As many of you already know, a few weeks ago I published Your Interview With Local Psychologist Dr. Matthew Bowen Part 1. I told you that I received so many questions that I had to break the interview down into three parts. Here’s the second installment. I will be wrapping it up with part three either next week, or the week after. Stay tuned for that.
I am doing an interview with my Psychology of Money and Wealth Professor, Matthew Bowen, PhD, to take a deeper look into why we misbehave the way we do with money. He graduated in Berkeley, California in 1986 and is a licensed psychologist.
He is the professor of the Psychology of Money and Wealth classes at PVCC. If you happen to be a local in Charlottesville VA and wish to learn more, be sure to sign up for his classes in the Fall. (Details listed below).
I wanted to go to the “streets” to get my questions because I wanted Professor Bowen to answer the questions that interested YOU.
I asked you, “What you would ask a psychologist specializing in financial behavior if you had the chance?”
As I stated in the the first part of this 3-part series, I received an overwhelming response from you mainly from Twitter. THANK YOU! I always enjoy seeing so much interest when it comes to the behind-the-scenes side, and perhaps the most important component of finance—your financial behavior. What’s causing you to mismanage your money?
Dr. Matthew Bowen
What’s the most effective way to get a significant other on board with a budget? @FinanciallyPoor
There can’t be a formula because the dynamics within each intimate relationship are unique. Good communication, respect, trust, fairness, willingness to sacrifice for the other and the relationship, and enough agreement on how to live now and what goals to make for the future are required for a stable and most fruitful financial partnership. If those elements are adequately intact, and one of the people in the relationship has a problem budgeting, then together it can be solved. If one or more of these elements are out of line, you are going to need outside help.
Is money *really* the #1 cause of relationship breakdown? Why? @Jen_Saunders
Yes. Not all marriages and co-habitations include children, but they all include money. That alone I suppose answers the question. But moreover, money is the perfect tangible foil (or lightning rod as it were) for stress and the range of emotional intangibles–both past and present– we bring to bear on our most intimate relationships. Control, dependency, self-denial, self-destruction, substitute for love, passive-aggression, secrecy, betrayal; all that great human goop can manifest through money in an intimate relationship.
Does individual money styles predict relationship success? @Jen_Saunders
As with other important domains, the financial relationship has to be a reflection of a mutually satisfying compliment of styles and preferences in order to work for the common good of the partnership. Active-Passive can work just as well for one couple as Even-Steven does for another. Again, case-by-case basis.
What are the biggest reasons we tend to spend compulsively without regard to the consequences of such actions? @AskCitCat
Compulsions are not reasonable. Rather, they are neuro-psychological “hard-wires” that become embedded in the brain and take on a disproportionate role in our lives. Food, sex, spending, gambling, increasingly now over-use of electronic media; all of these compulsive – impulsive spectrum behaviors can be identified by brain imaging and neuro-chemical tracing. The issue for an individual is to contain the syndrome and how to do so. Do you spend compulsively to compensate for a lack of love or life satisfaction, out of boredom or revenge….? Or, are you simply expressing a genetic trait of excess of dopamine reward receptors in your brain’s striatum? It can be a combination of the two factors, psychological and biological. In any case, compulsions don’t simply go away, they need to be addressed through understanding and intervention.
How does a history of living without (due to poverty, living through the Depression, instability in childhood) contribute to spending habits as an adult? @DreamintheLife
I do in-depth psycho-history interviews predicated on the persons financial life story, tape them, and show them to my class as part of the learning experience. One of them is a woman in her mid-80s who talks about being a child in the Great Depression raised by a single mother who was seamstress taking in boarders to supplement the income. At the end of our interview she comes to the nearly tearful realization that she never allowed herself to get the financial security she could have had (within a two career intact long-term marriage) because it made her feel guilty to exceed the option her mother was denied by being abandoned by the husband / father and then subjected to the Depression. But let’s not just focus on the lacking thereof. On the other hand, growing up wealthy can cause later financial behavior issues. Obviously enough, never having to limit or plan or strive (while a problem many would trade for) can make one an irresponsible, unrealistic and ultimately destructive financial adult.
What significant childhood experiences most shape an adult’s values when it comes to money? (parent’s influence, generation which they grew up, socioeconomic level their family has, etc.) @DreamintheLife
All of those are indeed salient factors and the first one is in its very correct and dominant position. Then put socioeconomic level before generation. Thus, with money as a shaper of the psyche, we need to go from the micro to the macro, working from the inside out. Growing up, you’re much more aware of and influenced by not getting that new bicycle than what they’re saying on CNN about the stock market, or in the new book about how different it was for baby boomers versus Dust Bowl babies. Our parents can strongly influence our sense of our self-worth and competence–and how fair or fun life is or is not–by how they relate to and shape us financially, both directly and indirectly.
What daily habits most contribute to healthy money management skills? (budgeting, writing everything down, having a general scarcity attitude, saving as much a possible, paying yourself first) @DreamintheLife
Very good question because it speaks to the essence of the matter. Money management requires almost as much ongoing attentiveness as a diet or substance abuse program. Once you start being neglectful or try to fool yourself with how much you can afford to consume, you’re going to be out of control. You need to create and stick to a structure, yet also able to revise and adjust as needed because things change. Truth be told and speaking of compulsiveness again, one needs to be somewhat compulsive about saving, investing and budgeting. Then, the more history you accrue with a stable budget, the more you can gradually relax and indulge yourself, because you know you can rely on yourself.
Why are Americans the worst in the world in terms of money habits and debt? @EverydayFinance
We created a a very material culture of consumption predicated on as much as you can get as fast as you can get it. The prevailing view is we endured the very long rocky road beginning with the Great Depression in 1929 and on through World War 2 ending in 1945. That’s a long time of scarcity and not much fun. Then just when we were getting our bearings, along comes the Korean War. Finally it was time to lighten up and prosper. But compared to the history of the great majority of the rest of the world, we’ve always had it good. And having been founded on being such a fiercely individualistic culture may be a factor, as well now as being such a multi-cultural society.
What can we do to train our brain to “accept” and “create” wealth? @EngagedMarriage
This question can be answered in parallel with the last one, while also keeping attuned to many of the issues addressed throughout the others. If need be, we can probably muster a combination of internal resources and external help to improve our financial status, just as we can our health, work or personal status. But of course you need to plan, structure, and then be disciplined. And don’t set your sights too high at the start, because you need increments of success, sooner than later, in order to be positively reinforced.
Why does the herd mentality exist? @InvestorJunkie
Fear and laziness and lack of self-reliance. If everyone is buying a spec house or tech stocks (or even just an item like an i-pod), one becomes afraid of being left out and behind if they don’t. This can surely occur on the other end when the herd is literally stampeding out. It takes work and confidence to create and abide by your own version of needs and priorities and a larger long-term picture. And of course in the internet age the media is even more influential than it was before, and our culture of course already realized we were overly influenced by the media.
Part Two Complete…
Dr. Matthew Bowen thoroughly enjoyed answering your questions and is very excited to hear what you have to say. Please continue the conversation by sharing your thoughts, and please feel free to ask any follow up questions you may have related to the questions in this post. What do you think? Have any of the answers surprised you? Do you feel you have any better of an understanding about behavior and money?
Again, if you are a local to Charlottesville VA and want to learn more, don’t forget to sign up for BUS-195 classes starting in the Fall at Piedmont Virginia Community College.