APA Monitor Live Atlanta Fonted Video Transcript – 01:10:01
[00:00:07]
[Dr. McGarrah, on right]:Why is money so hard for us all to talk about?
[Dr. Gresham, on left]: Well, money is one of our taboo topics along with the other taboo topics that you all know well. Which are topics we avoid because we don’t want to make other people socially uncomfortable. And we have a lot of unspoken social rules that we have to follow around taboo topics. But we as psychologists are the ones who need to keep breaking these taboos. And, so money; sex; death; bodily functions; race; racial differences between therapist and client. These are all the topics that we need to get comfortable approaching with our clients.
And there are good reasons for taboos, because they keep us… they keep the social wheels greased. And, you can get together with your family at thanksgiving and avoid all these topics and there will be no explosions. And everyone will follow the social rules. The problem is we follow them a little bit too well. And, we as psychologists haven’t really been trained to break the money taboo very well. And, so we’re very reluctant, many times, in intake to ask people “How’s your financial life?” when we are working with clients. And, so we want to start breaking that taboo. Particularly in the independent practice office. And you have to discuss it with your clients because you’re charging them a fee, and it’s amazing how many of us avoid the fee discussion with our clients, and just sort of present them a bill at the end of the first hour. And, that’s really not our best way to handle it.
[Dr. McGarrah]: I was telling Dr. Gresham that, before we started, that after I got my Ph.D. from Emory I felt very prepared to be a psychologist, but totally unprepared to be a practitioner, because I didn’t know anything about the business. So, I think… we don’t even know our own much less asking our clients about that. What makes a sense of financial wellbeing and how do you define that?
[Dr. Gresham]: Well, I think it’s really important that we all have, in our heads, a model of what it means to be financially healthy. And, we in psychology we’ve developed a lot of models about what makes a good marriage, with say John Gottman’s research. We’ve developed a lot of models about what makes for good communication and clear communication. And, we haven’t really worked on what’s a model of financial health that we can teach to our clients.
So, I’ve been working with this model for a number of years, that I developed. And, I just will talk about dividing money into four different levels, and trying to address money at all different levels as we work with clients. And, the first level is traditional financial literacy. And, those are the rules of mathematics and the rules of the rational man. And, those are very cut and dry, pretty easy in terms of the math works or it doesn’t work. And, that’s where a lot of energy is put in trying to help people with their finances is to teach them a class or give them financial literacy rules. And, sometimes it’s very very helpful.
I had a client who came in and she was under a lot of financial stress, because she was supporting her elderly mother. And, did not realize that her mother, because she had been married for 10 years before she got a divorce, was entitled to social security. And here this woman had been for years really struggling to keep her mother supported, when her mother was entitled to an income. And, so sometimes they are really helpful financial literacy rules that we can know as psychologists that will make a huge difference in our clients’ lives.
[00:04:23]
Then there’s the level of values. And a lot of times we don’t really talk about what do we most value in our lives. What are the most important things to us? Well, for many people it would be education or achievement, or family care, or things like that, or spiritual use of money. And, we want to help people look at what is it that you really do value. What are your most important values? Now, if I look at your spending can I see your values? And, this is a really good way to talk to people about their spending issues without shame or blame. If I look at what you spend, can I tell what’s really most important to you? And, how can we then go back and recalibrate your spending so that what’s most important to you does show up.
And, there’s a set of ten values that Dr. Shalom Schwartz,who’s the major values researcher in psychology, has found apply over 65 different countries. The same factors, the same 10 factors over many many different cultures and many different countries. And, so I have a list of those and I ask people to rank order them, from 1 to 10, what’s most important to you. So, we really need… money needs to show up in our values.
And, then we talk about an emotional-symbolic level. And, that’s where do you really understand the impact of growing up in your family, and what kind of impact that has had on you and you do money; and the impact of your emotions; and the impact of what money symbolizes to you; and can you talk about that? And, that’s where we as psychologists get really interested, because we’re really interested in the emotional and the symbolic and the irrational. And, that’s where we can be of great help to people around moneybecause most people are irrational about money. And, if you want to look at changing money behaviors it’s really important that you address the emotional issues around that.And, I really emphasize that. And, if you just take a minute I want you to think, just briefly, about the very first money memory that you have. What is the first time you ever remember being exposed to money?
[Brief pause]
And, we work with people in that way with people around emotional and symbolic issues around money. And, then of course, because we’re psychologists we do the process level. And, most people have a very difficult time when you ask, “Describe your processes around money.” Because you have to be able to step out of what you’re doing and look at it… “Ok, here is my processes. I avoid talking about it” or “I talk about it openly” or “I talk about it only when I’m feeling a lot of anger” or “I avoid it, completely” or “I’m obsessive to the penny about how much I spend and in which category.”
So, that’s where we can really help people is by helping them look at their money processes. So, when you integrate all four levels, the financial literacy; the values; the emotions; and the processes, you’ve got a model. And you want to look at how all those levels integrate with each other and can you integrate them. And, that is I think a very good model for us to work from.
[00:08:29]
[Dr. McGarrah]: That’s exciting and new. How do we develop our basic money beliefs and how do those beliefs impact us in our lives?
[Dr. Gresham]: Well, this is the area that cognitive psychologists call schema development. And, so we have certain implicit and explicit beliefs about money. And, the implicit beliefs are the ones that we’ve sort of incorporated without even really being aware of it. And, that’s where we can really help people also become aware of their implicit and explicit beliefs about money are. Typically, of course, that begins in the family. And, so children about the age of three or four begin to develop the concept… they start to realize what this stuff is called money and it seems so important and it seems so powerful and it seems so interesting and where does it come from. If you go to YouTube you can watch some really adorable videos of children talking about money. One little boy in particular sticks out in my mind, he says “Oh, money! That’s that thing... where it comes from is you put your hand in your pocket and then money is grown inside of a pocket, and then if you have a pocket you’re gonna have money. And, then you just pull it out and then you can get something.” And, so that’s an early schema about money. And, if you think about it there’s some pretty important schemas that we develop and maybe don’t realize. One is, depending on where you grow up and what your cultural beliefs are, rich people are good or rich people are bad. Poor people are good, poor people are bad.
And these are the beliefs that we develop in our child’s mind and they tend to be very concrete and very simple and they affect us very deeply. One in particular that a lot of us have is if you work hard you’ll get money. Well, that’s very simplistic because you can work really really hard and not get any money. And, you cannot work very hard and get lots of money. So, we want to take those beliefs and make them more sophisticated; bring them out into the open and help people really develop them.
[00:11:06]
[Dr. McGarrah]:I was thinking when you were talking about children, I did my dissertation with two year olds and one of the questions I asked them was “what does your mommy do?” and “what does your daddy do?” and this one little boy kept saying “My daddy makes big bucks.” And, I was like “What!? What job is it that he makes big bucks?” You know, and to that child whatever he did it was big bucks. So, you’re right. We get those early.
So, what are the money issues we face in our professional development as psychologists?
[Dr. Gresham]: Well, to start with: how are you going to fund the education that is going to allow you to become a psychologist? And, I’m not sure we do a very good job of helping perspective grad-students really look at how are you going to pay for this education and how is it going to get paid for? And, what are the rules, what are the processes that you can use to fund a graduate education? And, this is where we really need to help our students understand there’s a huge difference between federal student loans and private student loans. And, how are you going to repay this loan? What process are you going to use to repay this, and do you understand that before you even take the loan out how it’s going to be repaid.
And, federal student loans there are a number of different ways you can repay them and think about that before you take that federal loan out, because there are four different income based repayment plans. There are a number of different methods, and depending on where you go to school and whether or not you can go part time or full time. Can you work? What are the hazards of private student loans? And, that’s one period of our development as psychologists, and then you get out of grad-school.
And, if you’re going to go into academics I think we’re doing a little bit better now with helping people learn how to negotiate salaries. Particularly, I know division 35 and the women’s division has done a lot with trying to help women academics look at salary negotiation; position negotiation; looking for tenure; how do you develop tenure at the same time while you’re going through child bearing years; and how do you balance all that out? Then there are, of course those, who go into health care. Are you going to be at an agency and are you going to be an independent practice? And, of course, I went into independent practice with no concept that it was an entrepreneurial venture. And, I thought… it wasn’t for about five years I realized “I’m an entrepreneur!” [Audience laughs] And, I’m not the best risk-taker and I don’t really know what I’m doing. So, that’s when I started to make a much more deep study of what it means to be an entrepreneur and what it means to be a self-employed business person and what it means to have a market rate and how do you set your fee and how do you communicate your fee, how do you collect your fee. And, looking at cash flow; looking at all the things we have to fund when we’re an independent practice; our own health insurance; our retirement plan; and how do we do that.
And, there’s a chapter in Steven Walfish’s last book, it’s just been published. The Handbook of Independent Practice by Oxford University Press and I have a chapter in there called Financial Planning for the Independent Practitioner, and there’s a lot of information there about social security, retirement, about getting a financial plan for your life. And particularly, who’s a fiduciary advisor and who’s not a fiduciary advisor and how do know the difference, and how you take care of yourself when you go hire a professional.
[Dr. McGarrah]: Well, then you have the issue about a professional will. Which a lot of people don’t think about.
[Dr. Gresham]: That’s true.
[Dr. McGarrah]: And, so that’s something that if you are in private practice it’s a whole new ball game.
[Dr. Gresham]: A whole new thing. Oregon, now requires the professional will. You have to, when you renew your license… you have to tell the Oregon board who’s going to be in charge of your practice if something happens to you. I think it’s the beginning of a trend. So yeah, you’re right to bring that up. And, the other thing that we really need to do, and we don’t do, is we don’t have very much research anymore on ourselves as psychologists and our relationship to money. And, yet here we are the research profession, but we’re not researching money and we’re not researching our own field. We used to have a workforce salary study and independent practice income studies and those have really sort of gone by the wayside, which is unfortunate. Because, then when you’re planning a career you don’t really know sort of where you stand in terms of what kind of income you can expect in the first five years and the second five years, and so forth.
[00:16:46]
[Dr. McGarrah]:And that seems to be something on listservs that’s frowned upon talking about, because then you get into how much you’re getting reimbursed and none of that can be discussed on a listserv. So, you’re right we don’t know. So, how can psychologists help others with their money issues? I guess that’s the big question.
[Dr. Gresham]: Well, there is a wonderful field of research now in psychology called behavioral finance. And, this is the work of Daniel Kahneman, Dan Ariely, and Amos Tversky all about how we all make major cognitive errors around money. And so, you know your own emotionality is sort of how your irrational around money and behavioral finance is how everybody is irrational around money. And, the value of a dollar in the hand today versus… If I offered you a dollar today or if I offer you a dollar and ten cents in a year, which one are you going to take? Well, you’re going to take the dollar today. Even though that’s a 10% return in a year, which is fabulous. The dollar today seems like it’s worth so much more to people. And, so we have a lot of good research coming out on behavioral finance. We don’t have very much good research coming out on, here are some of the topics that I’ve looked for and I can find nothing on, what is the impact of financial dependency on a person and what is the impact of financial dependency in a partnership?
We have no research on the actual impact of becoming financially dependent. And, yet this is an experience that affects so many people. And, I could find absolutely nothing on it. And, yet the couples I see in my office are deeply impacted when one partner is financially dependent and feels that they’re in a childlike role and the other partner feels that they’re in a parental role. And, the dynamics, that can happen between partners, around that. And, yet we’ve really not addressed. We do need research on that.
And, the other thing we really need research on is financial trauma. There’s almost nothing written, in fact there is nothing written about financial trauma. And, yet financial trauma is an event that affects many people and people who lose everything in a business failure. People who lose everything in a bad investment. People who lose everything to a spouse’s financial infidelity. And, how do you really help people come back from this experience of financial trauma and rebuild their lives. There’s just not much on it and we do need that research.
And, we also need research on cultural differences. I’m still waiting for the book that tells me all the different cultural views on money. I work with a number of clients who are first generation in this country and for instance in Chinese families there are very particular rules about money and what money is and how money should be shared in the family. And, then the first generation comes up and grows up in the United States and they don’t want to follow the cultural rules for China about money. And, that creates a lot of hardship and conflict in the family. But, how do you find out what those rules are culture, to culture, to culture? And, for instance not being able to… not being allowed to pay interest on money or borrow money at interest. There are a lot of cultural and spiritual rules. I need that book, you know… Somebody please write it.