Rewire Your Relationship With Money | Wendy De La Rosa
Jan 13, 2025
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Wendy De La Rosa, an Assistant Professor at The Wharton School, dives into the psychology of money and how upbringing influences adult financial behaviors. She shares practical strategies for improving financial security, like the importance of open conversations around finances to combat shame. Exploring the G.I. Joe Fallacy, she explains why knowledge alone isn't enough for effective financial management. With insights on small purchases and a guide to crucial financial discussions for couples, she empowers listeners to take control of their financial narratives.
Dr. Wendy De La Rosa emphasizes the significance of reshaping environmental influences on financial decisions beyond just individual willpower.
The episode highlights how childhood financial experiences and parental attitudes towards money profoundly shape adult financial behaviors.
Normalizing financial conversations through structured discussions can effectively reduce stigma and empower individuals to improve their financial literacy.
Deep dives
Rewiring Your Mindset for Financial Security
Financial security can be greatly improved by altering one’s mindset and decision-making processes around money. Emphasizing that our environment significantly influences financial choices, Dr. Wendy De La Rosa explains that individual willpower alone is often not sufficient for making positive changes. She describes the G.I. Joe fallacy, the misconception that merely knowing what to do about finances is enough to change behaviors. Instead, people need to recognize the complex influences of their surroundings and seek to reshape those factors as part of their strategy for better financial habits.
The Impact of Financial Background and Environment
Dr. De La Rosa addresses how our upbringing and familial attitudes towards money shape our own financial behaviors as adults. She shares insights from her research, highlighting that many people inherit both financial habits and mentalities from their parents. For instance, if individuals experienced financial anxiety in their childhood, they may carry that stress into adulthood, affecting their financial self-concept. This suggests that being aware of one’s background can help facilitate healthier conversations about money and reduce feelings of shame.
Breaking the Taboo Around Financial Conversations
The taboo surrounding discussions about money can hinder financial well-being, and Dr. De La Rosa stresses the importance of normalizing these conversations. She notes that society is often more comfortable discussing personal issues like health and relationships than finance, which can lead to harmful stereotypes and misinformation. She recommends setting financial 'dates' with partners and friends to openly discuss finances, helping to create a supportive environment for tackling money-related issues together. Overcoming this taboo can empower individuals to advocate for themselves and improve their financial literacy.
Small Changes for Managing Frequent Purchases
To combat losses from small, frequent purchases, Dr. De La Rosa suggests implementing practical strategies to create financial awareness. One approach involves using a prepaid debit card linked to spending apps, allowing individuals to manage their spending by limiting the amount available for purchases. Creating barriers to impulsive spending can encourage people to evaluate purchases critically and preserve their budgets. This means redefining the payment landscape to enhance self-control and budgeting effectiveness in the face of incessant marketing pressures.
Leveraging Technology for Better Financial Decisions
Technology can be a double-edged sword in financial decision-making, but it can also serve as an ally when used wisely. Dr. De La Rosa encourages individuals to use features on financial apps that facilitate savings or set spending limits through technological automation. For example, people can set rules for saving a percentage of their paycheck, which can help align saving habits with income fluctuations. By leveraging tech to remove friction in managing finances, users can focus on fostering better financial habits while allowing technology to assist them in meeting their goals.
A Wharton professor shares practical tips on increasing your financial security, and eradicating the taboo around financial conversations.
Dr. Wendy De La Rosa is an Assistant Professor at The Wharton School at the University of Pennsylvania. She focuses on behavioral science to improve consumers’ financial well-being.
This episode is part of our monthlong Do Life Better series.
We talk about:
Psychological and technological tools for taking control of your finances
How to get a handle on small frequent purchases
The relationship between our environment and our finances
Financial shame
How our parents relationship with money impacts us as adults
The G.I. Joe Fallacy, and the misconception that “knowing is half the battle” when it comes to our financial health
10 financial questions to ask your romantic partner
How to eliminate the taboo of financial conversations