Loaded: Money, Psychology, and How to Get Ahead without Leaving Your Values Behind
Praise for LOADED
"LOADED is that rare resource which somehow captures both theoretical and practical wisdom about money, personality, and life. Your views – and actions – with money will be much improved after reading the wonderful advice in LOADED."
James Grubman, PhD, author of Strangers in Paradise: How Families Adapt to Wealth Across Generations and co-author of Cross Cultures: How Global Families Negotiate Change Across Generations
YOUR MOST VALUABLE ASSET...IS YOU. LOADED WILL TEACH YOU HOW TO MAKE THE MOST OF IT.
Based on decades of research and years of hands-on experience with people from all walks of life, LOADED is a must-read for anyone who finds themselves caught between the desire to thrive financially and the complex emotions and conflicting priorities that money so often brings to our lives.
Inside, you will learn to:
- Check your stories. Pinpoint and change beliefs that hold you back.
- Choose your strategies. Learn how to align your money with your needs.
- Cultivate your value. Put your unique resources to use and earn more.
Deeply researched, yet written in an approachable, conversational tone, LOADED offers insight into how your personal experiences have shaped your financial attitudes, and how you can build a healthier relationship with money.
Chapter 1: When It Comes to Money, We’ve All Got Issues 7
Chapter 2: Money Messages 11
We Don’t Talk about Money 11
We Talk about Money Constantly 13
From Freud to Frodo: The Stories We Tell Each Other 15
The Stories We Tell Ourselves 19
Stories Can Help or Hurt 24
Heuristics and Biases Shape Our Stories 26
Identifying Core Beliefs 27
Challenging Core Beliefs 28
Using Science to Our Advantage 32
Chapter 3: Poverty, Privilege, and Prejudice: A Crash Course in the Science of Money Psychology 33
Money and Social Psychology: How Poverty, Privilege, and Comparisons Affect Our Minds and Behavior 35
Poverty: Why Not Having Enough Is a Major Drag 35
Privilege: Why Having an Advantage Is Great . . . and Not So Great 46
PrejudiceWe’ve All Got It 54
Movin’ on Up 59
Money and Cognitive Psychology: How Specific Thinking Patterns Affect Financial Decisions 63
Why Retail Therapy Feels Good: Identity and Ego Depletion 64
Time and Money: Why We Always Want It NOW 70
Thinking in Circles 81
Finances and Emotions 83
Financial Knowledge 87
Making Change 90
Chapter 4: The LOADED Budget: Creating a Human-Centered Money Management Plan 99
What’s Wrong with Your Budget? 100
Where Does Your Money Come from? 102
Assets and Resources 108
Where Does Your Money Go? 114
Rules of Thumb for Creative Resource Management 140
The Asset Test 141
Putting It in All Together: Your Personal Economy 149
Enjoying a Loaded Life: Living in Harmony with Your Money and Your Values 161
APPENDIX A: SELFƪASSESSMENTS 167
Write Your Personal Financial Narrative 168
Define Your Core Beliefs 169
Financial Management Behavior Scale 170
Emotions and Money (from HelloWallet’s 2014 Pilot Study) 171
Mental Imagery 172
Behavior Identification Form 173
How Impulsive Are You? 174
Big Five Financial Literacy Questions 175
APPENDIX B: INTERVENTIONS AND EXERCISES 177
Change the Narrative 178
Challenging Core Beliefs: Find a Counterexample 179
Age Progression 180
Future Visualization Exercises 181
Exercises to Combat MoneyThink 182
Affirm Core Values 183
Cash Flow Worksheet 184
Resources Worksheet 185
Expenses and Needs Worksheet 186
Your Personal Economy 187
Just-In-Time Financial Education Resources 188
ABOUT THE AUTHOR 189
SARAH NEWCOMB, PhD, is a behavioral economist at Morningstar and HelloWallet (a personal financial wellness company owned by Morningstar). An interdisciplinary scholar, Sarah is well versed in consumer psychology, economic decision-making, personal money management, and cognitive and social psychology.
"LOADED: Money, Psychology, and How to Get Ahead without Leaving Your Values Behind is that rare resource which somehow captures both theoretical and practical wisdom about money, personality, and life. Sarah Newcomb has done a phenomenal job of distilling the latest concepts from behavioral finance and psychology for the benefit of the everyday reader who simply wants to know how to handle money better. She opens with a big-picture perspective on how we form our money personalities and behaviors, using relevant personal anecdotes and case examples. By book’s end, she leads us to taking charge of our money decisions to create budgets that really work. Writing in a highly readable style, her tone is upbeat and empowering. Your views – and actions – with money will be much improved after reading the wonderful advice in LOADED."
- James Grubman, PhD. Author of Strangers in Paradise: How Families Adapt to Wealth Across Generations and co-author of Cross Cultures: How Global Families Negotiate Change Across Generations
A new book from a Morningstar behavioral science expert distills the latest behavioral finance and psychology concepts to help individuals cultivate new ways of thinking and develop better money-management skills. LOADED: Money, Psychology, and How to Get Ahead without Leaving Your Values Behind (Wiley: ISBN: 978-1-119-25832-2), written by Sarah Newcomb, Ph.D., behavioral economist for Morningstar, Inc. (NASDAQ: MORN), aims to offer hope and guidance to people who have a difficult relationship with money, demonstrating how a values-based money management approach can lead to more peace and satisfaction in their financial lives.
“There’s no shortage of books available for people who love money, or guides to help you think rich, attract wealth, or beat Wall Street. These titles may appeal to people who aspire to great wealth and luxury and those who associate money with opportunity, happiness, and freedom, but I wrote this book to acknowledge the more difficult side of money and help people mindfully develop a healthier relationship with their personal finances, based on their core values,” Newcomb said.
“I’ve explored this fascinating and important topic to better understand how smart, talented people can get in their own way financially. I’ve counseled and taught individuals, couples, small business owners, students, parents, professionals, and teachers with myriad financial challenges and needs. In every case, there is a story that runs parallel to the numbers. Those stories are as unique as the individuals who crafted them, and each plays a powerful, yet often non-conscious, role in the financial decisions they make. By working with the story first, I’ve found that people can change their daily money habits, feel more comfortable with how they use and save money, and improve their finances over time.”
LOADED, whose publication coincides with Financial Literacy Month, is divided into two main sections. Written in Newcomb’s conversational and empowering tone, the book opens with a broad overview of money and its place in people’s lives as a cultural and social phenomenon. This section is intended to give readers a glimpse into the roots of their own financial narrative and identify problematic patterns of thinking that may contribute to an unhealthy relationship with money. The second section provides a new framework for tackling personal finances, including how people can take stock of their finances and plan a realistic, achievable path forward. The budgeting structure, which Newcomb calls the LOADED budget, incorporates several principles from psychology that are missing or misaligned in traditional budgeting methods. The framework offers a way of changing one’s financial life by creating a plan that is both deeply satisfying, yet also sustainable over the long term.
LOADED (ISBN: 978-1-119-25832-2 $27.95; Hardcover) is now available wherever books and e-books are sold. Worksheets and personal money psychology assessments supplement the text. Visit Newcomb’s blog at www.loadedbudget.com or follow her at @finance_therapy on Twitter.
Newcomb will lead a breakout session about the challenges and opportunities of goals-based investing at the 28th annual Morningstar Investment Conference in Chicago on Tuesday, June 14. At the conference, she will also lead an educational and networking event for female financial advisors about how they can engage reluctant investors in their financial futures. To learn more about the conference, visit http://global.morningstar.com/MICUS.