A New Take on Psychology and Money

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Lauren  Dixon  Associate  Editor  Workforce  magazine  

A  New  Take  on  Psychology  and  Money  

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Sarah  Newcomb      Behavioral  Economist  Morningstar  Inc  

A  New  Take  on  Psychology  and  Money  

A New Take on Psychology and Money

WorkForce April 20, 2016 Sarah C. Newcomb

Behavioral Economist @Finance_Therapy

Agenda

1  Intro

2  Financial Health of US Adults

3  Quiz!

4  Three Rules of Healthy Money

5  Q & A

Intro

Intro

Theory of Planned Behavior, Azjen 1991

Agenda

1  Intro

2   Financial Health of US Adults

3  Quiz!

4  Three Rules of Healthy Money

5  Q & A

Financial Health - Knowledge

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Financial Health - Knowledge

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Financial Health of US Adults - Needs

70% HR

Professionals

Report that financial challenges have a ‘large’ or ‘some’ impact on employee

performance.

57% Financial Education

Fewer companies offered any form of financial

education in 2014 than previous years.

16% Needs

Assessment

Of the HR programs offering financial education, only 16%

perform any kind of needs assessment.

The Survey of Human Resource Management (2014)

Financial Health of US Adults - Stress

Of US adults are losing sleep over financial stress.

American Psychological Association reports that finances are the #1 source of stress for Americans regardless of the economic climate.

62%

#1

$5K The Federal Reserve Board estimated (2012) that employee financial stress costs companies an average of $5,000 per employee, per year.

Agenda

1  Intro

2  Financial Health of US Adults

3   Quiz!

4  Three Rules of Healthy Money

5  Q & A

Financial Psychology Quiz

5 4 3 2 1

Financial Psychology Quiz

321 4 5

Financial Psychology Quiz

Financial Psychology Quiz

Financial Psychology Quiz

Financial Psychology Scoring

1.  Add up your answers to Questions 1-3 •  0-8 = Short-Term Focus •  9-16 = Long-Term Focus

2.  Your answer to Question 4 •  A or B = Internal Locus of Control •  C or D = External Locus of Control

3.  Your answer to Question 5 •  A = Desire •  B = Stability •  C = Fear

POLL – Placeholder Slide

Which Quadrant are you in? A: Long-term focus, Internal Locus of control B: Long-term focus, External Locus of control C: Short-term focus, Internal Locus of control D: Short-term focus, Internal locus of control

Financial Personality Matrix

Three Factors of Psychology

  Emotional motivations

  Mental time

  Locus of control

Agenda

1  Intro

2  Financial Health of US Adults

3  Quiz!

4   Three Rules of Money

5  Q & A

“Money is the root of all evil.”

“Money makes the world go ‘round.”

Mental factor: Core beliefs and Values

Three Rules of Healthy Money

Three Rules of Healthy Money

Mental factor: Core beliefs and Values

RULE # 1 Change Your Stories

Three Rules of Healthy Money

Time Line

One Month

One Month

Now One year from now

LINEAR TIME

Rule 2 – Choose your strategies Mental factor: Mental time

MENTAL TIME

Today

1 year from now

1 month

1 month

DISCOUNTING THE FUTURE

Three Rules of Healthy Money

Rule 2 – Choose your strategies Mental factor: Mental time

Three Rules of Healthy Money

Mental factor: Mental Time

RULE # 2 Care About Your Future Self

Three Factors of Psychology

Mental Factor: Locus of Control

Three Rules of Healthy Money

Mental factor: Locus of Control

RULE # 3 Cultivate Your Value

Summary

Psychology Matters

1.  Core beliefs & attitudes (social psych)

RULE #1: Change your stories

2.  Time perception (cognitive)

RULE #2: Care About Your Future Self 3.  Locus of Control (Social psych.)

RULE # 3: Cultivate your value

Thank You www.hellowallet.com

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