712: Brad Klontz | Harnessing the Power of Financial Psychology
Aug 16, 2022
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Dr. Brad Klontz, a financial psychologist and Managing Principal at Your Mental Wealth Advisors, dives deep into the psychology of money. He discusses why so many Americans lack savings despite national wealth and tackles the societal stigma around earning what one's worth. Klontz emphasizes the importance of financial education in schools and the impact of family histories on financial habits. He also calls for open conversations about money to combat shame and improve financial literacy, especially in the age of social media.
Understanding family money scripts is vital for financial self-awareness and smarter money management.
Psychological aspects heavily influence money behaviors, emphasizing the need to address root causes of financial habits.
Growing up in socio-economic tribes shapes financial mindset, highlighting the impact of societal norms on money approaches.
Deep dives
Exploring Family History and Money Habits
Understanding one's family history and the stories about growing up can provide valuable insights into how individuals handle money. By delving into past experiences and inherited money scripts, individuals can gain a deeper understanding of their current financial behaviors and beliefs, paving the way for smarter money management.
Psychological Elements of Money and Finance
Approaching the psychology of money requires a comprehensive understanding of one's upbringing, tribal influences, and underlying beliefs around finances. Dr. Brad Klante emphasizes the significance of psychological aspects in shaping money behaviors and decisions, highlighting the need to address the root causes of financial habits.
Impact of Social and Economic Circumstances
Growing up in socio-economic tribes can influence one's financial habits and mindset. The dynamics of financial enabling, sharing within communities, and the interplay between wealth and societal norms play a crucial role in shaping an individual's approach to money.
Teaching Children About Money
Educating children about money from an early age through structured allowance systems and discussions about money values can help instill healthy financial behaviors. By involving children in financial decisions and teaching them the importance of saving, giving, and managing money wisely, parents can set a strong foundation for their children's financial literacy.
Understanding Money Memories and Financial Flash Points
Our understanding of money and financial decisions is deeply rooted in our past experiences, known as money memories. These memories, such as witnessing parents prioritizing long-term security over short-term gratification, shape our beliefs and behaviors towards money. Financial flash points, pivotal moments like witnessing family financial struggles or significant economic events like the 2008 crash, significantly impact our money scripts, determining our financial outcomes and behaviors. Recognizing and reflecting on these experiences can help individuals navigate their financial decisions more consciously and effectively.
Relative Deprivation and Managing Tribal Entitlement
Relative deprivation, the subjective comparison of one's financial status to others, influences our sense of well-being and contentment. This psychological phenomenon, driven by societal norms and the need for social belonging, can lead to feelings of inadequacy and aggression. Managing tribal entitlement, the societal pressure to share and the fear of economic disparity, is crucial in establishing healthy financial boundaries. Balancing generosity with self-preservation is essential to avoid financial pitfalls and maintain long-term financial well-being.
If the United States is the wealthiest country on Earth, and it's one of the most prosperous times in human history, why does 45 percent of the population decide to wing it with no savings?
Why do so many of us buy the hype that bringing in barely enough money to survive from certain professions is somehow noble — and that making a living wage in service to others is akin to moral failure?
How parents who have spent their lives carefully growing and saving their own money instill lousy financial habits in their offspring.
Why financial planning should be a basic part of the public education curriculum alongside reading, writing, and arithmetic.
How social media contributes to a gross misunderstanding of the way wealthy people (the ones who stay wealthy, anyway) really spend their money.
