The Emotional Psychology Around Money with Michael Liersch

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Today. We are talking financial health and planning and being responsible responsible in this new roaring twenties of a decade. I'm excited to announce our guest is Michael. Leash who is the global head of Wealth Planning Manning and advice at j.p Morgan asset and wealth management. Michael thank you so much for joining us today. Thank you Brian. I'm happy to be here. And I know my title is a mouthful it is and and also your education so let me let me she. HD In cognitive psychology from the University of California and in economics from a little school called Harvard. So so what got you into where you are now in. Have you always been like a financial like obsessed with your finances. A major loser. That's just awesome. I didn't know that about you. I've always been obsessed with data and I know that sounds pretty weird but one of the most exciting things about life to me is actually understanding facts and really comparing that to people's perspectives or perceptions. So when when I was growing up I quickly learned that what people perceived us fact was actually fiction and I wanted to translate that actually into a career so my career if you were to just distill it down and all my education it's about actually understanding human beings us and what they perceived to be true and comparing that to the reality in actually trying to match them up and when you think about financial behaviors it's super relevant because because what people say they want to do what they're doing to get to. Financial Health is often times in reality. Not really what they want to do. And what not really what they're doing. And and so that's why they can never achieve that financial health so we try to get that. What are some of the? Let's just jump into the biggest myths. That people were misconceptions. Is that people have about financial planning give you. My favorite one is that financial planning. And money's not emotional. I think that that's such a interesting myth. And when I hear people say you should divorce emotion or feeling for money I feel like that's actually the most disempowering statement you can make and I wanna ask you Brian. Dismay have meaning to you. Of course it does and enlisting of points. Yeah you're the guy even more. Don't come from my points Michael. Yeah exactly right. Well you teach people about money. I teach people actually always say that points are currency. Let me call. You can add whether your small business like when I was just starting the point sky. We points were how I traveled how I cried content. I didn't have any cash before the bog was make money so so I think we're speaking the same language. I think you show a little bit more eloquently. Why why I doubt that? But here's where it's important is that there's at least two sides of it which is the way you got those points or the way you got that money has meaning so if you traveled a lot. You didn't get to see your family right. You made a lot of sacrifices. Perhaps you took that extra flight at the end of the year Josie joins then that has a different meaning than for example of someone gave you those points or gave you that money on the flipside how you can allocate those resources sources. How're you gonNA use those points or how you're gonNA use that money to impact you wanted to have on yourself and other people you care about and how they react to that that means something to you too? So That's the number one myth that I would say Brian that I I want to help. Human beings overcome is that you can somehow divorce emotion from things like money or from things like financial health. How you spend all all those ideas? I think we should start incorporating it and I think we should start empathizing with ourselves and being real about it. It matters the emotions around it. And that's actually gonNA drive our behaviors. I I mean it is kind of taboo to talk about money. It's a touchy subject. I mean my parents always instilled a work ethic. I started working at age twelve or thirteen and I knew the value of of money but it becomes a very scary place like and there have been times in my life like in college. I had no money and I had verizon bill that I you know cared not to handle and ended up biting me in the ASS years later. Ruined my credit score for years but why do you think it is. People put their heads in the sand. Or do you think that one of the core ways we can get better is if we start teaching financial wellness in our curriculum or putting your head in the sand by the way such a normal thing for your listeners. It's so normal. There's actually a behavioral finance danced term for it. It's called the ostrich effect. So there's a myth speaking of MS that ostriches put their head in the ground. When they're being let's say attacked by predators? This actually doesn't happen so I don't know why you know sooner some probably probably so it's such a normal thing you're asking. What's the reason season? I don't think anyone knows. But ultimately one of the major causes emotionally is idea of fear. Fear that that either you can't overcome what of that financial issue is fear that you'll be embarrassed. Shame yeah right OUTTA sight outta mind. It's ironic right because that feeds on itself because fear and shame. oftentimes don't lead to action so behaviorally we know that actually leads to something called inertia where I'm going to do nothing so I'm not going to get the education I need. I'm not going to ask the questions I need to. I'm not going to engage other human beings and what that does it compounds. The problem so by not getting that information it will actually lead me to worse and worse and worse outcomes over time and so what we're trying to say let's break those taboos and say it actually actually can be normal to talk about money so we actually have an episode and my podcast called my next move where we talk about normalizing money conversations. It's O'Brien when I think about your situation I think. How do you share your story just like you did so that your listeners know await like that happened to me too Ed? How can I pay that forward and pass that information on but do you think that our curriculum should have more financial? Do you think that that's one of the root causes like not teaching Ching budgeting as a core skill. You feel like that should be like in the family to handle. So here's a quiz question when you ask young people and so let's say a young people you're depending on someone else who they wanna get their financial information from who they want to receive education about money matters from who anything they name typically as that number one source they want to get that information from a probably doing its friends you know gets all parents you think it's their teachers. Do you think it's the Internet. I mean how young are we talk about. Like he like from five year olds teens teens parents and so young people want to hear from their parents. The why why their parents are behaving in the way they do how their parents think they should be behaving expectations. Is that different than how parents are behaving. So we get that all the time so young people to see their parents doing things things and their parents will say. Well don't do as I do do it. Somebody say not as I do. There's this whole ecosystem around that that. If someone has financially irresponsible the parents are they just kind of a disadvantage from the get go then actually not necessarily that can be an advantage because if you financially irresponsible parents is very obvious. That money behaviors leading to negative outcomes so a lot of times. What you hear is that actually that person wants to change it? What's less clear? Brian is when things seem reasonable. Rational national and yet. You don't understand it. That's where actually the confusion comes from. So that's the lack of communication from the uncertainty about either how those behaviors are maintained. Or what the motivations are behind that behavior that create the negative associations with money so one one example would be. Let's say your parents spend money on extravagant trips or on cars whatever that might be and they tell you you can't do that. You're not allowed allowed. But they won't tell you why. And that kind of issue in terms of the purchasing behaviors spending behaviors of parents. And what they prescribed to their children creates a lot of disconnecting and actually a lot of issues in family dynamics and even comes to how you display wealth how you display display spending a lotta time. Parents will display wealth and spending in a fundamentally different way than they expect their children display it. When we ask parents will what your motivation nation parents will say? Well I earn the money. I worked hard. I've been financially responsible to your point. And that's how I can do this. But they don't explain that to their children and what that means and to your point. They don't go through that educational process. Here's the meaning of money. Here's the meaning of a dollar and especially in this day and age. Where a lot of times you can be purely purely digital when it comes to money? It's not like a have a wad of cash where it's easy to teach those concepts you literally are just swiping or you're literally just going through that digital exchange process and so there's money lessons don't come naturally and family so that. Why are the motivations? Don't come

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