Emotional Money: An Interview With Maggie Baker, Ph.D.

Until a few months ago, I was under the impression that money was all about math.  I thought personal budgets were the employment of simple equations, stocks were graphs, risks were variables, etc.  I suppose, in the purest sense, I may have been correct.  However, when considering the way money functions in our lives, I was way wrong.

Several months ago, a friend of mine introduced me to the book, Crazy About Money:  How Emotions Confuse Our Money Choices And What To Do About It.  A couple weeks ago, I was fortunate enough to sit down with the author, Maggie Baker, for a chat about money, emotions and relationships.

First we talked about money and marriage… and divorce.  Maggie told a (probably common) story about a woman who wanted to rent a house after separating from her husband.  While she was married, the woman allowed her husband to handle all of the finances and as a result, she found herself with a poor credit rating and needed someone more credit-worthy to sign the lease with her.

“…Women leave themselves so incredibly vulnerable if they let their husbands do all the finances.  Because if they do get divorced, they have no credit worthiness and they have to assume his.  And, you know, maybe it’s good, but maybe it’s not.”

In the book, Maggie talks about the different personas around money.  I imagine women who end up in this situation are Money Avoiders- it’s probably much more comforting to turn over the finances to one’s trusted partner.  Unfortunately, such a plan can have disastrous consequences regardless of whether or not a couple separates.

Maggie talked about how the finances are handled in her marriage…

“My husband and I separated our finances.  We have completely separate accounts because there’s enough difference in the way we spend and enough difference in how hard we work.  Even though both of us are very hard workers, it’s really interesting. We work about as hard, but I’m much more vigilant about collecting what I’m owed and he’s not particularly, because he just doesn’t think about money. And consequently he ends up making a lot less. And that’s where money vigilance pays off… He’d go out and he’d wanna buy X, Y and Z and he’s not a spendthrift at all. But, I’m so careful with money… And now, if he wants to buy it, God bless him! It’s great, I love it…  We’ve done that now for about seven years… We keep everything completely separate and he has very little interest in what’s going on with it.  And I like all the things you have to deal with that come with it.” 

I enjoyed hearing about Maggie’s arrangement with her husband.  Separating finances and maintaining independent accountability and responsibility can save a lot of stress in the relationship.  It also allows for a cleaner financial break in the event of a divorce.

We went on to talk about family members we knew and the vast differences in peoples’ attitudes and habits regarding money…

“The most important thing is to have a balanced attitude. To have a certain kind of flexibility about how you handle money, so that you have a golden mean.  So that you’re not too expansive and generous and you’re not too stingy and hoardy.  But, it’s hard because the emotions are so complicated and the learning around money is so complicated. It’s hard to be the golden mean.  Most people are extreme in one way or another and then they get caught up in really bad habits…. I think a lot of people feel a great deal of shame about the level of credit card debt they carry and they don’t want anybody to know that.  But at the same time, I think that people are far more comfortable having a lot of credit card debt.  They figure, ‘Everybody else does too, I’m no different from anybody else.’” 

We talked about parents and the desire to help their children.  I brought up the fact that so many divorced parents feel a heightened sense of responsibility to be the Best Parent They Can Be and yet in many ways, this can prevent some individual growth on the part of the parent as well as the child.  Single parents need to take care of themselves first and foremost, so they can exhibit a complete and whole-hearted example for their children.  Sometimes a parent has to step away from the role of being a provider.  Maggie went on to further discuss a topic she addresses in the book…

“What I see that really scares me is that with this generation, there’s been so much investment in the kids being successful so that they do well at college but then end up coming home.  Which has got to feel like a failure in some way.  And they can’t get a job and here’s this kid that’s been highly nurtured to feel that the most important thing in the world is their success, and nobody’s going to hire them.  And then if things continue to not evolve, then very often the parents step in and out of their own sense of frustration and guilt and feeling like they failed because they can’t help their kid, they may start to raid their retirement money to support the child…  To do more education, which may not really be what’s called for.  So my whole value in what I want to impart to the reader is, take care of yourself, you have to learn to see that you can’t fill in the blanks with money.  And you have a right to hold onto that money for yourself.  Even if it means denying your most loved child.  Because what will help the child much more is to sit down with the kid and help them figure out what they’re going to do.  Not ‘Oh, they’re in pain, I’ve got to provide.’  Especially for women, it’s almost reflexive.  And what do they do?  They spend their retirement money to help their kid out and then when they get old, they have no retirement money and then they’re dependent on their kid, who may have hopefully done well, but still most people don’t want to be in that situation…

There’s a concept in psychology called Self Efficacy, which means that people don’t really develop a strong sense of self and a strong sense of self-esteem unless they feel engaged and empowered through their own effort and through the struggle of effort…. Kids who are given too much don’t have that sense of self efficacy.” 

As the conversation continued, we talked about how emotions and money factor into a divorce, beginning with the costly decisions people make in order to avoid losing money (such as paying a lawyer $10,000 to receive another $5,000 from the settlement of the house)…

“And that’s the whole point of loss aversion, that under circumstances of feeling the pain of loss or the risk of losing money, that people do things that are far riskier than if they’re not feeling that pressure…  And if they’re vengeful in their heart against the person they’re divorcing, then it becomes far more important to hurt that other person than it does to just get out of the situation.  So they’ll spend thousands of dollars pushing their lawyer to do all kinds of nasty things to try to get vengeance and of course it’s never satisfied.  And they’re out a lot of money and they were so blinded they couldn’t not do it.”

Money is a big stressor on a marriage and an even bigger one in the event of a divorce.  What I loved so much about Maggie’s book was the way she pulled away the layers and exposed the emotional aspects and early programming that influences our attitudes about money.  While some see it as a weapon or indication of power, others view it as dirty and shameful.  Think about the judgments we make around the money-aspect of a divorce.  Have you demanded a higher settlement?  Have you offered a higher settlement?  Did you consider your ex to be financially abusive?  Did you agree to let him/her have all the money if only you could have the kids/house/dogs, etc.?

I asked about the effect all of this has on children.  Even the most cooperative parents can’t hide all of their frustrations from their kids.  I wanted to know how such a situation might influence the way children grow up to think about money.  In particular, I asked about the outcome of a “flipped script”— what happens, psychologically, when children go from having two parents who comfortably provide to living in a single-parent home where money is scarce.  Although Maggie couldn’t relate any situations about her current patients, she did share an interesting story about the sixteen-year-old daughter of parents who often argued about money.  In a session with Maggie, the girl confessed that she was stressed about money, because her parents fought about it all the time.  Her parents were surprised to learn their daughter felt this way because the truth was that they had plenty of money and simply disagreed often about how to spend it.  Maggie explained…

“She was picking up their emotionality and not the reality of the fact that they did have enough.  That’s what happens to kids all the time; they don’t necessarily know the reality of money but the pick up the affect.  They pick up the emotion behind it.  If there’s a lot of intensity and negative emotion, then kids, being as narcissistic as they are and thinking that everything is about them, they’ll start thinking ‘oh, what’s wrong with me that my parents are fighting about money?  Maybe I’m too demanding…’  They think that they caused the money shortage or the money fight, just like if they’re getting divorced; they think they caused the divorce.  That’s the most important thing with little kids.  They’re immature cognitively, so they can’t put the pieces together… The steamed upedness is what the kids pick up on, without any facts.  So you either end up with an avoider or somebody who feels that they’re a burden and aren’t worth anything.”

This is important to note, regardless of one’s marital status or bank account balance.  Children are perceptive and they pick up on adults’ feelings very easily.  It’s not enough to simply teach children to be responsible with money.  Part of writing a healthy script is to maintain one’s emotional equilibrium where cash is concerned.  If you’re stressed about money, the kids will be as well, and this might not bode well for that monetary golden mean you want them to attain in the future.

As the conversation wound down, I asked if “money” is a topic everyone should discuss in therapy…

“Absolutely, but nobody does.  Since I’ve been doing this and had this emphasis, I get people to talk about money, but I have to be active in asking otherwise they won’t talk about it.  The only way it comes up in therapy is setting the fee and if someone can’t afford it.  When I was being trained, nobody talked about money.  And yet it’s the number one stress in peoples’ lives.”

After reading the book and considering its content, I have to agree.  Money is important for many reasons.  Understanding how we feel and how we use it is key to understanding a whole new aspect of our lives.  This self-knowledge can help us unlock doors to less stress, better budgeting and financial freedom.  In turn, the result will likely be better relationships, more positive parenting and a more cooperative marriage or separation.

If you’d like to learn more about Maggie, you can check out her web site at maggiebakerphd.com.  If you order Crazy About Money through the site, she’ll send you a signed copy along with a bookmark and a money awareness exercise.

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Respecting The Mom

Last Friday I took Drake shopping for new sneakers. He didn’t need new sneakers. He only wanted them because he was jealous of the shiny white Nikes that Josh was sporting. Apparently he begged and pleaded long enough that his mother gave in and sent him out the door with a check to buy new shoes.

Because Boyfriend had some work to do around the house, I took Drake to the mall. We stopped at three stores and none of them had the shoes he wanted. He directed me to a different store down the road and there he found the style his brother had. But there was a problem: the pair cost $46 and Drake’s check was only for $40.

“I knew it!” he wailed. “I told her I needed more money and she said ‘no’. She should have listened to me!”

Remember that TV show, Herman’s Head? It was as if all those people were talking to me while I stood there…

“I don’t like his attitude. Ten-year-olds shouldn’t instruct their parents how much money to spend. He doesn’t even need the shoes! And his outburst doesn’t deserve a reward. Take him home.”

“Just kick in the extra six bucks. It’s not that much money.”

“His mother gave him a budget. He should stick to it.”

“His mother let him down. Buy him a $100 pair of shoes to make him really happy. Then take him out for ice cream and pony rides.”

I watched as Drake paced and muttered under his breath. Then I made a suggestion. “How about if I call your dad?” I began. “I’ll ask him to call your mom and see if she’s willing to increase your budget.” (Yeah, I could’ve let Drake call his mom from my phone. But I think that would’ve put him in the middle… and it would’ve put her in a position where she felt pressured to act a certain way given the fact that it was me standing beside him and not his dad)

“OK,” he agreed.

I pulled out my phone and walked a few isles away. Boyfriend was up to his elbows in insulation and was not happy to hear why I was calling. He had bigger issues to deal with.

“Just give him the six dollars,” he told me. “I’ll pay you back. It’s not a big deal.”

But I persisted. “I feel like this is a teachable moment,” I told him. “[Your Ex] gave him a specific amount of money and I think we should respect that. The deal to get new shoes was made between the two of them and I don’t want to go against the decision she made.”

Begrudgingly, he agreed to make the call. A few minutes later he called me back and said she didn’t mind Drake spending a few extra dollars.

When I delivered the news to Drake, he was quite pleased and set about searching for a box of shoes in his size…. but he didn’t find any. After all that, the size he needed was nowhere to be found. Luckily, he discovered different style, for a dollar less, and they fit. We paid the bill and he wore them home. Drake was happy to have new shoes and Josh was happy that Drake wasn’t able to copy him.

…And I was happy to move past the moment of sheer confusion regarding whether or not to mingle my money with The Mom’s. I’m happy with my decision to respect her authority and clear my actions through the Actual Parents before buying the shoes. I just wish I could’ve just called Mom myself and asked the question. I wish we could have, at least, that kind of relationship.

Massage Day

Today was Massage Day.  Actually, it didn’t last all day… just an hour, after work.  But I looked forward to it all day.

Before I got divorced, “massage” to me meant that I would rub my husband’s feet (with lotion!) while we watched television.  Ah, but that was a long time ago- more than 4 years, in fact.

I got my first massage in October of 2007 and have been regularly treating myself ever since.  I’ve had the standard “relaxation” massage, the “therapeutic” massage, the “lomi lomi” massage, the mechanical kind that happens inside one of those egg-like capsules… and reflexology too.  For next time, I booked myself a “thai” massage.

While I recognize the importance of making monetary adjustments following a separation/divorce, I also realize how crucial it is to be good to yourself.  Which is why my monthly massage has taken the place of my monthly haircut (and I do my own mani/pedis).  The relaxing/rejuvenating effects of touch therapy make the split ends a little more tolerable (until they’re not tolerable. In which case, I take a trip to the salon).  IMO, it’s well worth the sacrifice.

Lesson #Q43:  Don’t forget to pamper yourself.  Just a little.

Money Adjustments

Lauren, blogger at My Life, Incomplete, wrote a super series about Financial Freedom after divorce.  It got me thinking about my own money matters over the past few years and I thought I’d share some of the choices I made, things I learned and advice I can offer others.

My choices:

  • House- I only lived in my house for 2 months before I left.  In the months before moving in, Ex and I had the kitchen remodeled, we removed wallpaper and painted every wall, we had the ceilings textured, the hardwood floors refinished… we even hired an artist to hand paint a few borders and murals.  After all that, I really didn’t want to leave.  But I couldn’t afford the mortgage.  I weighed the possibilities… I could live there and never ever eat.  I could get a roommate and rent out the apartment above the garage…I could rent out a half the garage… but that would never be a guaranteed source of income.  I was also driving quite a distance to work and spending a couple hundred dollars a month on gas.  And I did not want Ex to give me any support money.  I let him buy me out and I vacated.  I bought a house half the size and much closer to my job.  (I still probably spent a little too much.  Luckily, I got a raise not long after I moved in.)
  • Car- I loved my car.  It had a supercharger!  But again… not practical.  It was bigger.  It guzzled gas.  When the treads wore thin, the tires would cost a lot to replace.  It, too, had to go.  I traded it for an uber-practical Saturn Ion… 4 doors, front wheel drive, no bells or whistles, gets me from Point A to Point B… it was a wise choice.
  • Phone- After a few months, I axed my land line and went solely cellular.  I don’t always hear the ringing, but it saves me a good bit of money.
  • Cable- I got rid of that too and went internet-only.  That was harder than it is now because back in 2006, there weren’t as many online TV options.
  • Clothes and Stuff- I’ve become a big fan of the second-hand market.  And I love it!  I can buy a new brand-name wardrobe each season for the price I’d otherwise spend on one new garment.  (The price factor is really nice when shopping for quickly growing children too.)  And there’s a green aspect to the thrift-thing as well.
  • Credit Cards- before Ex was my Ex, he paid off my credit card as a Valentine’s Day gift.  After that, I began paying it off every month.  I know it’s tempting to use the plastic to help in surmounting the financial hump of divorce… but what if I needed that line of credit? I decided to continue using the card for convenience only in case I needed it for an emergency.

Things I learned:

  • It is possible to adjust to an existence on a fraction of the income one is accustomed to.
  • Practical = less hassle
  • Be thankful.
  • Celebrate life.  Not things.

More Advice:

  • No more lattes.  That’s an easy one, I know.  And it’s hard, I know.
  • Look for entertainment alternatives and opt for cheaper family activities.
  • Learn about money.  Seek the advice of a Divorce Financial planner or check your community listings for opportunities to learn more about budgeting, spending and saving.  See if you can find any of these classes for your kids too- it’s never too early to learn good financial habits.

An outsider would say that my standard of living has decreased dramatically since the divorce.  However, the increase in my quality of life makes it all worth it.

What did you learn?  What are you learning?  Where are you pinching pennies?

The Cost of Unhappiness?

I once encountered a professional acquaintance after not seeing her for several months.  Following the standard “hi-how-are-you” exchange, she told me she would soon be turning 65, but can’t afford to retire.  She went on to state that she married a man who likes to spend, not save, money.  She said she probably should have left him a long time ago….

…Wow, is she really telling me this?  Why is she telling me this?  She has no idea how I feel about this sort of thing… she’s not prepared for what I have to say….I don’t know her well enough to say what I have to say…. I need to be quiet.

I kept my mouth shut and listened as she vocalized her self-consolation, “Well, at least the kids still have one house to come home to.”

I refused to offer validation.  Instead, I took the opportunity to steer the conversation back to where it originated.  How could it have gone so far in the past few seconds? “At least you’re still able to work,” I told her.

“Yes,” she agreed, forcing a smile.  “Look at the bright side.”

I left the meeting feeling heavy and sad.  Did she mean that?  I can’t believe she said that to someone she barely knows!  How long has she been unhappy?  She could’ve taken action a long time ago and changed everything… why?  …why?  Why…?

I don’t expect I’ll ever receive those answers.  The woman will need to live with the choices she has made and conduct herself accordingly.  I just hope that when she chose to remain married, she considered more than the number of residences her children will be obligated to visit during the holidays.

There are many professional resources out there (not to mention the free support offered by true friends) dedicated to helping individuals survive and thrive after a divorce.  Why not give them a google?

Is a bad marriage worth forfeiting retirement to keep?