it's easy to understand why someone like James, who has everything, might sit back and enjoy it.
So this begs the question: Why would an incredible rich young man, someone who has more money than he could ever need, someone who is living in the lap of luxury and comfort—why would he join the military, forego comfort and pleasure, risk his life, and be so utterly focused on growing his family's wealth and status?
THE ANCESTOR ROOM
To answer that question, we will visit ancient Rome. Two thousand years ago, Rome was the most powerful civilization in the world. Its aristocrats were incredibly wealthy. They lived in sprawling estates, had slaves to do their manual labor, and received the best education and health care available. The story of Alex mirrors that of many of the children of Roman aristocrats. The clearest path to wealth and status was political, and the quickest path to political office was a resumé of military accomplishments. To this end, these young men would sacrifice all the luxury and comfort that Rome provided to travel thousands of miles away and risk health, life, and limb in the pursuit of military distinction.
The short answer as to why young men behaved that way: It was all about their ancestors. Roman aristocrats had a tradition of making wax masks of the men in their families. The masks were usually made when someone reached the age of 40 and only if he had achieved a noteworthy political rank. The mask was a sign that he had achieved the minimal level of social status needed to be recognized as successful within the family. The mask showed that he was on a similar path to achievement and social prominence as his ancestors who were similarly recognized. These masks were stored in the reception room of their atriums and were arranged next to labels of the highest political offices held by each person. They were worn by actors during funeral processions, but were also shown to visitors.
Next to the collection of wax masks was a chart illustrating the family tree, with painted portraits of the ancestors. Nearby would also be a collection of armor and weapons captured by their ancestors, prominently displayed family achievements that would be seen by anyone who visited the home.
Located in the entryway and near the center of the villa, these tributes to the family's history and accomplishments were displayed for all to see. It would not have been uncommon for the family to walk visitors through the space, showing off the military trophies and political distinctions and telling stories about the trials, tribulations, and achievements of their ancestors.
Imagine what it would have been like to have been a child growing up in such a home, hearing stories about the various artifacts, pictures, and accomplishments of your ancestors, which were so prominently displayed. What must it have been like to have been shown a sword taken from a Carthaginian officer by your great-great grandfather in the Battle of Agrigentum in Sicily or hearing about how your grandfather helped restore Roman honor as a general in the Battle of Carthage in North Africa?
This deep connection to the past would help you make sense of the privilege you were now enjoying, and more important, the sense of duty and responsibility that accompany your privilege. Imagine how your self-esteem would be bolstered as you were told that you, as a direct descendent, have the same blood coursing through your veins. That the traits of courage and wile are built into your very being. You would believe that the highest levels of accomplishment for you are not only possible but are expected. That your ancestors are watching you, supporting you, and encouraging you to take the family to the next level. It is not hard to imagine that growing up in this way, you might develop an intrinsic motivation to do your part to maintain and grow your family's wealth and status and the belief that you could do it.
SO WHAT'S IN YOUR ANCESTRY ROOM?
When was the last time you visited someone's home and saw busts and portraits of their ancestors lining their walls? Interestingly, some of the most generationally successful families do have pictures of their ancestors displayed prominently, but for most of us, this is just not the case. It makes sense though, because, for rare exceptions, many of our ancestors never achieved significant fortune or status and few could afford an artist to paint a portrait. Many Americans are the descendants of immigrants. Aside from the occasionally wealthy adventurer, no one in their right mind would choose to leave a life of wealth and privilege to get on a boat and travel across the world to start over in a country where they knew no one and often didn't even speak the language.
If there were busts of your ancestors, with the possible exception of your parents or grandparents who may have been able to capitalize on the opportunities for socioeconomic advancement, the busts would likely not be of those who accomplished great things as measured in our culture or by ancient Roman standards. Instead you would see pictures and artifacts of refugees, indentured workers, slaves, and immigrants.
For most Americans, you would be looking at the historical legacy of poverty. Many of our ancestors came to America in an attempt to escape the depredations of political upheavals, poverty, calamity, disease, and natural disaster, or were forced to come here against their will. For many of us, our more recent ancestors would be represented by the tools and artifacts of farmers, auto workers, government employees, cooks, or laborers.
So, if you closed your eyes and imagined the hall of fame for your ancestors, what would you see? What financial legacy did they pass down to you? What beliefs about money did they pass on to you? What beliefs about what is possible did you inherit?
WHY AREN'T YOU RICH?
If you are like many Americans, your family has been in the land of opportunity for generations. So why weren't more of us born into an ultra-wealthy families? Take a moment to answer this question for yourself. Your most valuable answer in terms of truly understanding yourself will be the first thought that popped into your mind. You may be tempted to modify this so that it sounds more rational. Resist the temptation and stay with the image that first popped into your mind. Let the implications of that belief unfold. Just let it flow.
If your ancestors achieved financial success, congratulations! Now that doesn't mean that they passed this down to you, but hopefully, you have benefited from either the resources they were able to build or the mindset that allowed them to become successful. But if you are like most of us, ask yourself this question: Why weren't your ancestors rich?
So why aren't you rich? The answer is simple: You and/or your ancestors didn't successfully hoard enough money or valuable objects. Of course, there are a plethora of other considerations, but in strict behavioral terms, that's pretty much it. Rich people have amassed a bunch of money for themselves. Poor people have not. It turns out that high financial net worth is not about how much money you make; it is defined by how much money you save.
Here are two possible causes for your ancestors not becoming wealthy. The first is that they were dedicated to the concept of saving money, but they were unable to do so because the money or the opportunity to learn about money was not afforded them. This would include having been the unfortunate victims of oppressive governments, discrimination, or any number of atrocities throughout human history from which they were not able to recover.
The second possible cause is that they didn't buy into the concept of hoarding. According to Dictionary.com, hoard is defined as “a stock or store of money or valued objects, typically one that is secret or carefully guarded.”1 There are several key elements to this definition. First, it requires someone to stock up and save money or valuable objects. Second, it requires someone to protect, preserve, and safeguard the hoard.
The great news about this is that if you are reading this book, you likely live in a free society where people just like you have been able to create financial success. So while institutional and/or cultural barriers exist, it is possible for you to overcome them.
Today, we honor hoarders of money and resources. If you are not among them, it would be normal for you to feel bad about yourself. You may ask: Why were they able to do it, and me and my ancestors failed to do it? But here's the thing: While today we honor hoarders of money, thousands of years ago we killed them.
DEATH TO SAVERS
The majority of us are just not wired to save. In a 2018 study published in Nature Communications titled “Differential Temporal Salience of Earning and Saving,” researchers Kesong Hu, Eve De Rosa, and Adam K. Anderson found that we are wired to pay more attention to earning than saving.2 They noted that “savings” are for future use, are currently inaccessible, and are abstract, which decreases our attention and motivation to save. In contrast, we are wired to focus more on earning or gaining money and possessions now, which is much more concrete. Not only are we wired to pay attention to immediate concrete gains versus long-term abstract savings, our ancestors survived by sharing what they had when they had it. Those who didn't share were sanctioned by the tribe, often quite dramatically—sometimes banished, sometimes publicly executed. The ultimate sanction was to be thrown out of the tribe, which was a prescription for certain death. The sharers survived, and so they passed on their sharing genes and became the dominant group with the trait of sharing.
In many contemporary settings, the bias toward sharing instead of saving for oneself is very much predominant. For example, this approach to resources is quite prominent in Appalachia, Native American tribes, many African American communities, poor neighborhoods, and others. Those members of the community who share what they have with others are venerated while nonsharers are sanctioned. An underlying premise is that “If I look out for you when you need help, then you will look out for me when I need help.” Each generation had its share of hoarders, but the majority of our ancestors, those individuals who survived, were those who had a sharing bias.
