Sunday, February 16, 2014

Parents: let's put on a (personal finance) show!

Let's talk about my
pin money for the week.
Once upon a time, managing money was something we could see. Mom or Dad would sit at a table surrounded by paper statements and bills, writing checks and balancing the register. Cash was received at a bank branch, maybe even from a teller. 

Many important associations with money were formed by witnessing these activities. We might notice a parent who got very stressed when the checkbook came out, or discussions about expenses that quickly descended into argument. Or we may have seen money management as a normal and neutral (maybe even positive!) aspect of the family's operations. 

Money management activities today can be a bit more mysterious, if not completely invisible to children. We may check balances on our phones (indistinguishable from the other million times a day our kids see us looking at our phones), or pay bills online during a few minutes at lunch (if we directly pay bills at all). We get cash from points of sale or ATMs that we hit during our rush to get somewhere else. 

This can leave kids with a skewed understanding of what it takes to direct and manage finances. Money seems to just happen automatically, without much attention. Often there are systems or institutions who capitalize on this inattention, protecting us from accidental oversight or promising to monitor our accounts and alert us if there's anything we need to know. 

So as parents, one of the most important parts of financially educating our kids involves finding ways to bring money management to life so that it doesn't just happen behind the scenes. 

It might take real effort to make money management more visible in your family. It's easier to use the conveniences of automation and mobile access. This is especially true if money is a stressful trigger. We look for ways to minimize our exposure to things that cause distress.

Performance
In a sense, when we make money management visible we're putting on a show. We choose what and how we demonstrate to our children about money. 

Kids pick up on this performance on various levels, and that's why it's important to pay attention to scene, script, roles, and routine. 

Scene
Look at the pretty Excel spreadsheet.
What do our kids see when they look at us managing money? Are we shuttered off in a dark corner, muttering angrily to ourselves? Or are we integrated with family life, accessible for curious questions? I understand it can be hard to review an account statement while sticky fingers reach for your keyboard. I used to pay bills after the kids were asleep for this very reason. But you'd be surprised how many young adults come to my practice who've never learned that it's normal to review expenses, plan for cash flow, or read through account statements. 

Script
What language do we use with money, and how do we dialogue with others? When it comes to money, words matter. I recently changed how I talk about my usual Saturday practice, saying "Mommy's managing our money,' instead of "Mommy's paying bills." I want them to frame what they see as something positive and self-directed, as opposed to reactive and compulsory. Language and tone are especially important when choosing how to communicate with loved ones. Watch out for panicked or accusatory tones when asking your spouse to explain that recent charge at the Apple Store. 

Roles
Who takes which responsibilities when it comes to managing the family's money? In two-parent households, does one person do it all, while the other declares him- or herself "hopelessly terrible" with numbers? Ideally children should see a flexible back-and-forth, where both parents treat each other as competent and equally responsible. It's okay to have different jobs, but no grown up should be exempt from money matters. 

Routine
Let's work together to fund
our vacation account!
There should be a predictable choreography to our financial management process. Mail gets opened every day, bills are paid weekly, accounts reviewed and reconciled each month, investments quarterly. Children need to see that money exists within a framework of time, and that inattention to time brings a swift consequence of disorder. It shouldn't be, "Crap! Didn't I just pay that?" or "I think I'll jump on Mint.com today." Without choreography, the actors crash into each other and the audience can tell the scene is a mess. 

If all of this makes you feel a little stilted and self-conscious, don't worry. As with real theater, the more you rehearse the more comfortable you'll feel. And you couldn't be in front of a more receptive audience. 



Monday, November 25, 2013

I hate to be the Feminist Grinch here...

Badass Girls - what's not to love?
I appreciate a good commercial. I do. As a former marketer I admire how GoldieBlox has so successfully tapped into the desire for parents of girls (and, I think for grown women) to see toy manufacturers create products other than dolls or princess crap. 

But before everyone runs away with efforts to get the Girls commercial aired during the Superbowl, I wonder how many people have actually tried the GoldieBlox products? Because it pains me to tell you that we have -- and guys: neither my six-year-old nor I thought they were that great. It was cranks, spools, and some things that spin, all tied together with a somewhat confusing narrative that wasn't terribly compelling. Nor was the building process that engaging. My daughter gave it a half hour a couple times, then she was done.

World of meh.
We should be careful (or at least aware) of when our frustrations and aspirations are being co-opted for the aim of selling a product. Not that I'm saying GoldieBlox has some evil agenda. But they are not in the business of creating girl-power content. They are in the business of selling toys. Girl-power content is just a means to that end.

It's like the great capitalist trifecta when the product, message, and need all sync up to something socially positive. But in this case I feel like the need and message are galloping off into the sunset, while the product sort of limps along behind. 

Rainbow Loom genius at work!
When it comes to providing play opportunities that engage my daughter's interest and help spur her cognitive development, I'll be putting my family's dollars into Rainbow Loom and Legos, and turning down the volume on today's catchy viral commercial. 

Saturday, November 23, 2013

So exactly what is "Financial Therapy?"

I work in a very niche field. Ten years ago, after addressing and working though my own troubled relationship with money, I decided I wanted to help others in similar situations. At the time I thought I was the first person who ever made the connection between how attitudes and beliefs impacted financial behavior, and it took me a long time to define my professional path. Early exploration led to social work and getting my MSW, and thereafter I had the good luck to land an amazing partner/employer in The Actors Fund where I was tasked with launching what became our Financial Wellness Program. 

It gives me a great feeling of satisfaction and pride to see how far things have come since those early days. The culture has changed, and I feel like there is an openness and complexity to our post-2008 understanding of money. Wonderful resources like LearnVest and DailyWorth successfully integrate the "softer" elements of financial behavior along with practical advice. 

LearnVest even did a full feature on the field of financial therapy, and I was honored to be interviewed for the piece. This was part of their "10 Questions for..." series. 

So without further ado, "10 Questions for a Financial Therapist!" 

The $19,000 Haircut


When people assume that my passion for financial wellness is the result of a lifetime of good money habits, I tell them the story of The $19,000 Haircut.

I come from a family with solid financial values: work hard, spend less than you earn, save scrupulously and invest wisely. Yet somehow I couldn’t quite reconcile this excellent advice with the very different message I got from credit card companies strategically stationed inside my university bookstore, or with the dilemma of moving to New York City right out of college (read: no savings) and living on an entry-entry-level Marketing salary. Still, debt that began innocently enough spiraled over time into a “what’s $50 more on the Visa?” attitude, accompanied by anxious night sweats about when a deposit would clear, and using convenience checks from one credit card to pay the minimum on the others. A few years into this cycle I was getting farther away from the entry-entry-level pay excuse, yet no matter how much money I made it was never enough to right my course. My money (lack of it) and debt (too much of it) made me feel like I was living a lie, and that anything else I achieved in life meant little in the face of such monumental secret failure.

Enter my dear mother, who came to visit me one spring at my apartment in New York. I asked her to give my hair a trim, something she hadn’t done since I was a child. Perhaps it was my new metropolitan tastes or her lack of recent experience in hair styling, but I ended up with what can only be described as a lopsided mullet. I took one look in the mirror and burst into tears.

My haircut wasn't even this good. And 
ScarJo: this is not good. 
“Don’t cry!” She pleaded, horrified at my reaction. “We’ll call your hairdresser and tell her it’s an emergency. I’m sure she’ll see you right away!”

“I can’t!” I wailed. “I can’t go back there. I bounced a check” —this scenario occurred in 1999, a time when there was such a thing as paying by check instead of the ubiquitous debit card— “I bounced a check there four months ago and I can’t go back.”

My mother was dumbfounded. Bounced a check? Her daughter, who had received the best lessons in financial responsibility that the Midwest could offer? It was true. What’s more, as it became clear over the course of the next three hours, I was late on several bills and had amassed more than $19,000 in credit card debt.

Shockingly, she didn’t pour down any of the blame or censure that I had feared would come if I disclosed the truth. She simply asked, “Don’t you have a budget?”

“A budget?” (Not that I was unclear as to what a budget was, you understand. It was just that I didn’t know how a budget was relevant to me, in all of the unique snowflake-ness of my individual challenges and circumstances.)

“A budget,” she continued. “You make a decent income. How can you not have a plan for where your money goes?”

A-ha, that was the crux of it. I had no budget because I had no plan. No plan for my money, no plan for my career. I reveled in throwing myself at the world with just my talent and my ambition and treating the whole experience like one amazing adventure. Planning? Bleah. I wanted to be fearless and live a big life. I didn’t want to live on a budget.

MacGuyver says, "OMG, girl, your hair is
terrible. You need to get your life together."
And yet... did I want to live a life so financially compromised that I couldn’t undo a lopsided mullet? Was that the life of intrepid adventurer, or was that a deluded young woman with bad hair?

I wiped away my tears and decided to come totally clean. I pulled out the tattered bag in which I kept a stack of old mail. I held back no secrets. I didn’t pretend that I had this under control in any way, shape, or form. My mom dove right in.

“There!” she said, after 30 minutes of rapid-fire questioning and sorting through my bills. She held up a lined notepad that didn’t have more than ten items on it. “Here is your monthly budget.”

This was a monthly budget? It didn’t even take up half of a page: rent; cell phone; cable; electric; credit cards one, two, three, and four (organized by highest to lowest interest rates); and a weekly allotment of cash to use for everything else. The follow-up instruction: when you run out of money, stop spending. I took a deep breath and accepted the notepad.

Oscar Wilde once wrote that “the only thing that can console one for being poor is extravagance.” This had definitely been true for me. I had resisted being on a budget because I was afraid that it would deprive me of freedom, and when gripped by that fear I would try to soothe myself by (paradoxically) going out and spending more money. But in the first weeks and months of following my spending plan, instead of feeling restricted I was shocked to discover that I felt liberated. If I chose carefully, I had enough money in my weekly cash allotment to meet my obligations and even allow a little breathing room after the basics were covered. Being able to take care of my needs safely, without worrying that checks would bounce or that I would regret the purchase later, was a kind of emotional freedom I’d never before experienced. Also, I felt much more attached to the items I did decide were worth parting with money for. Instead of associating purchases with failure and fear, I associated them with confidence and value.

Once I made the “my money choices = me” connection, I felt a flood of meaning in my financial life. It was like I could see clearly for the first time. I went from utterly unconscious to fascinated with everything about the financial process. Thus when I looked at my debt, what I saw was a $19,000 reflection of all of those years of pain, frustration, and shame. Talk about motivating! I wanted that debt gone.

That same spirit of attacking life made me attack my debt and just want to pummel it into the ground. Every freelance job, tax refund, or gift from Grandma went toward my debt. And what’s more, I paid it joyfully. It took me just over a year to pay off the entire amount, and I remember that year as one of the happiest periods in my life. I hosted “clothing swap parties” with friends instead of going shopping (frankly, my friends were thrilled I’d 'fessed up about my money problems because they were all secretly in debt, too). I planned my life better, cutting back on taxis and convenience food, which made me feel calmer since I wasn’t so harried all the time. I learned to cook and lost weight. I even negotiated—successfully—with a retailer or two in order to make a purchase fit within my spending allotment. What was “another $50 of debt” and the resulting dread and shame when compared to the actual freedom that came from financial security and working toward my goals?

The gift of this period was that I learned how to pay attention to money. The debt was the painful wake-up call that I tried to ignore until it was impossible. The budget was the framework for engaging with my own decision-making process and discovering my own values. And the money itself? Money became a language that I learned to speak.

Now I want to be clear that my experience with The $19,000 Haircut and paying off my debt is just that: my experience. After working as a financial therapist and coach for the last decade, I understand that there are several parts of my situation that were extremely lucky. I had a good, steady job and could take on extra freelance work. I received encouragement and support from my family. And just as importantly, this all happened in 1999-2000, the years when credit card companies were tripping over themselves to offer huge credit lines with 0% 12-month introductory rates and no balance transfer fees. It was cheaper for me to get out of debt then than at another time in history.

But the greatest lesson of The $19,000 Haircut was not about financial tactics. The gift of The $19,000 Haircut was the discovery that money can take us on a journey where we learn to do something different (financially) and it makes our lives better (non-financially).

The $19,000 Haircut put me on path whereby I became financially sane, personally empowered, and I found my life’s passion. That’s my story.

Wednesday, October 24, 2012

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.

Friday, October 19, 2012

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.

Thursday, September 6, 2012

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.