Research tells us that 90% of all financial decisions are made emotionally, not logically. For nearly four decades, Rick Kahler, CFP®, CFT-I™, has helped people make better money decisions. What makes his financial world view different from most financial experts? He blend the nuts and bolts of financial advice with the emotions that drive making them. Every financial behavior, whether it appears illogical to you or others, makes perfect sense when we understand the underlying beliefs, feelings, and thoughts. Good money decisions are not just about money. Check out https://thefinancialtherapypodcast.com/ for more information.
#67 Behavioral Finance or Financial Therapy?
Your perception is your reality, regardless of what the facts suggest. When they were youngsters, my kid’s favorite TV show was Mythbusters. The host, Adam Savage, was known for saying, “I reject your reality and substitute my own.” He often said this in jest, but he was describing the human condition. This is especially true when it comes to money, where perceived risk is the risk you believe, whether that degree of risk really exists.
#66 Money and the Meaning of Life
While money will not give you meaning in life, there is extraordinarily little likelihood that you will find meaning in your lives without it. The purpose of money is to serve and support the search for meaning in our lives. We are hardwired with two general conditions, the need to survive and the quest for meaning. Our material needs must be satisfied before we can ultimately satisfy the quest for meaning. The bridge between these two conditions is money.
#65 The Emotional Misunderstandings of Capitalism, Socialism, and Greed
Greed, whether for money or food or anything else, is not produced by an economic model. Whether people live under a capitalistic, socialistic, or communist system—or in a Stone Age tribal group—greed is alive and well in all of them. Every human being experiences it in some way and on some level. It has been considered one of the seven deadly sins since the early days of the Christian church.
#64 The Importance of Grieving a Financial Loss
As a financial planner and financial therapist, witnessing a client grieving over a financial loss is ubiquitous. Financial losses include a job, a business failure, a poor investment decision, the loss of a significant financial asset like a car, home, cash, collectable, or precious metals. Financial losses also include the death or disability of an income earner or breadwinner. The difference of the loss of a loved one from the financial aspect of a loss is that financial losses can be insured against to minimize the financial impact of a loss. While insurance can mitigate the financial loss, it can’t remove the emotional pain of that loss.
#63 - Why We Don't Leave Money to Charities
Among people that have accumulated enough of a nest egg to pass on, my experience is there is little thought given to whom they will bequest the money. It’s generally a forgone conclusion any inheritance will go to their children or grandchildren. The societal money script around leaving an estate in the U.S. is “Good parents leave all their money to their kids,” and “the more money I can leave my kids the better off they will be.” It’s not surprising then there is usually no thought or discussion on how to pass on an inheritance in a manner that doesn’t harm the kids and rarely, if ever, is there any discussion on leaving money philanthropically.
#62 - The High Emotional Cost of Being Scammed
In the past when I read stories about scams, I often wondered how people could be so gullible. I assumed that the victims of fraud were the elderly or less educated, had suffered a recent loss of a loved one or who were isolated. While there is some data suggests that one in five over age 65 have been targeted by email scammers, being scammed can happen to anyone. Nobody is immune to fraud and sometimes people simply fall for scams due to the psychological techniques employed by fraudsters. Falling for a scam is not about the money.