The Saddest Money Piece I've Ever Read

I hear and read a lot of sad stories about money. Stories about loss, about desperation, about dealing with frustration and indignity. But this has got to be one of the saddest money stories I've ever read.

Isa Hopkins's parents used to fight about money when she was little. Sure, lots of people's parents fight about money, but I guess Isa's parents fought a lot. Or the quality of their fighting was particularly toxic. I would guess that the financial insecurity itself probably caused distress for little Isa, and when she looked around for a caregiver to reassure her she saw two people too engrossed with their battle against the world and each other to take care of her. She got the message that not having money meant fear and a lack of safety. And then what happened next? At one point in her teens things changed for the better. Her parents got more money, and the fighting stopped. No money, fighting. Enough money, no fighting. So Isa really got the message that money is absolutely, utterly essential to any chance at domestic felicity.

Though she was curious and even enthusiastic about the prospect of having a lot of money as an adult, Isa chose to pursue a path as a writer. I haven't met or treated Isa, but this doesn't surprise me. I'm sure retreating into an inner fantasy world was a great solace to a little girl in scary, shitty circumstances. Also, as someone who reports close family relationships, up-shifting into a different socioeconomic class can be tricky, even threatening, to family bonds. So there must have been something very familiar about choosing a life as a poor artist.

But this leaves Isa in a bind. Having experienced first-hand the stresses that lack of money put on her parents' relationship, she would not -- would not -- get involved with someone if there was a risk that this pattern would repeat. And in the incontrovertible, ipso facto, If-Then logic that can only be borne from the mind of a traumatized child, that meant that as an adult Isa would find herself stuck not being able to grow, become intimate, partner, and have children.

My heart breaks for Isa. I see her piece not as the brittle and tough expression that it tries to be on the surface. She expresses no self-doubt and presents her argument like there's no debate. Yet the very act of publishing this piece is itself an expression of hope that she's wrong. I feel her writing these words and probing them, testing them, examining them for validity. I picture her continuously updating the comments and hoping for a counter-argument.

The associations that we make with money and relationships when we're young are so deep. We have so little understanding of the world that we think that what happened in our family is the world. Poor Isa. It doesn't have to be this way. Lack of money is a terrible stress, but it doesn't always mean that a person is doomed to suffer that stress alone.

Surf the Urge

Just came from an absolutely AMAZING training with Dr. Andrew Tatarsky of the Center for Optimal Living.  He was at The Actors Fund to talk about Harm Reduction techniques and his book, Harm Reduction Psychotherapy. While this was mainly focused on application with substance abuse cases, it is easy to make the connection to a disordered process with money. My favorite part of the training was the technique of urge surfing, where you delay responding to the urge to "use" (splurge, spend, drink, etc.).

In that delay you slowly breathe into the urge and describe the thoughts and sensations that come up. 

The urge becomes the way in to see what is driving the feeling. You "unwrap" the urge and ask:

• What does the urge want?
• What happened just before?
• What does the urge want to change?
• If it could speak, what would it say?
• Is there a story it has to tell?
• What part of you is speaking through the urge?

For so many of us, financial behavior is not strategic, rational, and deliberate -- oh, no. It is reactive, messy, and confusing. It's based on urges that have their basis in deep emotion and profound personal meaning. It touches on our multiple points of our identity, relationships, and social context. Before we can attempt to change or "clean up" our financial behavior we have to come from an initial place of compassionate curiosity and radical acceptance. Once we can perceive and understand the origin of these behaviors and how those behaviors serve us (even as they limit us), only then do we have the chance to make real, purposeful, substantive change. 

Radical acceptance. It's what financial wellness is all about.

The Secret to Financial Change

I appreciate where this article in LearnVest titled The Power of Pessimism: How Negative Thinking Can Improve Your Finance" is trying to go. Working with a client who is overly attached to affirmation and attraction (a la "The Secret") in lieu of an action plan can test my patience sometimes. But I don't know that I'd go so far as to say a dose of pessimism is the answer, either. Maybe it's just the provocative word choice that irks me.

The problem is that all of us have certain cognitive biases that frame how we perceive situations and approach change. As the article points out when discussing the effectiveness of affirmations, people with already high self-esteem respond well to self-directed messages like "I am lovable" and "I am worthy." People with low self-esteem tend to experience a drop in self-regard when they try to direct these messages toward themselves.

The toughest thing about trying to do something new is that we tend to approach this new thing in the same way we always approach things. Actually doing something differently is very, very hard. 

And when it comes to changing your financial life -- oy! People generally seek our financial coaching or counseling when something with their money has become unbearable. Either their debt has climbed to an unacceptable level or they are tired of not being able to afford to visit their nieces across the country. Something has happened to make them say, "I don't want to live like this anymore." They are already dreaming of a life with zero debt or buying plane tickets on Kayak.com. Visualizing a desired outcome is not the difficult part.

The difficulty is that changing a financial outcome invariably involves changing your financial process. You have to do something differently than you've been doing it. Your attachment to a desired outcome does not overcome your cognitive and behavioral biases. That's why people usually have better results when they work with a coach or consultant who can offer them another point of view.

This article made me think of how I tend to direct people's focus when approaching financial change. In a nutshell (a very blunt, un-nuanced nutshell) I find that it depends on where you are in the process:

Beginning
Focus on changing nothing. Gather information about where you are, how your life works and doesn't, examine all options. Learn to pay attention and resist urge to change something -- anything! -- just to relieve stress. Practice being a "neutral observer." This can soften up our cognitive biases because we get out of the feel -> react cycle.

Early Middle
Focus on experimenting with change. Immediate and near-term focus only. No thought for the future, or you'll lose the ability to pay attention to the present. Purposefully resist the urge to prematurely commit. Try out, "fail," discard. Play!

Late Middle
Start to practice with what has worked in the Early Middle stage. Now you begin to focus on the future. Now there is a combination of optimism with what LearnVest might be calling "the right way" of "doing pessimism."

Final Stage
Now focus on progress toward your desired outcome. When you start to get off track, go back to the beginning and go through the gather info -> analyze info -> decide and follow through steps again. Revel in your vision for the future and attach to it, love it, and let it infuse your efforts.

Not sure where this road leads, but
it smells delicious!

Every Stage
Behavioral change is a slow, many-step process. I find it helps to try to enjoy yourself along the way. Stop and smell the roses of each little thing you try out or discover. This is the gift, this is where you truly learn to live your life and make conscious, purposeful choices. This is what is more important than zero balances and even visits with family. If you can learn to change your financial behavior you have the power to change anything in your life. Simply focusing on an outcome (positive or negative) leaves out all that good stuff along the way.

But Seriously, People

I love to laugh with my clients. There are times when I'm a little embarrassed, worried that we are making so much noise that we'll disturb people in offices nearby. What are we laughing about? You name it. Sometimes the more critical the situation the more you need a good belly laugh. 

One of the funniest things in the world, and certainly a subject that comes up a lot in coaching work, is how utterly terrible we are when it comes to change. We are absurd. We are failures waiting to happen. We make endless mistakes and a million wrong calls. If you don't have a sense of humor about this, then you'll never persevere long enough to get it right. 

Learning to do something new takes a light touch. Have fun with it. 

Knock, knock.

Who's there?

Control freak.

Con--

--Now you say, "Control freak, who?"!!

Don't be the control freak. 

The Good-Enough Budget

"You have excellent math skills and

you deserve good things!"

I have a half-developed pet concept I keep turning over called the "good-enough budget." The term is a take-off on that classic Winnicott term, the good-enough mother. Without getting into a whole history of Object Relations, the basic idea of the good-enough mother is a departure from the Freudian and Kleinian "good mother/bad mother" dichotomy. The good-enough mother is less of an abstract, but is seen as a real person dealing with the real world, doing the best she can to respond to the developing needs of her infant, and for her efforts and responses to be sufficient to the child's needs. (The history of modern psychotherapy is basically written on the backs of "bad mothers," so the idea that something short of perfect parenting is still considered "good enough" should be met with cheers.)

The good-enough mother does a few crucial things consistently well:
- She sees her child for who he is and doesn't project her own fantasy;
- She accepts and responds to her child's needs without shaming or rejecting;
- She provides a "holding environment" with her attention, love, and physical care that supports her child's development from a dependent infant to a mature, authentic adult.

So how does this relate to money? How can a budget be good-enough?

First of all, the good-enough budget is concerned with boots-on-the-ground financial management (meeting your real life, day-to-day financial needs) and not an abstract concept of financial perfection. Do you account for every penny? Do you religiously reconcile your accounts every month? Probably not. And the good-enough budget doesn't require you to. As long as you have a basic framework for what you earn and spend, you're still in better shape than "failing" at the ideal.

The good-enough budget reflects who you really are. Do you eat take-out for every single meal? Then your good-enough budget shows a higher number in Take Out than in Groceries. Same thing for all of those other "naughty" financial behaviors that people consistently omit or under-report in their budgets: buying clothes, liquor, taking taxis, etc.

Not quite ready to accurately account for those expenditures? The good-enough budget doesn't judge. Figure out all of those committed expenses -- things like housing payment, car payment, student loan, cell phone, internet, insurance -- and everything else can be "discretionary" for now. Practice simply staying within your means (so that "committed" plus "discretionary" is still less than "income) and the good-enough budget will accept that for now.

The good-enough budget gives you room to work on your financial awareness and behavior without requiring perfection. It is a low-pressure but consistent connection with your money where you give yourself structure, but still enough wiggle room for this to be a work in progress.

Because you, my darling, are a beautiful snowflake and you deserve to have your money be a source of happiness instead of shame. Mama loves you.

Women and Money: The Sky Is Falling

Hey, girl. I know that money and investing topics are "intimidating" and "boring" to you, so you "tune out" when your advisor tries in vain to show you a PowerPoint on market returns. But you need to get it together, because according to USA Today, "Women's financial responsibility grows faster than knowledge."

And ladies, we all need to care about this "lack of knowledge" because everyone, not just women, "will have to bear the burden" of the repercussions of our ignorance. Don't believe me? This warning comes straight from "personal finance experts." Says one:

I can't even understand Post-Its! How

can I possibly read a quarterly statement?

"If we find ourselves in a position 15 years from now where the husbands start to pass away and the wife doesn't know what to do in terms of managing money, there's going to be a lot of bad decisions made, a lot of economic waste and a lot of scared people," says Justin Reckers, a certified financial planner who runs weath management and divorce management practices in San Diego.

We'd better get on this, before we collectively crash the economy.

Just a couple of things to consider, though, before you run sobbing to your husband and beg his forgiveness for not rushing to open the brokerage statement every month:

1) Women are not bad investors. When it comes to making decisions about investment holdings, women consistently outperform men* over the long term. Some experts think this is because we are more risk-averse, others think it's our understanding of our own emotions that allow us to process feelings before acting on them. Whichever the case, we generally have a much more critical assessment of our skills than the results would bear out.

2) Every article of this type that I read laments the fact that women feel intimidated by jargon. We feel concerned about being bag ladies in our old age. We want to feel confident in meetings with our financial planner. We have got to stop being so distracted by how we feel about situations and pay more attention to the facts. How much are you saving, where are you investing it, how are those investments performing, and what future considerations do you need to keep in mind? Period. You can have all kinds of feelings about it, but don't make those feelings your focus.

3) That said, there is something valuable in what your gut is telling you -- as long as you turn that feeling into action instead of a whole narrative about how terrible you are with money. If you don't have a good rapport with your financial planner, find a better one. If you can't read the latest personal finance best seller without slipping into a coma, join an investment group or take a class. We have got to stop complaining that we don't like the way the financial services industry is currently set up, and start supporting -- with our attention, dollars, and voices -- those types of financial services that do work for us.

The bottom line is that women are great with money. What we do poorly is interface with a system that wasn't originally set up to engage us. But that doesn't give us a bye to just sit on the sidelines and complain about it, or wait for some man to show up and serve as our liaison to money world. Stop thinking the problem is you, your inability, and your ignorance. And by all means, don't take articles like this too seriously.

* This finding only relates when comparing decision-to-decision, not balance-to-balance. According to the Employee Benefit Research Institute, though roughly the same number of full-time employed men and women participate in retirement plans, men on average have a balance of $31,388 where women on average have a balance of $20,877. Men contribute more to their plans.

ETA: For a much more helpful take on this topic, check out Geraldine Sealey's article in the September issue of Real Simple titled, "Women & Money: Why You Need to Take Control Now." I can't find a digital version, but it's on newsstands now, and I am quoted in it along with Amanda Steinberg of DailyWorth, Galia Gichon of Down-to-Earth Finance, and Laura Vanderkam, author of All the Money in the World: What the Happiest People Know About Getting and Spending.

"The Talk" About Money

I will admit that when I first saw a Billfold.com post about this PSA campaign from The National Financial Educators Council, I just about blew a gasket. But since this campaign is supposed to "elicit an emotional response that encourages parents to talk with their kids about money," I guess that's sort of the point. My reaction was less about the appropriateness of the images, though, and more utter amazement that financial literacy is being pitched as "a talk," emphasis on the "a."

Teaching your kids about money is not a one time event. It's not a conversation, a booklet, or even an all-day seminar where you play Tony Robbins and motivate your kids to unleash the power of their bank account. Teaching your kids about money involves being a full-time, round-the-clock role model for financial behavior. And if you think your kids aren't paying attention, think again.

Children, especially young children, are incredibly sensitive to parents' emotions. When your entire security depends on the stability of the two (or one) central adults in your life, it pays to pick up on cues as to whether mom is overwhelmed or dad is prone to lash out. So what children are constantly picking up with their little kid antennae are the emotional signals you send out when you handle money tasks.

When you get agitated watching the cash register number creep up at the grocery store, little Suzy registers your stress level creeping up, too. Or when you go on a spending spree only to collapse later in guilt (or get in an argument with your spouse), little Billy might choose to play outside and stay out of the way. Of course, one or two or a few instances of these behaviors isn't a big deal -- it's the overall pattern that makes an indelible imprint on your child.

Which is not to say that I don't think you should talk about money with your kids. You should. You should do it often. By all means talk to them about compound interest and how to open a 401(k) and warn them about high-interest debt. But in my experience it's not a lack of information that gets people in serious trouble, it's a lack of emotional regulation. It's difficulty paying attention to stressful tasks. It's putting money in the place of love, or self-esteem, or self-care.

As a parent and role model, you don't have to be perfect. Even your money mistakes can be constructive, if you communicate about your struggles in an age-appropriate way and demonstrate sincere efforts to improve your behavior. It's healthy for children to see adults dealing with the consequences of their mistakes.

I appreciate that this PSA campaign is trying to get parents to associate financial literacy with other forms of keeping their kids safe. But I wish there were more tools to help parents deal with the truly hard parts of "The Talk," like why it's hard to keep on a budget, how to talk finances with a partner without arguing, and how to translate personal values into financial goals. Sigh, if I only had the money to create my own PSA campaign (or was even remotely savvy with Photoshop).