Money and emotions are a messy tangle for many people.
That’s why for Mary Clements Evans, a certified financial planner, financial therapy is the linchpin of the work she does with her clients.
In her new book, “Emotionally Invested: Outsmart Your Anxiety for Fearless Retirement Planning,” Evans dissects the fear, anxiety, and guilt that money decisions can stir up and offers advice on how to calm down and find financial happiness now and in retirement.
I sat down with Evans to learn more about what folks can do to take control of their money lives and make choices they won’t regret. Here are edited excerpts of our conversation.
Kerry Hannon: Why is it so important to understand our “money why”?
Mary Clements Evans: Our money why is what drives our decisions — the underlying reasons behind our financial actions..
It’s how you feel about money. It’s your relationship with money. I liken it to my relationship with brownies. I know how many calories are in a brownie. Guess what? I am going to eat brownies because it makes me feel good even if there are lots of calories.
The same thing happens with money. The smartest, most well-educated people make poor financial decisions because their moneywhy is not in a good spot.
There are two primary money whys: FOMO (fear of missing out) and FORO (fear of running out).
Can you dig into what is FOMO versus FORO in terms of our money decisions?
People who have FOMO are hyper-focused on today. These are the people who want to buy the car, take the vacation, redo the bathroom.
FORO ones are hyper-focused on the future. They’re always afraid they’re not going to have enough money to retire. They’re not going to have enough money if something bad happens. They’re all about safety and security.
There are shades of those in many people, of course.
Let’s talk about the title of the book. What do you mean by emotionally invested?
We all like to think that we make rational decisions. We don’t. We make emotional decisions, then we back them up with a series of facts that make us feel like we made a factual decision.
If we acted completely on facts, nobody would have borrowed money that they shouldn’t have. Nobody would be hoarding money that they could spend.
How has saving for retirement profoundly changed for Americans?
For a long time, many people had pensions. Corporations had them because they wanted to attract employees. But after the Employee Retirement Income Security Act, or ERISA, became law in 1974 that slowly changed. Retirement saving was turned over to the individual worker. The worst thing that happened is we told everybody, “This is so easy, you can do it yourself,” which is crazy.
Learn more:A step-by-step guide to retirement planning
You’re busy doing your job, raising kids, maybe taking care of parents. And in your spare time, you’re supposed to have complete knowledge about the most complex system there is on earth. I’ve been in finance my whole life, and a week doesn’t go by that something doesn’t cross my desk and I say, “What the heck is this?”
You use the term “saving for survival.” Can you discuss?
Plenty of people don’t realize the importance of saving for retirement. They think of retirement as something very far into the future. This isn’t saving to have a wonderful retirement, take vacations, buy the beach home, and do all these other things. You have to save to survive — to have enough money for food, shelter, and clothing.
In today’s extended lifespan, you could be in retirement 20 or 30 years. Think about that. Even if you started when you were in your twenties, you’re going to spend 40 years saving to live a life, with inflation, for 20 or 30 years.
Have a question about retirement? Personal finances? Anything career-related? Click here to drop Kerry Hannon a note.
You suggest an exercise where folks finish this sentence: Money is… Explain that for Yahoo Finance readers.
People say: Money is the root of all evil. Money is fun. Money is scary. Money is confusing. Money is problematic. My favorite: Money is not my friend.
Of course, the real definition is that money is the means of exchange for goods and services. That’s what it is. But every answer I get is full of emotions.
For Mary Clements Evans, a certified financial planner, (seated) financial therapy is the linchpin of the work she does with her clients. (Photo courtesy of Mary Clements Evans)
You spend a fair amount of time in your book telling people how to find a financial adviser. What is the most important thing people need to know?
The most important thing that people need to realize is that in our industry, there are no standards. The two most-searched terms for financial help are “financial adviser” and “financial planner.” Yet there’s really no set of qualifications for you to call yourself that. You can have somebody with a high school diploma and a weekend course, and they can call themselves a financial adviser. But then you have somebody who has a master’s in finance, certifications, and years of experience, and they have the same title.
Learn more: What is a financial adviser, and what do they do?
There are several good certifications out there. I’m a big fan of the CFP, which is a Certified Financial Planner designation. It takes about two years to attain, and it’s hard. It’s like getting a master’s in finance. It’s a tough test, and it requires tons of ongoing education.
Finally, Mary, what is the biggest takeaway from the book?
I’m trying to remove the shame and blame around finance. Shame doesn’t work. People should not feel bad about themselves. So often when I meet new clients, regardless of their education or their income, in the first five minutes they start apologizing to me, saying they should have done this or that. Removing that shame and blame is a good thing. And it’s never too late to be empowered, become smarter savers and investors so you can ultimately enjoy a more secure and worry-free retirement.
My job is for individuals and couples who feel frustrated and overwhelmed by money and have a hard time talking about it to figure out how their money whys subconsciously affect financial decisions, and, most importantly, how they can identify theirs (and their partner’s). That is what can change your financial world.
Kerry Hannon is a Senior Columnist at Yahoo Finance. She is a career and retirement strategist and the author of 14 books, including the forthcoming “Retirement Bites: A Gen X Guide to Securing Your Financial Future,” “In Control at 50+: How to Succeed in the New World of Work” and “Never Too Old to Get Rich.” Follow her on Bluesky.
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