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Loaded: Money, Psychology, and How to Get Ahead without Leaving Your Values Behind

ISBN: 978-1-119-25832-2
208 pages
April 2016
Loaded: Money, Psychology, and How to Get Ahead without Leaving Your Values Behind (1119258324) cover image

Description

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.

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Table of Contents

ACKNOWLEDGMENTS xi

Introduction 1

Chapter 1: When It Comes to Money, We’ve All Got Issues 7

Note 9

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

Notes 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

Prejudice—We’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

Notes 94

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

Notes 164

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

INDEX 191

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Author Information

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.

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Reviews

What Others Are Saying:

"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 

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Press Release

April 25, 2016
Morningstar Behavioral Economist Publishes New Book, LOADED: Money, Psychology, and How to Get Ahead without Leaving Your Values Behind

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.

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