Are your emotions sabotaging your financial success? Find out how to fix your relationship with money for good! Joe Anderson, CFP®, and Big Al Clopine, CPA, show you how the emotions of investing can impact your portfolio, and how your money personality might be keeping you broke. Learn the investing biases and investing mistakes to avoid to help you improve your money management. Discover behavioral finance concepts so you can avoid the pitfalls of the psychology of money.
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Important Points:
- 00:30 – Why Your Emotions Are Wrecking Your Finances
- 00.51 – The Secret Love/Hate Relationship We All Have with Money
- 03:25 – Why We Don’t Talk About Money – and How It Hurts Us
- 04:47 – What Being “Rich” Really Means (and Why It’s Not About the Bank Account)
- 07:11 – The 3 Money Biases That Keep You Stuck
- 09:14 – What’s Your Money Personality? (And How It’s Controlling You)
- 12:28 – Turning Toxic Money Habits into Healthy Wealth Behaviors
- 14:21 – How to Fix Money Fights and Strengthen Your Financial Relationship
- 17:45 – Stop Saying “I’m Bad with Money”: Reprogram Your Financial Mindset
- 19;04 – Real People, Real Money Problems – and How to Solve Them
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Transcript:
(NOTE: Transcriptions are an approximation and may not be entirely correct)
Joe: What is one thing you should get out of your overall finances? Stick around. We will tell you. Welcome to the show. The show is called Your Money, Your Wealth®. Joe Anderson here. President of Pure Financial Advisors, and with the big man, he’s sitting right over there. Big Al Clopine. Hello, Big Al. How you doing today?
Al: Pretty good.
Joe: You know, when you think about investing your financial planning, there’s one thing that people always screw up.
Al: I’m guessing you’re gonna say emotions.
Joe: It is your emotions. Emotions have no business being in your overall financial strategy. Over half of us have a love hate relationship with our money. We either love it. Or we hate it. We gotta find a happy medium here, folks, that’s today’s financial focus.
The Secret Love/Hate Relationship We All Have With Money
Money’s a pretty private matter. If you kind of take a look, this was a survey done by Wells Fargo. Pretty interesting here. Personal finances are almost at the top of the list. Religion, politics, death. And then sex. Your Sex life personal finance is right there. Something we don’t wanna talk about. Something that is very private to us. That’s why these emotions go a little bit wild. We need to figure out what is our money personality, and we’ll figure it out with Big Al.
Al: All right. This money, love/hate relationship. How do we get there and how do we fix it? Well, let’s look at influencing factors. We’ve gotta know kind of how we got there, number one. Number two is what are some of the biases that we seem to carry that affect our emotions? And probably most importantly is how do we fix it? How do we improve our relationship with money? So Joe, this is a little different show than we normally do, but I think it’s very pertinent.
Joe: Yeah. I think all of us have some sort of love towards money and some sort of hate towards money, so if we can clean up that relationship with the overall finances, I think we’ll be a little bit better off. Let’s kind of kick it off Al, when you look at the factors of this love hate, we’ll start you with the green. I’ll go with the anxiety.
Al: Money is great. I love it. I want to achieve goals. I wanna set goals and achieve ’em. I feel like I’ve had accomplishments, I feel in control. And I can save, but then I can also buy when I need to. That’s kind of where we wanna get to, Joe.
Joe: Yeah. But if I look at it, you know, oh man, I have some negative thoughts about money because maybe I don’t necessarily have enough. You know, what does society think of me if I’m not driving a fancy car or I have a fancy house? What? You know, keeping up with the Joneses is actually kind of a real thing.
But all of us have financial struggles. Well, most of us, about 99.9% of us have financial struggles, and I think it’s just the mindset of how we think about these struggles and what are the steps to do to get over to the green and get outta this anxiety and stress line. The influencing factors could be childhood experiences. What education do you have in regards to money, your personal goals, societal pressures?
Al: Well, you’re right, it’s keeping up with the Joneses, that’s a big one.
Joe: And it’s funny and especially for those of you that are married, you know, you and your spouse may not be completely aligned on this stuff and it creates even a little bit more tension factors that are off limits to talk about. So, Big Al, you like to go to cocktail parties, here’s things that you don’t necessarily wanna bring up.
Why We Don’t Talk About Money – and How It Hurts Us
Al: So, okay, this is good for me to know. So I don’t, I’m not gonna ask you how much money you spend. Yeah. I mean that’s, or how much you make. Hey, how much money you got?
Joe: Wait a minute. How much debt are you in? Let, let, well, it looks like you got a lot of debt. How much debt are we talking about? You know, investments. I thought this was kind of interesting. This was that same study that Wells Fargo did. I think a lot of times people talk about investments. What are you investing in? Or you got any hot tips? Or maybe they just come to us because we’re in the business.
Al: Maybe so, but maybe, maybe a lot of people don’t like to talk about it, I guess is what this is saying.
Joe: Yeah, these are No-no’s, these are factors you don’t want to bring up because that could create a lot of stress and hate in the other person’s eyes as you’re bringing these topics up.
Al: Yeah. So, Joe, let’s talk about factors of wealth. This is a study where individuals describe the rich. So 52% think they’re hardworking. 43, only 43% think they’re smart. They’re greedy. Yeah, they’re greedy. They’re self-centered, self-centered.
Joe: Yeah, I mean, I, yeah, I think there’s a, there’s some biases here. You know, hardworking, maybe they got lucky. All right. They got married into money. They inherited money, right? So it’s all funny. What, what’s your definition of rich? I mean, rich is one thing, but I think what we really wanna talk about is wealth. The show is called Your Money, Your Wealth®, and wealth means a lot of things to a lot of people.
What Being ‘Rich’ Really Means (and Why It’s Not About the Bank Account)
Peace of mind. Do you have peace of mind? It doesn’t necessarily what’s in your bank account, but do you have that peace of mind? Can I go to sleep well at night? Can I afford anything that’s 18%? Say that I could just cut a check. I like this one. Loving relationships. I believe that is wealth. That is true wealth. Lots of money. I don’t know, I don’t think that’s wealth. I think that could be rich, but not necessarily wealth.
Al: I think the point is, I mean, money doesn’t necessarily buy happiness, but it doesn’t hurt either.
Joe: Let’s kinda wrap this up. So here’s the hate, right? Money doesn’t equal happiness. Not even close, right? Spending wastefully sometimes if you don’t even like money. It doesn’t matter. You’re just like, let’s get rid of it. You know? Make a big deal out of savings. Oh, we gotta continue to save, we gotta save more. You’re looking at this number, right? Then all other things in your life don’t matter. What is the almighty dollar? Let’s try to get out of the red here. Let’s get in the green.
Al: Yeah, let’s go over some love. So I think maybe where you kind of start is a realistic budget, right? Then you know what you can spend purposely. Right, and then you’re content because you got this under control and you see your investments grow. You know you’re on track for whatever goal you have, whether it’s buying a home or a car, or a retirement. You feel good about it.
Joe: Hey, if you need more help, you know where to go, your money or wealth.com, click on our special offer. It’s our Emotionless Investing Guide. You gotta keep those emotions out of that investment decision. Our Emotionless Investing Guide, go to YourMoneyYourWealth.com. Okay, we’ll be right back. When we get back, we’re gonna talk about your money personality. You don’t wanna miss this.
Joe: All right. Welcome back folks. Show Called Your Money, Your Wealth®, Joe Anderson, Big Al. We’re talking about emotions in regards to your overall financial status. What is your love hate relationship with money? We will figure out your personality here coming up after we get through the true false question.
Al: A majority of people would choose a million dollars per year over true love, true or false? Wow. What a question. What do you think Joe?
Joe: 51% said? Yes. I guess it’s true. They have true love for a million dollars a year.
Al: You’d rather have the million?
Joe: A million dollars a year. Wow. I love that million dollars.
The 3 Money Biases That Keep You Stuck
Joe: Alright, let’s go to biases when it comes to investing now, loss aversion.
Al: Yeah, that’s a big one. And a lot of people don’t kinda understand how that works. It’s like we’re all excited when our investments go up. But did you know there’s been study after study that shows that we’re, when our investments goes down, we’re twice as miserable as the ride up.
We, we just hate to lose money.
Joe: You know, it’s true with about anything in life. I think there was a very famous head coach for the NFL and he retired and they were like, well, why did you retire? And he is like, the loss is hurt twice as much as the wins. And it’s like, I can’t do this anymore. It’s emotional rollercoaster.
So loss aversion, we’re twice. Is upset about the loss overconfidence. This happens when the markets go up for a period of time. It’s like, Hey, I’m a genius at this. I can continue to do the things right, but then the market’s kind of hit and that overconfidence blows up a little bit on you, and you get a little bit of regret.
Al: Well, you do, and the overconfidence thing. But we see this sometimes with young investors. They happen to make a good stock pick or a good mutual fund pick, and they think they’re. Brilliant, and that you realize later on when things turn around, you may not be as good as you thought you were. So just be careful of that.
Joe: Well, yeah, they do studies too on driving. Are you an above average driver? All right. In 70% say yes, I’m an above average.
Al: Or like 90%.
Joe: Yeah, 90%. It’s like I’m above average. Yeah. You know, so it’s, you know, that’s statistically impossible. So we’re not only overconfident in our ability to manage money, but we’re also overconfident in just about every other aspect of life hurting behavior.
What’s this?
Al: Yeah. Well that’s a, that’s a real common one too. It’s like you try to follow what, what everyone else is doing. Even if they’re jumping off the cliff together, just you, you know, everyone has a different financial situation and just because your neighbor is investing one way doesn’t mean you should be investing that way. So just be careful of trying to follow the herd.
What’s Your Money Personality? (And How It’s Controlling You)
Joe: Alright, let’s get into your money personalities. You know, when it comes to money status, here’s the negative. We’re motivated by social status. Hey, I have that nice Mercedes-Benz in the overall driveway. You know, it makes me feel important, right? I got some cash, or I’m driving the nice car, the nice house, right?
Or luxury items. That’s my status symbol. That’s my significance. And then you take on a bunch of debt to maintain the lifestyle. You know, if you look at a lot of this. People in the red here, you might think, wow, they must have millions and millions of dollars, but in a lot of cases they are flat broke because all of their dollars went to these luxury type items for that status symbol.
I get it, right? If we make some money, we wanna buy. Nice things. I like nice things too. But you wanna make sure that your overall financial house and that your money status is kind of in balance.
Al: Yeah. But when you’re talking money status, where, where do you wanna get to? So we talk about budget. No one likes budgeting, but it’s, it’s, it’s kind of a necessary evil at at least some kind of rudimentary budget.
And thinking before you’re buying, right? So you’re not making rash decisions. Save up for purchases for a new car. A down payment for a house, you’ll feel a lot better about money going forward.
Joe: Yeah. Here’s another personality, by the way. This was done by NerdWallet money vigilance, right? I’m always worried about money.
I can’t go to sleep at night. Oh, these bills keep coming in. Or am I going to have enough for retirement? Or, you know, little Benji is gonna go into a private school or college coming up, or can I afford the dental bill? I am just always freaked out. I have this scarcity mindset where it’s just like I focus in on some things and it’s hard for me to get out hard.
You know, some of us, most of us have experienced some sort of financial hardships. Of course, others a lot more than others. But it’s just, you can’t let it go. You know, that’s kind of the, the negative side of things, but we could turn that around.
Al: Yeah. To flip it around, I think one of the things you do right off the bat is get educated and, and some of this may be already know, and some of it may be you need to review, and some of it would be brand new for some of you, but just get some basic education.
It gives you a lot of confidence. Once you got knowledge, you start doing the right things. You make informed decisions and you increase your value, not only of your savings, but your value to others in terms of your job and other things like that.
Joe: Here’s another personality. How about avoidance? I don’t care.
I’m just gonna ignore it. You know, get the foreclosure sign on the window. Eh, it doesn’t imply just rip it off, right? I’m not gonna track my spending. Let’s just kind of keep spending. I don’t like to think about money. I don’t like to talk about money. I’m just going to avoid it.
Al: I probably don’t wanna do that.
There is a way to avoid and actually do it properly, and that is automate your finances, automatic contributions like a 401k, 4 0 3 B, or if you don’t have that, maybe a, a, a withdrawal to your IRA from your checking account every month. So it’s just done without you thinking about it. Make sure you send that money to savings, stay organized, but once you do that, you don’t really have to think about it.
You actually can avoid it and show that’s can be okay. Yes, sir.
Turning Toxic Money Habits into Healthy Wealth Behaviors
Joe: Money worship. Ooh. Oh. Money is the most important thing to me. Oh, I’m gonna just keep grinding, work those long hours, right? Work in the overtime or get a, that, that another case on the books or whatever. I’m just gonna sacrifice my health. I’m gonna die at the desk. That is the worship of money. Well, we don’t wanna do that.
Al: No, we don’t wanna do that. Not even close to that. Better way to think about it is figure out what’s important to you. Figure out what those goals are. What does financial security mean to you? How long do you wanna work? What sort of lifestyle do you want?
Do a little calculation, figure out how much you need to. So that you got things on track, and once you do that, you feel much more in control and happier.
Joe: You know, when we look at these personalities, you know, when it comes to status vigilance. Avoidance or worship. You know, I, I think all of us have a little bit of both, but it’s funny as I’m going through this, some of you might be like, wow, I’m on this side, but my spouse is definitely on that side.
Or vice versa. You know, when it comes to relationships, you wanna make sure that your sound in the relationships that you have with people. And also with your money. And if you can put that together, I think you can accomplish a lot more in your overall financial life. You want help with this? Go to YourMoneyYourWealth.com. It’s our Emotionless Investing Guide. Emotionless Investing Guide. Say that 10 times. Hey, when we get back, we’re gonna talk about how to put this all together and enhance the overall relationship you have with money. You don’t wanna miss this. Don’t go anywhere.
Joe: Hey, welcome back to the show show’s called Your Money or Wealth. We’re talking about the relationship you have with money. Is it a love/hate relationship?
Hopefully it’s more love than hate. Let’s see how you did on the true false question.
How to Fix Money Fights and Strengthen Your Financial Relationship
Al: An average couple argues about money over 50 times a year. Wow, that seems like a lot. Could that possibly be true?
Joe: That is true. Big al, this survey, 2000 Americans who were dating, engaged or married, oh my God, isn’t Then one in three Americans avoid just talking to their partners about their finances.
Al: Just forget it. Let’s not even,
Joe: I’m not even gonna mention it. Because we’ve already done this. It was like 60 times a week.
Al: Yeah, yeah.
Joe: So now I’m just gonna shut her down. Just avoid it. Just avoid it. Oh, let’s improve the relationship folks. Improve the relationship. I think first and foremost, if you’re watching this, you’re way ahead of the curve, right?
Because you’re getting financial education, goal setting, right? It doesn’t have to be something elaborate, it’s something that you can just write down on a a napkin. Just set goals and then you can work towards achieving them. Emotional awareness. Just understand that you get emotion. Sometimes you have that love or that heat feeling.
In regards to whatever status or your personality falls into, just be aware of it. So then you can kind of control it where you’re not affecting others around you. And then finally, if you need to seek support, I mean, there’s a lot of help out there.
Al: It’s a lot of resources. But let’s talk about improving yourself.
Here’s another way to improve your relationship with money. So get some more education, get some more training. Improve those skills, right? And talent. And what is that gonna translate to? Well, probably more compensation. More money. More money to work with. More money to save. Maybe you can retire early, right?
When you have a little bit more money, some of these things get a little bit easier.
Joe: Alright. How about goals? Just improve your, your goal setting. You know, short term goals could be, you know, try trying to increase your salary, like Al just mentioned. You know, maybe just cut expenses or just have a good understanding of what the money’s coming in and where’s it going.
There’s a lot of different free resources today, online that you can kind of track your spending a little bit more than putting it on the old spreadsheet. But that also creates some emotion. So you want to be careful there too. Medium term, right? Go on vacation. Set a goal to say, Hey, we’d like to go on vacation next year in a couple years, a grand vacation.
Just set the goal, start saving towards it so you’re not feeling that guilt if you’re spending money and both of the spouses or partners are on the same page, or buy that new vehicle, but just make it a goal versus maybe an impulse buy. Long term, I don’t know, maybe you wanna retire at 65 kids, put the kids to school, just setting goals.
It could be really simple or it could be complex, but by setting them, writing them down, talking about it and tracking it is gonna help the love hate relationship.
Al: Let’s talk about improving your relationship with money right off the bat. Live within your means. Sometimes easier said than done, particularly when you’re trying to buy a home and you have to buy all this new furniture and you’ve got kids and they go, they go to private school or whatever it may be, but try to live within your means.
That’s probably the one of the number one things that you gotta do. Avoid debt or try to get outta debt. Pay yourself first’s. Another really important one, make sure you got money going into that 401k, 4 0 3 B, or IRA. Regularly, automatically. So you don’t have to think about it. And then budget for your goals, for the priorities so that when you want to buy that new car, you got the money to do it.
Stop Saying ‘I’m Bad with Money’: Reprogram Your Financial Mindset
Joe: All right, now you’re all set. You’re ready to go. But guess what will always come lurking back. It’s that head trash. It’s that self-talk. It’s either gonna be negative or positive. Here’s some examples of some negative self-talk. You know, I’m not good with money, so if I’m not good with it, I’m just not gonna do it. I don’t understand this. I don’t understand IRAs or 401(k)s. I don’t understand the stock market. I don’t understand what bonds are. Get that outta your head. There’s resources for you, or money is stressful. Yeah. Everything is stressful if you make it stressful. So try not to be so focused on the stress aspect of it. Money causes arguments. Yeah. I think it’s how you handle those discussions in understanding what your money personality is and who you’re chatting with. You know, I, I just don’t care about money. No, don’t care.
Al: Well, and, and to really get in the right mindset, it, it, it takes some time, right? I mean, I don’t think we’re all born great with money.
You gotta, it takes some patience. It, it takes some education. You know, maybe try to get yourself out of the negative self-talk and at least into kind of a neutral. Talk, which then could eventually lead to more positive outlook. And one of the ways you can say that instead of, instead of, I don’t have enough money, well I’m learning about money, I’m gonna get there.
Money Questions from Real People – and How to Solve Them
Joe: Alright folks, it’s that time. We’re gonna flip the script. Let’s answer some of your questions.
Al: This is from Frank and San Diego. Can bankruptcy forgive big credit card debt? Well, yes it can. And there’s a couple kinds of bankruptcy. There’s chapter seven, which your debts, most of your debts go away. Sometimes student loans are not part of that, but there’s also a chapter 11, which the debts don’t go away.
They just get spread out over time or maybe negotiate a little bit down. So it depends upon what kind of bankruptcy
Joe: recommend that.
Al: I’m just answering the question.
Joe: Got it. All right, let’s let’s go to the next one.
Al: How do I approach my husband about spending so much on Big Boy toys? This is from Amy in Seattle.
Big boy toys. What do you think about that one?
Joe: I don’t know what big boy toys are. I, was it a new boat, new car, new truck? I don’t know. I think this is this money relationship that we have. I dunno. Hopefully today’s show kind of helped you out. It’s tough.
Al: Yeah, just re rewatch the show.
Joe: Just rewatch it. Just get hubby in there. Then we’ll answer the question for you. Hubby, come on. Have some more communication with your spouse when it comes to those big boy toys, but it all starts with your goals and what’s the money for in making sure that you and your spouse are on the same page in regards to hitting your goals.
And if there’s excess cash flow. And if you guys decide, hey. I wanna buy this toy and you could buy this toy. Or I’m really, you know, looking at this for me personally. And so there’s a give and take in all of this too. But if they’re doing things without really consulting you, that’s when you have to probably take a deeper dive and have those tough conversations.
I’m not a counselor by any stretch. Well, so I don’t know if I’m even qualified.
Al: Kind of sounded like it.
Joe: I don’t think I’m qualified to answer that question. So that’s it for us. I gotta get my P doctorate now. You do. We gotta go back to school and enhance my skills. Hopefully you enjoyed the show. We try to have a little bit of fun.
I think all of us have different money personalities at different phases of our life, and of course with different circumstances. It’s identifying what those personalities are, what that emotion is. Hopefully we can have more love than hate, but the world is the world and we just need to understand where we sit so we can get to that love side. Again, if you want more help, go to YourMoneyYourWealth.com. Click on the special offer. It’s our Emotionless Investing Guide. Let’s not get emotions too much in our finances. It’s almost impossible, but this guide can at least guide you. YourMoneyYourWealth.com. Click on that special offer. For Big Al Clopine. He’s the lover. I’m not gonna be the hater, but you’re gonna get to that website. I’m gonna get to neutral first.
Al: Yes. Yeah, let’s walk before you run.
Joe: Yes. We had a lot of fun. Thanks for joining. We’ll see you next time.
IMPORTANT DISCLOSURES:
• Investment Advisory and Financial Planning Services are offered through Pure Financial Advisors, LLC. A Registered Investment Advisor.
• Pure Financial Advisors, LLC. does not offer tax or legal advice. Consult with a tax advisor or attorney regarding specific situations.
• Opinions expressed are subject to change without notice and are not intended as investment advice or to predict future performance.
• Investing involves risk including the potential loss of principal. No investment strategy can guarantee a profit or protect against loss in periods of declining values.
• All information is believed to be from reliable sources; however, we make no representation as to its completeness or accuracy.
• Intended for educational purposes only and are not intended as individualized advice or a guarantee that you will achieve a desired result. Before implementing any strategies discussed you should consult your tax and financial advisors.
CFP® – The CERTIFIED FINANCIAL PLANNER® certification is by the CFP Board of Standards, Inc. To attain the right to use the CFP® mark, an individual must satisfactorily fulfill education, experience and ethics requirements as well as pass a comprehensive exam. 30 hours of continuing education is required every 2 years to maintain the certification.
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CPA – Certified Public Accountant is a license set by the American Institute of Certified Public Accountants and administered by the National Association of State Boards of Accountancy. Eligibility to sit for the Uniform CPA Exam is determined by individual State Boards of Accountancy. Typically, the requirement is a U.S. bachelor’s degree which includes a minimum number of qualifying credit hours in accounting and business administration with an additional one-year study. All CPA candidates must pass the Uniform CPA Examination to qualify for a CPA certificate and license (i.e., permit to practice) to practice public accounting. CPAs are required to take continuing education courses to renew their license, and most states require CPAs to complete an ethics course during every renewal period.
