Money Matters Episode 8- Financial Behavior - What People Really Think About Money W Guest Dr. Margaret J.King of The Center for Cultural Studies and Analysis

Chris Hen is a registered representative Cambridge investment Research Inc, a broker dealer member of Finra Sci, investment adviser representative of Cambridge investment research Advisors, Inc. A registered investment adviser. Cambridge and Houston First Financial Group are not affiliated. So Houston Midtown chat of the society for financial awareness presents, money matters. With your host, Christopher Hen.

After Good morning, everybody, and welcome to money matters. It is Friday at 10AM, and we are coming back off of the July fourth holiday. I hope you had a... A great holiday, had time to spend with your family as I did, and our back and listening to us. If you...

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We have a great show for you today we... Are our topic for today is going to be, a financial behavior. Financial behavior ism. You've also heard it called cognitive, finance or neuro economics, but our topic is financial behavior, the way people really think about money really. First, before we get, to the topic.

We're gonna talk a little bit about Sofa, which I do on every show about who we are and what we do then I will talk a little bit about the topic and how I deal with different financial behaviors in my my personal practice as a financial advisor, and they were gonna be joined after the break by a very special guest today, Margaret King. My Margaret is the director of the center for cultural studies and analysis, which is a... It's a tank really in Philadelphia, and they study all kinds of behaviors, and technologies behind money behind consumerism. And so we're gonna we're gonna start with kind of a surface discussion of this and in my practice and then go to a very specific, discussion about financial behavior. So let let's go ahead and get started.

As far as Sofa just spend a few moments on that. We are a non profit educational speakers bureau. And so our mission is to fight financial ill literacy. And we do that by going out to different companies, different organizations, different groups, anywhere people already congregate and provide financial, education, as well as health and wellness workshops. So how do we do this?

Well, typically, when we are asked invited out to a company, we are... A guest. And so they they ask us to go out to a company a professional association a group, for instance, on Monday, I I will be, speaking on Monday and Tuesday at the Texas Crime Prevention Association, state, convention, And when we go out, we'll... I'm gonna do a top a topic called getting fiscal fit. So usually, we'll go out.

If it's a company, it's gonna be a brown bag watch and learn type seminar atmosphere. If it's an organization like this, then there might be breakout sessions, but we will go out and we'll talk on finances. We'll talk about, budgeting. We'll talk about credit cards investments. It is a multi disciplinary organization.

So if you have... If you want somebody to come out and say talk about wheels, then we will have an attorney. Come out and talk just about state planning and wheels. If you wanted somebody to come out and talk about, first time home buyer come then that would be a realtor. So all of the topics are gonna be in some way related to either finances or help and wellness because we believe that money can be 1 of the most stressful things in life, and we don't try to separate those things.

We think health and wellness and your financial wellness go hand in hand. How how are we... How can you get us out to your company? Well, to do that, we ask you to introduce us to the human resource manager at your company, your your place of employment. We would ask that you had introduced us to the program, director of a professional association that you might be a part of.

We would ask you to point us to the executive pastor at a church or, religious institution, any group of people that have speakers come out, we would ask you to to put in a good workforce, we will give them a call. And if they invite us out, then we will we will set up a talk, and that that's generally, how our talks are done. We do have some that are open to the public, a couple times of year April, which is financial literacy month is our biggest month of the year. And so always, you can go to our website, which is WWW Houston midtown sofa dot 0RG and get a list of events you can get on our newsletter. We also have a free white paper available around the topic of financial literacy.

Now with dan, I wanna go ahead, and transition over to their our topic today, which is, financial behavior in the way people really think when it comes about when it comes to money really. And what I haven't done so far, with the show is talk too much about my purse... Practice, I am a financial advisor, and I haven't mentioned a lot of what I do on a day to day basis, but this topic if if there's any topic where this is a, relevant, this would be 1 of them. And so what I want talked to you about is my process of, my plan my planning practice, I do holistic. I financial planning.

And so I don't do what you'll... Maybe some stock brokers or financial consultants do which is called transactional business. That would be where you would just meet with that person to help you on 1 thing, like investments or easier 04:01 k. I do all of those things, but the really the core and how I get started when I work with people is through a process in this process, it's really about the why. It's trying to find out the...

Motivations and the why behind the money. And I've used this as long as I've been in practice as a financial adviser. I've been in business 13 going on 14 years now. And if you would have come to me back in 2019 99, 2000, the process is gonna be very similar to this same process that I used today. I've done a few tweaks and changes to it.

But, in general, it's gonna be very similar to to what I've always done. And the reason for that is it's based... The the process is based off of Abraham Mas hierarchy of needs. And for those of you who who haven't heard of abraham in, Mas, he's what's considered the kind of the father of motivational theory. So when it comes to somebody getting together a financial roadmap of where they wanna go with their finances.

When I work with them to put together a a plan, I do a complimentary consultation, and we sit down and we do a financial road map, and there's 3 prongs to that. The first part is a question that I ask called what's important about money to you. And that quite that part of the financial roadmap is really based on the hierarchy of needs, and it's kinda drilling down, peeling back and onion drilling down on why, the why, somebody might come to me and they'll say, I wanna retire. I want to be debt free. I I want to put my kid through college.

And I ask them well why is that important to you. And and usually, when I work with these clients, you can get them to a level where they're talking about things that... Are really considered values. They're talking about independence. They're talking about being free.

Well, I I wanna be at a point where I can retire where if I ever got laid off from my job. Maybe I wanna keep working, but I have the option of working. So if what what I find out is when I I I'll I'll give somebody a, a list of documents that they need to get together to to make this meeting happen. And they'll come in and often, if they have all of their papers together, they'll start... If I have an analytic driver, can always tell because they'll pull the state, maybe the brokerage statement out, and I'll put it down.

And they'll say, okay. I need your help on this. III invested in this, and And, for some reason or other, they're they're asking for advice. And I say, okay, we're gonna get there and I do that. But, I won't start with that.

And the reason for that is that it's a... I know what's important about money to me. I know what's important about money to my clients, but in order for you to reach your financial goals, you need a coach you need somebody who's gonna be able to really look at the the heart of the matter and look at the motivations and remind you when the market goes down, if you get laid off when life throws you those curve balls, why? Why are you doing this? Why is this so important?

So that's really the basis in the beginning of a financial plan. And the other part of it is what have you done up until today. So And so that's when we look at those documents and really take kind of a snapshot in a financial, a picture of where they are currently. And then we also look at their financial goals, and that's gonna be just what you think it is When you think of a financial planner, we're gonna sit down and talk about those goals, like, retirement planning and, getting debt free. And then we're gonna quantify them.

We're gonna put a number on them. We're gonna put a date a deadline, a specific dollar amount we're gonna quantify them. And then the the last... That... That's the last part of the financial goals, And with that, I would go on and if we choose to work together, we would do a financial plan.

What's relevant about that whole processes is I've worked a lot with couples. I have singles that I work with, but I work with a lot of couples as well. Sometimes, I'll get clients who come in, and I call them 1 leg couples where the meeting was supposed to be with both of them and then just 1 person shows up. Usually, that's gonna be a good client because those people aren't on the same page when it comes to their finances. Another thing to look at is the not when I get clients that come in and maybe the 1 person specifically focuses on doing the finances the other person is not brought on board.

So maybe I have a husband who's saying, you know, my wife doesn't do the finances. I take care of all of that, and, you know, that's letting kind of the mach cheese. That sounds macho to say that, or there may be another motivator, they may be thinking that they're saving that person work they're saving them stress. But what happens in that situation, more than often, is, if that person passes away, they have basically achieved financial financially crippling the widow. So I get a lot of widows who come in and they they have no idea what's going on where the money's is at what it's been doing in the past or or how to to do anything moving forward, even to the extent of balancing a checkbook.

So when I work with couples, it's extremely important to get them on the same page. The other thing is is listing a partner which could be a psychologist. It could be a marriage counselor. It could be a divorce attorney. Hopefully, they they have not gotten to that point, but that...

That's a possibility. A lot of the conversations I'm having with people are call are just really difficult conversations maybe there's gambling addictions or drinking or something that will affect the finances. So I just wanted to give you a kind of a, a large overview of of what that looks like in my practice. And I think this might be a topic that we'll continue to talk about on another show. With that, let's go ahead and take a break.

The best things in life for free. But you can give them to the bed and beads money. That's what I want. Your love gives me such a thrill. But your love won't pay my bills want I That's I that's what I Money don't get everything.

It's true. What it just get kong users? I want money. And we are back from the break. You are listening to K t Houston.

The show is money matters. And we have with us today, a very special guest, Margaret Keen, who is the director of the center for cultural studies and analysis, which is at think Tank really in Philadelphia. Margaret, are you there? Yes. I am.

Hi, Chris. Hi. Good to good to hear you there. Thank you so much for being on the show today. Oh, it's my pleasure.

And I I do like your musical theme. No. That was a different edit. I haven't heard that 1 before, but definitely a neat... Song.

That was the flying. Version. That's a new 1 to me. That... That's the flying lizard.

Oh, very nice. Very nice Well, margaret, I know, 1 of the things that I'd like to do before we get started is really let the listeners know a little bit of value. You. And I was wondering if you could tell us a little bit about yourself, but then also, tell us a little bit about the center for cultural studies and analysis. And and what it is that you guys what you do?

I'll do both. I'll do all of those. I'm am a cultural analyst. I had to think tank that studies human life and behavior. And that's to get inside the human mind.

And I started an academia with the first degree in profit culture. Which is now my window into the American mind, it's the evidence kit for understanding what people think and do, It's it's the evidence. Wow. Oh, that's where I think of it. It's sort of like a Csi model.

I love culture. Love it. And I found that human behavior, the real time problem in business is human behavior. I found that didn't fit well with conventional theory of how people use technology or food or cars or computers or whatever or money in real time and the culture of the everyday is what gives the picture of these values and how they drive our decisions as a group. I call this deep culture deep culture.

It's understanding at a very deep level at a very long term level, people the mind, the collective mind of people in groups. Based on very long term pattern starting with the discovery of fire and that was 1800000.0 years ago. So this this is now about focus group cisco goes very deep and very historical. It's our company called center agricultural studies and analysis? Yes.

Does this in order to provide intelligence and to support our intelligence seeking to major your companies and nonprofit. And our mission is to explain the brain that they our selling to. The mind and motivation that uses their products. It's amazing companies don't always they they have a very good grip on their business and their industry. What they don't understand so well is what makes them successful who they're selling to, their buyer So we answer questions like example, why is Jewelry so important is it because we love gems s or what they call personal ado is what they call it Ant apology.

Well it turns out that Jewelry were you going back about 60000 years now has only been used for 1 thing to signify relationships between people and status within groups, those are the only things it's ever used for. So it's not about carat weight and carrot cut and weight, which is the way the jewelry industry tries to sell it. That's the technical side. That's the way they buy jewels in ant were. That's the way they buy diamonds, but that's not the way we buy Diamonds.

So there's already disconnect there. It's about attachment to other people or to school, the Navy ring, your religious of jewelry, again, it's all about how we use things. Things client experiences are props to get us where we need to go as people. And you mentioned Mas hierarchy. We have our own version.

We've worked up a new version of that just last week and I'm so happy to hear that somebody else is har to that. So jewelry about relationships houses are about location. You buy a location when you buy a house. Whatever on that location is almost tertiary. It's really about location location.

And money in sex and food and social role. Those are basic needs. And that's that's what we're talking about when we talk about money. Wow. So we're we're definitely on the same page here that that idea that deep culture.

And then I know that the term that's thrown out, and I heard a lot in my field, financial behavior ism or or or neuro economics. Yeah. Yeah. Can you tell us kind of a rundown or give us kind of an idea of what that is for listeners who've never heard those terms. I certainly will.

It cognitive finance also called behavioral economics or neuro economics you just mentioned. Is the study of how money really works on our brains rather than on paper. That's the way I put it. That's my. It is the working definition of finance, the how it operates in real time operational definition Which is not about financing and numbers and running numbers.

You mentioned the stock broker approach or the financial plan approach. But it's about intuition, status, reward security, what kinds of risks we're willing to take, and how we frame all of those hundreds of decisions that money presents in our lives, which you deal with in your practice. It's called the x factor actually. This cognitive finances, the x factor in economics. Which is the human factor.

It comes all down to us in our brain and behavior. And this is the collusion course of the right and the left screen, the rational the emotional versus the rational or the old Limbic system, the reps brain is also said lizard brain the lizard brain and the new neo brain, which is an overlay, not a different brain it's an overlay on the way that we make decisions and set priorities. We're all seeking out a kind of wealth, the mas hierarchy has self actual virtualization at the top. Well, that's all after. Money is just how we get there.

So that's the channel. It's delivery device. So it's not about money by itself, but other factors that are culturally defined like class and social mobility, and social equity and it's about how we allocate what we have our income in our assets along those cultural lines not just about financial planning. Absolutely. Absolutely.

Now. Margaret, if I ask you, a lot of the show what we do is is we try to give them Real life examples, and I do a lot of storytelling on here. Do you have an... It would say a real life example how something like that might affect us on an everyday basis. Yes.

I can. And actually, I'd like since this is money matters. I'd like to speak of... Bank about banking just briefly financial security means knowing that what you have in the Will be there in the future basically. With some blip in the stock market.

But anyway, what you have today you'll have tomorrow people used to stay with the same bank for a lifetime. But this goes back to it's a wonderful life give you third movie. Is sort of the heartbeat, it's sort of the organizing principle or the security core for a community. But when your bank gets bought different bank and then that gets bought by a different bank and you have all of these sort of nesting banks, changing the conditions of service as they go, you lose that security reason to be loyal. And when that happens multiple times, you'll change banks as soon as you get a better offer and banking becomes the commodity.

Now that's 1 example. Of loss of our loss version. We want to stick with what the tried and true, what we know works. And this is why the financial crisis has been so I mobilizing to people because they thought they knew the rules and it looks like because there risk some people at the core of this, some bankers and bun who are just as is driven by their lizard brain as the rest of us. And actually that's what happened.

So But if I can just make another example is our spending priorities. The rewards that we get, from money set our priorities. And that comes out and raising our class by how we spend we don't talk about class much in the United States. But class raising is behind most of the buying that we do. Malls are designed for example, to make us feel affluent.

They're highly air conditioned that there's music, the lighting is great. Everything is polished. You feel like you can afford deal to be there and you can afford to be a buyer there. And film and television portray middle class life affluent, vacation and resort present an ideal lifestyle. And college is costly because it's the ultimate investment in class at the social circle and career And it's total it's when you think about it, it's totally intangible.

And it's just all up to you. You pay lots of money to work very hard. For a very long time and go into deep debt and the students the student debt issue here. What we're really talking about here is largely the experience economy, not just goods, but experiences. The key is to understand what's important about the money allocation, how much goes into which bucket, which I'm not sure you deal with all the time.

And when it goes into that bucket and can you switch money between buckets and that kind of thing at these are the principles behind intelligent planning and pricing in the theme park or banking service or a brokerage firm and the key to sounded economic policy for organizations. Just understand what's motivating you. Understand allocation, that's a big watch word now in economics, a it's not just what you have it's how you're spending it and how you're managing it. That's the whole crop Year to financial planning. Absolutely.

Absolutely. I can't disagree with anything that you just said. What is what you do, Yeah. This is your math and I I see it. I see it on a day to day basis.

What do you what do you think are some of the biggest roadblocks? That really prevent people from making positive financial choices in their lives? Well, I'll tell you the way I see it operationally is that there is not a very good understanding a clear understanding of what money is for. Its leverage for all life decisions and that's a very complex project. It's not simple.

Money expresses who we are and who we want to be home and the management of that money is also the way we keep the basics covered, but what we don't want to just pay because home we're very complicated, essentially highly educated, highly motivated people, highly cultivated people, what we want to do with those people want to do is to put money to work as a vehicle to take us where we want to go, the mass hierarchy. We want to move up the hierarchy. Besides taking care of the bottom, paying the bills, keeping the lights on paying taxes, the buying food, but that's not what life is about. Overs spending gives us an immediate reward. That's the problem, the whole problem really here.

But what we ultimately want is actual wealth and freedom and Wealth is 1 avenue of Freedom. Few people really analyze what they want their money to do for them in the whole life picture. So that's part of your job. So they can put those features on auto autopilot. This is the way I deal with it, like retirement and investing and the rational brand can set these up.

For the long term, so kind a financial planner, this is so that the right brain reward centers can enjoy the near term rewards spending without undermining the architecture of a life budget. And that's the whole contest. It's how we use money how 1 part of our brain, which is the rational long term part sort of battles with the other side, which is emotional, very child like if you want to use that image. And once everything now is Absolutely. Absolutely.

Margaret. We are... God. We get... The 2 of us we could go on on this because this is a very interesting.

I would love to have you back on, and I I feel like we have more to talk about. I'm there. Yes. Well, thank you for for being with us today on the show. For for listeners who would like to find out more about the center for culture studies, you can visit the website at WWW cultural analysis dot com.

And Margaret, do you have any parting thoughts to leave us with today? Well yes I do. I could just reiterate here that the brain on money primarily emotional and rewards driven and it always wins. It planes a way to win. Absolutely Whatever no matter how good our planning is that brand, that part of us is always going to prevail.

So the best we can do with that knowledge, knowing that going in armed with that. Is to integrate finance tactics within a framework that respects both the Limbic and the rational brains and any good money strategy works both brains as a total system or it's doomed as we can see really any day of the week and sometimes the entire economy go down that way. Absolutely. And I think we've seen some of that and we see some of that in the future, so we'll have to see, but Margaret, thank you so much, and we appreciate you pleasure. Show today.

Thank you, Chris. Thank you. Bye. Channel, do dude just we're right here at the end, and we just wanna do a quick wrap up, give you an idea of a calendar of mint for the show's moving. Ford next week, we are gonna have Brian Penny who is a Bank of America whistleblower, as well as a freelance rock at Tim Kramer Main street.

So he will be joining us next week, make sure to tune in on July 19, we will have family services joining us again to talk about this financial coaching program. And then on July 26, we'll will be joining by Doctor Fran Bo. Is a psycho therapist in author. She's a frequent contributor to parents mad magazine in the ask experts Q and A column. So please join us.

And with that, we will go ahead and transition magazine back into the busy. Back