We are pleased to have had the opportunity to sit down with Sarah Newcomb, Director of Behavioral Science at Morningstar, to discuss such topics as hostile envy, overcoming struggle, and what it’s like to be an “arm chair researcher”.
Colin and Greg: Sarah, tell us your story. How did you end up where you are today?
Sarah: I found myself in my mid-20s, having had to wait until I was 24 to even take out student loans without a co-signer and go to school. I went in undeclared, meandering around for a while in my early adulthood. I found myself with a degree in math, expecting my daughter and young family, but I couldn't get my finances together. It can't be about numbers because I love numbers. I love the problem solving aspect of math and so I thought “if this is a logical exercise, then clearly I'm failing it, and there's something going on here other than the numbers”. I had known nothing but financial struggle from early childhood and thought if I can understand the fundamental theorem of calculus, I must be able to learn how to manage money in such a way that I'm not struggling all the time.
I decided to learn how financial planners manage money because I thought if I learn from the professionals, then I can do the right thing with my money. But it was in the course of training to become a personal financial advisor that I took an elective in psychology. Specifically, psychology of financial planning and the psychology of clients, the psychology of wealth, the psychology of class tension – the psychology of money. That was where I finally was able to start to unlock my own dysfunctions with money. It's not all about interest rates and numbers ( those are important) but what it really comes down to is the stories that we tell ourselves. All sorts of judgments fly through their mind and they'll be subjective. They're very much dependent on who that person grew up around and the culture that they were steeped in, the stories that they listen to, the people that they compare themselves with, their mental state. All those things are brought into every one of our financial decisions. Yet we treat it as if each one is just a math problem.
For me, that was when I thought, “this is what I want to do. I want to dig into this. I can't be the only one.”
Colin and Greg: Can I ask you? You brought up the word struggle in your answer there. Having come from a background of a large family, it's not like we didn't have food on the table. We didn't have a lot of extras then. My kids have a different life. They haven't faced struggle. So when we accomplish something as a couple, my wife and I, I can appreciate it. But I don't think my kids appreciate it because they haven't had to struggle. Is that kind of what you've experienced?
Sarah: Well, I mean, I can only see things from my personal vantage point. We can look at some research to how do people respond to things from this background versus that background. But I do think there is something to the fact that I think that is blind. That's the issue with privilege. We don't experience privilege as the presence of favoritism. We experience it as the absence of barriers. When those of us who have had to work harder for what we have than maybe our children, we may appreciate it more because it was harder, we paid a higher cost in effort or whatever to get to the same opportunities that our children may have.
First of all, let's remember that that's why we paid that cost because we wanted to give them opportunities that we didn't have. So good job, you. That's what intergenerational stability and growth is supposed to be. You cannot see things unless you experience them. You can sympathize, but you can't empathize when you haven't experienced struggle. It doesn't mean that you're necessarily set up for financial failure or that your psyche is somehow going to be negatively impaired because you didn't struggle. I do think we have to point out to those of us who have maybe moved up a class, we do have to sort of point out to our kids maybe what advantages they have over others, not so that they will feel guilty, not so that they will shame themselves or make others feel bad, but so that they can recognize when you have resources at your disposal throughout your life. There are going to be more opportunities to you when you have a safety net at your disposal. You can take more risks. Those are privileges. What it means is you work hard and then you see the results of your labor and that's great.
Where we get into trouble is when we turn around and we say to other people, “just do what I did” when they face barriers and the terrain that they're walking is very different terrain than you walked. That's where privilege gets us into trouble. We don't need to be walking around modulating ourselves because we are giving our children opportunities or because maybe we have opportunities that others didn't have access to. I think we need to not judge others by the same standard when they're walking a different path.
For more questions and answers with Sarah Newcomb please refer to our Podcast.
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