Loaded

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.

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: Self-assessments 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

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

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.

Does money represent luxury, security, and peace of mind, or stress, inequality, barriers, and greed? LOADED is written for anyone who struggles with their complex relationship with the so-called "root of all evil."

Rather than offering traditional financial advice, Sarah Newcomb (a Morningstar behavioral economist) digs deeper and approaches money management from a fresh angle. LOADED explains how our experiences with money have a psychological basis and can often run counter to our core values.

Our personal history has a profound influence on how we handle or mishandle money. In reality, however, money is a simple tool, a neutral resource that is full of possibilities. It can be used for good or for ill, and how we use it is entirely a matter of personal choice. Our relationship with money is almost never about the numbers. It is about the stories we tell ourselves because of those numbers. We all come to believe certain stories based on our upbringing and our experiences with money. This is where our relationship with money is rooted, and this is where sound money management begins.

Based on years of research and filled with illustrative stories, LOADED offers an important guide for identifying the harmful core beliefs about money and what can be done to challenge and overcome those negative beliefs. Once a clear understanding of an individual's beliefs about money is established, the human-centered approach to budgeting and money management can be put into action. This budgeting structure incorporates several principles from psychology that are missing or misaligned in traditional budgeting methods.

The fresh approach outlined in this book is a money management method rooted in psychology that offers a way of changing one's financial life by creating a plan for money that is both deeply satisfying and also sustainable over the long term. The author also includes a wealth of worksheets and personal money psychology assessments to aid in the LOADED process.

LOADED offers an approach for discovering and understanding your relationship with money that will lead to more peace and satisfaction in your financial life.

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.