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.

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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