"Loaded" Book Review

Author: Sarah Newcomb, PhD (@finance_therapy)

Previous works: Self-published ““I HATE Money! Understanding Your Financial Attitude.” https://www.lulu.com/shop/sarah-morehead/i-hate-money-understanding-your-financial-attitude/paperback/product-16320184.html

Publisher: John Wiley & Sons, Inc., Hoboken, NJ

Find it at your local library: *Worldcat* (http://www.worldcat.org/oclc/994217545)

Content: Split into three sections, first is about identifying and challenging our own money stories and beliefs, second is learning about the psychology of money, last is developing a “Human-centered money management plan”.
Style: Like attending a money psychology workshop held by a friendly college professor. Lots of stories which makes it interesting, backed up with behavioral economics research which makes it more likely to offer success to the reader.
Intended Market: People who have very deep-seated emotional issues around money, are looking to get past them, and want to build a budget that works for them. This book should be marketed to financial coaches and therapists as I think we would be the group to get the most from it.

Overall: I thought this book was very good. It is not a general personal finance book that will teach you about proper usage of credit cards or saving for retirement. There are a thousand books on that stuff. Rather, this book is geared to any adult who has destructive core money beliefs causing excessive financial stress, whether that be over- or under-spending, and is ready to face their past so they can finally have a good relationship with money.

I would strongly recommend it to all financial therapists, educators, and coaches as her overview of the psychological ramifications of early financial experiences is important for us to fully grasp so we can better spot where the real issues at play are, empathize with and better serve our clients. Plus, her fresh perspective on budgeting provides a new angle to come at issues from and her varied tools could be useful when working with clients.

Review:

This book shows its readers how their childhood experiences inform their adult relationship with money using peer-reviewed resources and then goes on to help the reader build a realistic budget based on all their needs - including emotional.

Most of us never bother to explore how our childhood experiences shape our current financial situation - but we should. While most books stick to our current situation, income, and expenses, Dr. Newcomb explains to the reader, using peer-reviewed, generally professionally accepted theories, of WHY certain childhood experiences create apprehensions, weaknesses, and anxieties surrounding money. She invites us to reflect on our core values and emotional needs, gives advice for how to grow past our intrinsic beliefs holding us back, and only then do we develop a logical budget that will allow us to live in accordance with our values while satisfying our emotional needs. She provides multiple exercises and charts to help us better understand ourselves and her material.

The book really starts with chapter two “Money Messages”. A fascinating review of our culture’s nonsensical relationship to money and how our core beliefs are created for us during childhood. As children, we have no say in how we are raised or what we experience, and this makes all the difference when it comes to our adult relationship with money. Although money is too rarely talked about in the open, our families signal about it all the time, society signals about it all the time, formal education signals about it all the time, friends signal about it all the time. As children we absorb these signals and incorporate them into our worldview.

For example, think of the stories we tell children before bed. Time and again it’s a virtuous poor person against an evil, and often rich, person. Beauty and the Beast, Cinderella, Snow White, A Christmas Carol, Aladdin, Charlie and the Chocolate Factory, Lord of the Rings - even Star Wars*. The virtuous poor have to defeat/protect/teach/marry an evil and/or rich person - time and time again. You can haggle about details and point to stories that don’t follow these tropes, but, in broad strokes, they usually hold true.

[Side note: The feminist implications of all these women getting saved by handsome, rich princes are ridiculous. These stories mostly teach little girls to be socially useless, uneducated, gold-diggers. As heroines, all they do is get saved and marry. Why don’t we get to take the ring to Mordor and save Middle Earth? Why aren’t we overthrowing a corrupt imperialist government? Thank you, Katniss Everdeen, but your story is way too gruesome for young kids, we need to do better.]

Children desperately want to fit in with their friends. When first visiting a friend’s house who is from a different class, rich to poor or poor to rich, they can feel embarrassment, shame, guilt, anger, and more. In a child’s mind, this can translate to many destructive beliefs, such as the belief that you can’t be a good person and rich at the same time or that to be a good person you have to have money. Kids aren’t known for their spectacular reasoning abilities, hence the term kid-logic. As children, we take what we gleaned from these experiences and form a lifetime of financial beliefs from them. I appreciated Dr. Newcomb’s incorporation of true stories throughout to illustrate the theories she presented.

All this leads her to help the reader discover their core beliefs about money. To reflect on their history and what that taught them. At the end of the chapter she gives some advice on how to change core beliefs that do not serve you.

In the third chapter, my favorite chapter, “Poverty, Privilege, and Prejudice: a Crash Course in the Science of Money Psychology,” she explains what the research shows the psychological, social, and financial ramifications of poverty or privilege do to us. The research is fascinating. Those of us in the field of financial education, coaching, or advising would be wise to know it by heart so we can best help our students and clients.

The chapter is explicitly broken down into the tiniest of bite-sized chunks in order to relay the academic work. The first half discusses money from a social psychology perspective, how having or not having money plays out in destructive ways in your life. You can get a very general gist of what she discusses later on from page 35, “It would appear that money creates a lose-lose scenario: If you don’t have it, your performance suffers, your relationships suffer, and you may die sooner. But, if you have great wealth, you may be more likely to engage in victim blaming, and less likely to help others by choice.” Statements like this may not get Dr. Newcomb the nickname, “Sunshine”, but she believes that, with effort, we can get past these types of setbacks.

The second half of the chapter goes over the same topics from a cognitive psychology standpoint, “how differences in thought patterns affect financial behaviors” (63). She discusses retail therapy in terms of ego and identity; how we try to solve problems going on with our ego and identity through buying stuff. She gives rules to help stop us from buying things to serve our ego or identity. She goes on to review why addressing our needs for tomorrow can so easily get put on the backburner in favor of less important things today, and then provides useful tools to help us understand and overcome our natural inclination to discount the future.

The chapter then continues with one after another of bite-sized behavioral economics lessons. She shows why money is so fraught for us - there are just so many factors at play. It’s all interesting, it’s all relevant, it’s one brief overview after another of very important topics. It left me wanting her to write a full book on just this chapter!

The fourth and final chapter brings all this information together to help the reader reimagine their financial world. It begins with a deep dive into assets and changing our mindset on how money comes into our lives. Rather than working for a paycheck, she explains, we are actually renting our intelligence, skills, and experience. Thinking about earning this way, we always have what generates the money - just no one to pay us for it if we lose our job. It is a subtle but key shift in thinking as those who feel they have control over their own destiny tend to fare better than those who feel they are at the whim of fate. And adults who grow up poor tend to fall into the former category, adults who grew up with money tend to fall into the latter.

Moving on, she jumps to the other side of our money, spending. This section felt like hidden treasure to me. From page 116:

This is a point on which I deviate from a lot of financial educators. We often hear people say, “You have to know the difference between a want and a need.” I firmly disagree with this advice...I have become convinced that every decision we make is an attempt to meet a need. We know we don’t need a lot of the things that we buy. We want them because we believe they will help us to meet some deeper need inside us. Even the frivolous items we buy on impulse are attempts to serve a fundamental need such as fun, comfort, ease, or relaxation. We do not need to learn the difference between a want and a need. We need to learn the difference between a need and a strategy. This small change of wording creates a big change

I have taken her beliefs to heart as this lines up with my own experience in working with budgets. Tell someone who loves their boba tea that they aren’t allowed to buy it anymore and you’ll get one of two responses:

A lie that they won’t buy it anymore joined with a sinking feeling that they now view you as an adversary.
A sad and defeated client who now feels they don’t deserve a simple pleasure like boba tea and sees money as a cruel master out to hurt them.

Dr. Newcomb offers a third option - determine what it is about the boba tea that the client loves and figure out a strategy to get that. Is it because it’s refreshing and sugary? Is it a relaxing break from the daily grind? Is it because they get time to themselves to read? Once you find the real reason for the spending, you can find a strategy to satisfy this need.

As financial coaches, we should be focusing on strategies to get people what they need rather than denial. She illustrates this idea through some stories, which is helpful as it was a bit hard to wrap my head around at first. Eventually she walks us through mapping our own needs and building budgeting strategies around these. This section of the book would have been well served by bigger pages and having some workbook areas where the reader could write.

[Side note: Loved this endnote, p164, “I recognize that we have a Social Security system in the United States. I challenge anyone to prove to me that most people living solely on Social Security are financially secure and satisfied.” I’ll translate the academese for you: “bring it.”]

Ultimately, if the reader follows her process, they would have a budget based on values. Yay! She takes the reader through the process step by step, providing lots of exercises in the appendices that give the reader insight so they can build a budget that will work for them.

I want this book to get picked up by a different publisher for a second edition to make it more of a workbook. With a bit of reworking to make it as easy as possible for the reader to follow her steps, I believe it would be far more effective to achieve the book’s promise of developing a values-based budget. As it is now, the extra steps the reader has to take to do the exercises, like writing it out on a separate piece of paper, are exactly the type of tiny hurdles that stop them from going through the process. If this were to be built as a workbook, where the exercises were big and inviting to use, with color charts, as well as having some bits fleshed out more and a better thread between the ideas, it would be an absolute hit.

Overall, I loved it and want more of it.

**Ms. Moody Information Literacy Rant**

I put all this at the end because I like this book a lot and didn’t want my librarian annoyances to detract from the fact that I want people to read it.

I rarely purchase books to review with my own money. Usually I will get them from the public library. I decided to spend my own money on this book as: the topics it covered, personal financial psychology and budgeting are two of my strongest interests; the author has a PhD in behavioral economics from a good school, the University of Maine; and she is the Director of Behavioral Science at Morningstar. The content was what interests me the most and the author has a formal education, attained the highest level of education that requires much research in the field, and works in the field, all giving her a strong level of subject authority - so I figured it was a pretty safe bet that I would want to keep it around. I was not wrong. (Authority construction according to the Association of College and Research Libraries’ Framework for Information Literacy).

Basically, she’s the person you want to learn from.

Recognizing that this is a book for a popular audience and not strictly an academic work, I am tempering my expectations for it. Unfortunately, even with this understanding, it suffers from an unbalanced amount of references and lack of editorial input and oversight. Both are red flags for me.

In general, her references, where included, were very good. The book would have been better served had the research been more evenly distributed across the whole work. She uses many peer-reviewed journal articles - but only in one chapter. This chapter has sixty notes at the end, the vast majority being citations. The other three chapters have a total of twelve notes between them, again, the vast majority of the notes being citations. This uneven treatment of topics leaves me a bit weary as to how up-to-date and proven her claims are when they aren’t backed up.

Although she obviously knows a lot about the psychology of money, barring the sixty-six pages that make up the only well-cited chapter, I don’t know what research the other one hundred twenty two pages are being based on. Is this all original to her? If so, how can she back up her claims? If it isn’t original to her, whose work is she using? Were these works written by researchers? Economists? Psychologists? Financial advisors? Financial gurus who have no evidence to back up their claims? Should I read their works? Were they published somewhat recently or, like her references to Maslow and Rosenberg (discussed below), are they more than half a century old?

I am not the one with a PhD, so take this with a big grain of salt, but as an expert on information literacy and a behavioral economics nerd, for me, the omission of the names Thaler, Kahneman, and Tversky, from a book about behavioral economics, is glaring. (maybe I missed them?) It’s like writing a book about fast food and never mentioning McDonalds. They’re that crucial to the field. Again, I am not the PhD. I am 100% sure she is very well informed about their work. Just seemed weird.

The other red flags are not actually citing works she discusses. In the last chapter she brings together all the psychology and history from the previous chapters to help us build a values-based budget. There are two references that act as a foundation for our budget. Neither are cited. What?

The first one is on page 117. She bases her budgeting method in Maslow’s Hierarchy of Needs - a very well-known theory. She quotes him and cites “Maslow, 1943, p 375” but whatever work she is referring to is not listed in the notes at the end of the chapter or in the text itself that I could find. The second is on page 118 where she begins folding the work of a Dr. Marshall Rosenberg into her own framework for budgeting. Much of what she discusses for budgeting centers around his message that we need to find strategies to fit our needs. From page 127:

The core message of Rosenberg’s work was that every action a person takes is intended (consciously or unconsciously) to meet a basic need, and that our needs are universal… Beyond this, Rosenberg believed that conflict emerges when the strategy we employ to meet a need conflicts with another need. Finding peace in our financial life comes from creating better strategies, not from depriving ourselves of what we need.

There’s no mention of what work of his she’s using. I want to know more, his work seems really useful, but there’s no citation. This is one reason why citations are important - people will want to know more about topics you only touch on. (The other big reason is so you can look at the original work to see if it is accurately represented.)

Sure, missing a citation that’s only mentioned in passing isn’t great, but how do you miss two that are discussed for pages on end? Given that the publisher, Wiley, focuses on scientific, technical, and academic texts, their editors should be especially adept at catching these sorts of things. It’s pretty basic. Like, Citations 101, basic. If they missed these, what else did they miss? What were the editors even looking for? Did they work with her to hone the text, as good editors do, or did they just run through it looking for typos and grammatical errors with no oversight on the quality of the content, writing, or format? If no one else was there to work with Dr. Newcomb, give her notes and make sure every statement in the book could be defended, then what statements, if any, were made that are indefensible? I’m not saying any of it is wrong or bad - remember, I like this book a lot - just that red flags like these increases the likelihood that sub-optimal information can be getting passed on through this book. It’s like if a good restaurant has a consistently dirty bathroom. It would make you second-guess the cleanliness of the kitchen. As such, these red flags give me pause should I want to use her methodology with clients.

And there’s a typo on page 105. It says “What to you want to be” when it should say “What do you want to be”. Get it together, Wiley!

Lastly, I also would have appreciated more references to other books. I love journal articles, but books provide a breadth and depth of information necessary for grounding oneself in a subject. She does mention books here and there but only once actually cites them in her endnotes. When authors lean so heavily on articles, it gives me the impression that the author was cherry-picking her data, that is, only using data that reinforces her own preconceived beliefs rather than fully researching the topic. Given her education, I doubt that’s the case here. The lack of references to books is just another information literacy red flag popping up.

All this griping out, I like this book so much that in my head I imagine her original draft did use and reference a dozen books and had proper citations throughout, but the publishers went at it like Edward Scissorhands at shrubbery - just without the talent. #HeadCanon

**End information literacy rant**

Cheers,

Ms. Moody

*One year at the library for Valentine’s Day my student assistant made a display of “Blind Date with a Book or DVD”. She pulled books and DVDs, wrapped them in paper so you couldn’t see what it was and put a classified ad on the front. The one she did for Star Wars was something to the effect of “Poor country boy joins religious cult in order to overthrow the government.” Which is not wrong.

Book reviewKate MoodyAugust 25, 2020budgeting