Financial Planning

What Is Retired Husband Syndrome?

What is retired husband syndrome?

I first heard of Retired Husband Syndrome (RHS) at a book signing in 2013. From across the book section in the exhibit hall, I saw a young man with jet black hair staring at the back of my newly-published book, The Mindful Money Mentality: How to Find Balance in Your Financial Future. He turned it over, opened to the table of contents, flipped a few pages, and turned it over again.

Until that point, he acted like other book-browsers – look at back, flip to front, open to table of contents, flip to back, flip again. Some would then take the book to the register. Others set it back on the shelf. The whole decision took less than 2 minutes.

But this young man took so long reading, I wondered if he might consume the whole book right there. Then I quit watching, distracted by conversation with another attendee.

When I turned back to look for him, he was gone. Figuring he had decided against it, I was surprised a couple of hours later to see he was the first in line at the book signing.

Retired Husband Syndrome – in South Korea

Approaching with an enthusiastic smile, he said “Hello” in a heavy Asian accent. He was from Seoul, South Korea, and said that he thought my book would be helpful to his male clients. Unsure why he was excluding the female ones, I readied my pen to sign, but asked him to tell me more.

“In Asia, we have Retired Husband Syndrome (RHS),” he said.

“I’ve never heard of that. What is it?” I asked, putting the pen down.

“Some husbands spend their whole lives working for a company, and when they retire, they are at home, and it is not good for the marriage. The husband loses his identity because he is not in his job anymore, and he wants to be home with his wife. The wife has been at home her whole life, but she doesn’t like the husband being there, doing nothing.”

“So sometimes the retired husbands do…nothing? They don’t have hobbies or hang out with their friends?”

“Yes, that’s right.”

“Wow. So you must see a lot of marriage problems in your practice?”

“Yes! And it is too bad. They have a pension, but the couples never spend time planning what they will do.” He explained more about the strain on the marriage; the sadness he sees at a time when there could be great joy and celebration; and the effect on their children and the families.

“This makes me sad. Sometimes I am going to be the only person outside of the family who might see it. All of the financial advisors in Seoul could help people with this. This is preventable.”

Retirement Planning Is About More Than Money

I once heard a conference speaker say, “We spend more time planning what we’re going to eat for lunch than how we will spend a 30-year period of our lives.” In the U.S., it’s not only pre-retiree husbands, but also wives, singles, straight, and LGBT pre-retirees, admitting they are at risk for something like RHS.

It helps to clarify how you might spend the bounty of time that increased longevity will likely bring. If you need help planning a fulfilling retirement, find a financial professional or coach who takes as much interest in your time as they do in your money.

You can help stop the spread of one type of preventable international syndrome, and help your future happiness even more.

For more on the psychology of money prior to retirement, tax tips, and a monthly dose of fun, enjoy the free award-winning e-letter, “The View From the Porch.” Subscribe at this link: https://bit.ly/3t2uwfn

Continue ReadingWhat Is Retired Husband Syndrome?

Death By A Thousand Indecisions

indecisions

“Then indecision brings its own delays, And days are lost lamenting over lost days. Are you in earnest? Seize this very minute; What you can do, or dream you can do, begin it; Boldness has genius, power and magic in it.”

Johann Wolfgang von Goethe, Faust

Death by a thousand indecisions. As Goethe asked, are you “in earnest”? When it comes to decisionmaking, sometimes it’s quick: Ready-Fire-Aim. With other decisions, we take our sweet time. How much is indecision costing you?

Like death from a thousand cuts, indecisions can slowly deplete our energy, leaving little behind for ourselves or others.

Decisions are Draining

That’s because decisions are draining. Neuropsychologists like Dr. Moira Somers tell us that decisionmaking depletes our mental energy. According to Dr. Somers, every day we wake up with a finite amount of mental energy. As the day goes by, the more decisions we make, the less energy we have. And the bigger they are, the more energy they use.

Think about life’s transitions. One reason transition times, good or sad, are so stressful and exhausting – a move, a death, retirement, a child, a divorce – is the many seemingly small, plus a few momentous, decisions.

Further, lack of sleep, hunger, grief or even excitement can start the whole day off depleted.

Then, every indecision we “make” is a decision. In fact, a pattern of indecisions can take physical form, and stress us out every time we see it.

What does not-deciding look like? A pile of unfiled papers. Empty boxes stacked in the garage. The “miscellaneous drawer” in the kitchen. The “junk room.” Scattered financial accounts in too many places. Unfinished projects.

With a finite amount of mental energy at hand, who can blame any of us for having some kind of to-be-decided pile/stack/assortment hanging over us all the time?

Dealing with Indecision

What to do about it?

  • Make big decisions in the morning, before depletion sets in.
  • Automate it: Use a system to take care of small decisions automatically
  • Eliminate it: Ask often, “How important is it?”
  • Date-Activate it: Calendar the decision to deal with and be done
  • Delegate it: Ask for help

Automate It

An automation example I love and have yet to implement is the decision of what to wear. Michael Kitces, a noted financial expert, famously has a closet full of the same blue shirts, pants, and shoes. One less decision each day for a busy guy.

Another example is cooking. Thanks to Cassy Joy Garcia’s book, Cook Once: Eat All Week, our household now pre-preps ingredients on Sunday. Then, each work night is 15-30 minutes to assemble and cook the ingredients with pre-planned healthy recipes. The meals are delicious, but the best part is not having to make the decision of what’s for dinner. Hallelujah.

Eliminate It

In the summer of 2021 I began thinking about a new car. My financial plan called for me to sell my would-be 7 year old car in January 2022 and buy another one. I couldn’t decide what kind of car to buy.

Aware that the indecision was draining me, I wondered why I was having such a hard time deciding. Then it hit me. I didn’t need a new car. In fact, I didn’t need a car at all. My husband and I had both switched to working from home. Why did I need a shiny hunk of metal to sit in the garage? We had my husband’s car, which was only 2 years old. We ran a 6 week experiment without using my car to see if it caused any problems.

When we saw that it didn’t, I felt immense relief. This told me I was making the right decision. Besides, it was a good time to sell a used car. $15,000 later, we are both very happy about eliminating that decision!

Date-Activate It

My calendar rules my life. It tells me what to do, where, and when. If this is not you, then this tip might not work.

One decision that goes on the calendar every year is whether to take a ski trip and if so, where. The local ski clubs publish their trips around August/September. Ski season pass discounts usually end on Labor Day. So I have the calendar marked for that timeframe to do my research, poll my skiing girlfriends, and make the decision. While it feels sooner in the season than I would like to make a commitment, if I did not give myself a deadline, I would dilly dally into December as all of the good trips filled up. And in the meantime, I would be spending a huge amount of mental energy on something that’s supposed to be fun.

Delegate It

Part of my indecision problem has been the flawed belief that I should be able to do everything myself (and perfectly, which is a topic for another blog post).

However, after a divorce, when my brain was extra foggy, I had significant success with hiring a friend to help organize. At the same time, I had estate planning documents updated with a local attorney. With my friend’s insight, coordination, and diligence, I quickly had an uber-organized office AND an updated “emergency box.” I felt the fog lifting as things came together.

It turns out that hiring help accelerated my decision making and used less energy. Perhaps this is what Goethe meant by the boldness in beginning. Delegating to others can be bold.

Getting Better and Better

Goethe said in that boldness to begin the decision we find genius, power, and magic. Further, there is a spiraling effect – the fewer decisions left to make, the more time to do what we do best. This is far better than a daily slog through indecision-infused mud.

At some point, with excess energy, I felt ready to give back. Someone close to me suddenly lost her husband and her mother within a three month period. She had an overwhelming number of decisions to make about seemingly small stuff, and was in a grief-stricken state to be doing so. I feIt the capacity to help her. I could not have made that statement before I had my own house in order. I don’t know if that counts as genius, power, and magic, but it felt really good to do.

What About You?

What if you took an indecision pile and automated, eliminated, date-activated, or delegated?

Who might you then be able to help?

Genius, power, and magic are waiting, if we have the boldness to begin.

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Student Loan Forgiveness 2022? 6 Questions To Ask

Student loan forgiveness 2022? Where do your student loans stand right now? It can be pretty confusing to figure that out. Covid deferrals, loan servicer mistakes, and now forgiveness have led to a mish-mash of options. However, the big financial mistake you can make is to assume you don’t qualify for some kind of relief.

One piece of good news on the mish-mash front, especially if you have more than one loan: Those loans can now be seen on one page at www.studentaid.gov. No more checking on each servicer’s website for your information. It has a helpful feature. The site divides your loans into those that can be forgiven (through any existing forgiveness program, not only the most recent one), and those that cannot (mostly private loans).

To use studentaid.gov, you will need an FSA ID. This is different from your loan number. Apply for one at the website, and you’re in.

6 Questions to Ask Yourself

Before deciding, like Seinfeld’s Soup Nazi, “No forgiveness for you,” (90s reference – might make no sense to recent graduates), ask yourself these 6 questions to start:

1) Were your loan payments ever on some kind of income-driven repayment plan (IDR)? If so or you are not sure, see “Income-Driven Repayment Loans,” below.
2) Have you worked in medicine, education, or for government, at all since graduation? You may have been given bad advice about Public Service Loan Forgiveness. Skip to “Public Service Loan Forgiveness,” below.
3) Does your employer offer any type of student loan reimbursement benefit? If not, might they consider one? It’s tax-free to both you and them until 12/31/25. For more info, see “Tax-Free Student Loan Reimbursement,” below.
4) Did you repay some or all of your Covid-deferred loans in the last 33 months despite the fact they were on deferral? Skip to – “Forgiveness – What We Know So Far,” below.
5) Is your household Adjusted Gross Income (look on your tax return or ask your CPA or CFP) less than $125K (single) or $250K (married)? Skip to – “Forgiveness – What We Know So Far,” below
6) If you are a parent of a current student getting loans, is your household Adjusted Gross Income (look on your tax return or ask your CPA or CFP) less than $125K (single) or $250K (married)? Skip to – “Forgiveness – What We Know So Far,” below

Income-Driven Repayment Loans

If your loan payments were ever calculated based on your income, you may be entitled to some relief. Many errors were made in the calculations of those payments, mostly in the loan servicers’ favor. Most of those errors have now been corrected. You may owe less than you think. You may also qualify for lower payments.

Go to student aid.gov, sign up for an FSA ID, and find out.

Public Service Loan Forgiveness

A study showed that nearly all applications for PSLF had been rejected over the past several years when many of them should have been approved. Additionally the loans suffered from accounting errors.

Plus, more jobs have now been added to the PSLF program eligibility.

****But in order to have your case reviewed, you have to enroll at the student aid.gov site by getting an FSA ID by 10/31/22.****

Anyone in medicine, education or government work should go ahead and enroll. Enrolling sooner than later will reduce the chance of getting caught up in a last-minute rush of applicants.

Tax-Free Student Loan Reimbursement

With the 2017 Tax Act, employers and employees were given a special benefit. Employers can reimburse employee’s student loans up to $5250 (but any tuition directly reimbursed is subtracted first). The employers get to deduct the compensation, and the employee doesn’t pay tax on it. This benefit is available regardless of salary, income, or occupation.

Because the 2017 Act sunsets in 2026, however, this means that this benefit is only available until 12/31/25, unless it’s extended by Congress.

Ask your employer if this benefit is available to you. If you work for a small-ish employer, that employer may not be aware of this benefit. Given the tight labor market, it might be a good time to make the request to add it, or to provide it for you.

Forgiveness – What We Know So Far

While many of the details still have to be worked out, you’re probably aware that the recently-enacted loan forgiveness applies if you are single with Adjusted Gross Income (AGI) of less than $125K or married with AGI of less than $250K.

Again before letting that internal Soup Nazi strike you down, remember AGI is not your gross income/salary. If you are a W2 employee, your AGI would be approximately:
Salary+Bonus minus Retirement contributions minus HSA (Health Savings Account) contributions.


In addition to retirement and HSA contributions, there are many other adjustments that can affect your AGI, but they are less common. The point is that if you make $135K and think you don’t qualify, think again. If you contribute $6K to your 401K and $6K to your HSA, your AGI is $123K, so you actually do.

If you are self-employed you probably have even more deductions, so a thorough tax review would be in order. Maybe an amended return for 2021 might be worthwhile if you find a deduction that was missed.

The amounts that can be forgiven are $10,000 for all borrowers with public loans (not private ones), and an additional $10,000 if they were also Pell Grant recipients. The website at student aid.gov will tell you which loans you have that are forgivable.

What if you paid off your loans within the past year and you would otherwise qualify for forgiveness? Surprise – you will be able to apply for a refund. Details on that yet to come, though.

What if you are the parent of a current student? As long as the student had loans as of 7/31/22, and your household’s AGI falls below the income eligibility figures, your child’s loan(s) would qualify for forgiveness.

Summary – Several Strategies

In summary, now there are several strategies to employ that can help ease the burden of student loan debt. Consult with a knowledgable CPA or CFP on what opportunities there might be for you.

You can make an appointment to speak with us about your student loans or other concerns on our Contact Us page.

Continue ReadingStudent Loan Forgiveness 2022? 6 Questions To Ask

Parents, Aging and Finances

Parents, aging, and finances. Talking about aging with parents can be one of those difficult conversations we want to put off for another day. Like other difficult conversations, though, avoidance usually makes it harder.

Transitions in aging can fall into four broad categories: financial matters; health care decisions; living arrangements; and transportation. This week’s post tackles the topic of finances.

Helping Parents With Finances

The downside of the digital age is that it makes seniors more susceptible to fraud and scams. They can send or spend money anywhere, or divulge sensitive information, with one click. Without being physically present, adult children might not be as quick to catch the warning signs that a parent has become susceptible.

The most common kind of elder financial abuse occurs from people close to the parent. Sometimes it can be a new person in their lives – a girlfriend or boyfriend, a housekeeper, or a companion caregiver. Checking up on new friends and companions might not feel good, but is a necessary step.

Are parents located far away? In her wsj.com article, Veronica Dagher interviews financial advisors and aging experts on how to help parents with finances from a distance.

By volunteering to help with bill paying, the person with the DPOA can begin to get acquainted with the parent’s accounts, particularly what kind of expenses are normal and which are not.

Parents: Start Early, Small and Often

Parents would be wise to communicate early with adult children. While the topic of money is taboo in many households, it will make everyone’s life easier if the parent is open and communicative. It’s helpful to know how many accounts there are, how the accounts are managed, and approximate amounts or a range of amounts in each. Describe how the transition of help with money would go in an ideal world. Other steps:

  • Provide contact information for the financial advisor, investment manager, lawyer, and accountant.
  • Arrange an annual family meeting with any or all of the above.
  • Begin conversations early with small topics first. Allow everyone involved to grow into their roles.
  • Build on that trust to expand financial duties as time goes on.

Adult Children: Start Early, Small, and Often

For the adult children, instead of anticipating one future difficult conversation, experts recommend thinking of each topic as a continuous conversation to be had over a number of months or years. Following are some pointers.

Start the conversation with curiosity.

“Mom/Dad, if you should ever reach the point where you’re unable to (balance your checkbook, drive on the interstate, feel confident about a medical decision, feel comfortable living on your own), what would you like to have happen?”

“What would be an example of something that would indicate the point at which you would like help?”

Listen intently. Even if it is not what you would like, check for understanding by repeating back what you heard. For example, “So what I hear you saying is that, if you have a fall, that’s when you’ll ask for help. Is that true?” Sometimes when we hear things back, we change our minds, or clarify.

Things To Do Now

As noted in Dagher’s article, one of the most important documents is a Durable Power of Attorney (DPOA). If a DPOA is more than a few years old, or there has been a change in health status, have it reviewed by an elder law attorney. The attorney will make sure the powers granted are up to date with current law and broad enough for the parent’s current situation.

Since so much of our financial lives are online, it’s also wise for a parent to share emails, userids, and passwords with the person named as DPOA. Ideally, all of the financial institutions where a parent has accounts would have copies of the DPOA and confirm they recognize it as valid.

By volunteering to help with bill paying, the person with the DPOA can

  • begin to get acquainted with the parent’s accounts
  • become known to the institutions where accounts are held and
  • learn what kind of expenses are normal and which are not.

Additionally, it tends to work better if just one person is named as DPOA. Then name a backup or successor in case they are unavailable. Joint DPOAs can be a headache.

DPOA Does Not Work for Health Care

While the DPOA covers financial and legal matters, it does not address health care decisions. For those, a health care proxy or Designation of Health Care Surrogate is necessary. With Covid-19, family members may not be allowed in the hospital. Should an emergency happen, the health care proxy, as well as any living will, DNR (Do Not Resuscitate), or DNH (Do Not Hospitalize) documents should be provided to paramedics and/or hospital staff.

For a free resource specifically addressing the talk about end-of-life care, see The Conversation Project, at https://theconversationproject.org/starter-kits/. For a primer on the 4 basic estate planning documents needed by everyone, see Part 2 of 2 – The Talk That Only Gets Tougher – 4 Documents.

Simple But Not Easy

These are difficult scenarios to think about or talk about. The most important thing to do now is begin with a single step. Whether you are the parent of adult children, or the adult child of an aging parent, it’s never too early to broach the topic. Rather than waiting until it’s too late, start while it seems too soon. That kind of talk will be a lot easier.

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Read more about the article The Ideal Retirement Plan: It’s About More Than Money

The Ideal Retirement Plan: It’s About More Than Money

view from the porch

The ideal retirement plan: it’s about more than money.

I knew a man who couldn’t wait to retire from his government job. With a few decades of hard work and wise money decisions, he was able to call it quits at 55. Thrilled with his newfound financial freedom, he immediately took to cooking, golf, dating, traveling, fishing, and having fun. For the first few years, every time I saw him, I could see the lack of work responsibilities had lightened his step and his heart.

At 65, he moved to a Florida retirement community, the kind with nearly identical roofs, lawns and mailboxes. One of the few ways to stand out was by the cover on your golf cart. To outsiders, everyone looked the same, dressed the same, exercised the same, and seemed to absolutely love their new life in the sunshine.

Happy on the Outside But No One to Talk To

One day on the phone the man said, “Y’know, I really like talking with you. I don’t have anybody to talk to here.”

This was a shock. “What?” I said, “Surely there are some retired CEOs, executives, people that think like you there, that play golf, and that you have a lot in common with.”

“Nah,” he said, “I don’t have that much in common with anybody here.”

I thought that was crazy. He talked like them, dressed like them, shopped like them, and played golf and pickleball with them. He probably was just as well off, financially, as any of them. How could he not have someone to relate to?

Unfortunately at that time, I was unfamiliar with the signs of depression. Five years later, it took his life.

Three Myths About the Ideal Retirement

According to writer Mitch Anthony, there are three myths about the ideal retirement plan.

Myth 1: “This part of my life is going to be about ME.”
Anthony says, “This is a formula for emptiness.”

Myth 2: “I am going to surround myself with people like ME.”
Anthony’s reply: “This is a formula for stagnation.”

Myth 3: “I am going to do nothing but relax.”
Anthony: “This is a formula for boredom.”

Emptiness, stagnation, and boredom. Doesn’t sound much like the ideal retirement. Yet, these three myths form the basis of a lot of retirement plans.

A Mayo Clinic gerontologist told Anthony, “A life of total ease is two steps removed from a life of total disease. The first step is they get bored, the second step is they grow pessimistic, and then they get ill.”

The Dark Side of Retirement Plans

This is what writer Robert Laura termed the “dark side” of retirement. For some who don’t think about how to bring meaning and purpose to their life after work, serious mental health maladies, like depression and addiction, await. Florida retirement communities have some of the highest suicide rates in the country, particularly growing among white males over age 65.

Of course not everyone in retirement communities is depressed. It’s common to have constant fun, be social, and live vibrantly, filling time with volunteering, mentoring, and circles of friends.

Plan For More Than Money

For those like the man above, jumping off the work treadmill onto the retirement scene without a plan can be risky. Instead, South Dakota financial planner Rick Kahler responded to Laura’s article with several wise suggestions for the non-financial part of a retirement plan:


*Ask yourself how much of your identity is tied up in what you do, rather than who you are.
*Start creating a life to retire “to” rather than simply a job or business to retire “from.”
*Consider gradually reducing to part time and taking extended vacations, rather than showing up one day, and having nowhere to go the next.
*In your ideal week, identify how would you spend your time, and with whom?
*Have a diverse social network outside of work.

As one example, writer Douglas Bloch complained his parents’ retirement community had no children, while his retired friends were finding fulfillment in their own neighborhoods mentoring youngsters in math.

The best retirement plans start with a plan for a fulfilling life first, then match up the plan with money decisions. That’s why good planners ask, what’s the money for? For most, it’s not to support boredom, stagnation and decline. If you define what an ideal retirement means first for you, then your retirement plan and your retirement life have far better chances of success.

Dedication to Mental Health Awareness

Following May’s Mental Health Awareness month, every June I republish this story in memory of the man who inspired it. Retirement is a life transition that has an under appreciated impact on mental health.

Resources for Ideal Retirement Plans:

Dori Mintzer, Ph.D. has a weekly live interview series and podcast called “Revolutionize Retirement.” In it, she interviews experts on retirement life.

Mitch Anthony’s book, The New Retirementality.

Holly’s book, The Mindful Money Mentality: How To Find Balance in Your Financial Future

Sign up for our free monthly e-letter, “The View From the Porch.” We never share your email address.

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The ABCs of Behavioral Economics

The ABCs of Behavioral Economics: This article was originally published in NAPFA Advisor magazine.

Behavioral economics, with its long lexicon of “biases,” has enjoyed great popularity for a couple of decades. However, it’s also one area where financial planning students feel the least prepared. Experienced advisors, too, find this relatively new field fascinating, but yearn for practical ways to apply it, especially amid the market volatility of the past couple of years.

Sometimes it’s helpful to boil things down to basics. At the risk of oversimplifying, here are three reminders, A-B-C style, of what behavioral economics is about, how it works, and how advisors can use it.

A—What is behavioral economics about? A: Actors (economic ones) are not always rational.

Economists used to assume that actors (people and companies) always act rationally to increase their profit, wealth, or “utility.” The father of behavioral economics, Daniel Kahneman, won a 2002 Nobel Prize for proving they actually don’t. However, even today, both clients and advisors still tend to assume finance is about facts, not feelings.

Throughout my early banking career, I made this assumption. For example, when the estate tax exemption was $675,000, I reveled in suggesting ways that nearly every client could save on estate taxes. One husband, whom I knew liked to argue, pushed back when I brought this up. “Why do you automatically assume I want to save taxes?” he blurted.

His wife looked at my jaw hanging open. I answered, meekly, “Because nearly everyone I talk to wants to save taxes?”

“Well, maybe I don’t!” he said. “The government has a lot of good programs.”

Before that day, I had never asked how anyone felt about paying taxes (who would ask such a stupid question?), or what the idea of legacy meant to someone (too personal, I might upset them). My job, before that day, was like Sergeant Joe Friday, “Nothin’ but the facts, ma’am.”

Now I know all facts, especially anything with the word “estate” in it, for goodness’ sake, come with feelings. It’s far better to get to the feelings first if we want any chance of rational decision making.

B- Why Does This Happen? B: Brains have powerful primitive parts.

In his 2011 best seller, Thinking: Fast and Slow, Kahneman divides the brain into two systems: System 1 and System 2. To oversimplify, System 1 is the older, primitive part, and it generates emotional responses. System 2 is the newer, intellectual part.

Most of the time we’re quite aware of what’s going on with System 2 (intellectual), and quite unaware of System 1 (emotional). We fail to remember how much more powerful System 1 is than System 2. To make matters worse, System 2 falsely believes it can override System 1 anytime it wants.

For example, have you ever been sitting at a traffic light and suddenly heard a honk from the car behind you? My System 1’s initial thought is, “Who the !@#$ is honking?” as I glare in the rear-view mirror. A fraction of a second later, it occurs to System 2 to, duh, see if the light turned green. System 1’s embarrassment kicks in with a little wave in the mirror, “Sorry!”

One of the signs of a true professional is the ability to override System 1 through experience and practice. Kahneman uses firefighters as an example. After many fires, they learn that fear doesn’t go away. They accept it as part of the job, then, with experience, use it to make split-second but measured decisions.

In the last couple of years, have you not been a little scared, at least once? A study from the Journal of Behavioral Finance showed financial professionals are just as prone to emotional errors as retail investors. Knowing and accepting this should make us even more cautious. Younger advisors know from their training not to act irrationally based on fear. Senior advisors know from experience not to act irrationally after seeing advisors who did.

Our System 2 can try saying, “I won’t be scared the next time the market falls 10%,” but your System 1 will decide that involuntarily, not you.

System 1 beats System 2 to the punch nearly every time because System 2 is wired to conserve energy. So, it allows System 1 to do most of the work, which mainly involves scanning for threats. Fear isn’t wrong. It’s unavoidable. Whether and how we handle it is our hallmark.

C—What can we do about it? C: Curiosity can help.

How do we foster conversations in which System 2 creates a measured response to System 1 impulses? One way is to concentrate on being curious. This means to expect our own emotional response but not react to it. Accept whatever the client brings up. Focus on better understanding the client’s responses.

Here is an example:

Client: “I think we should buy/sell/do something different than what we’ve been doing.”

Advisors’ thoughts under the influence of System 1:
Fear: “Are you leaving?”
Guilt: “I should have called you sooner.”
Contempt: “You stupid idiot!”
Impatience: “No. You are acting irrationally. I don’t have time for this. Here’s my advice. Take it or leave it.”

Advisors under System 2 (with System 1 emotions in the background):
“I understand, and I would like to hear more about what you’re thinking.” (Fear: Yikes! No! You might blame me for this.)

“It sounds like you are really concerned. Tell me more.” (Contempt: After all our meetings, why can’t you just be calm?)

“I’d be happy to talk about that further. Help me understand how you are feeling.” (Impatience: Do I really have to listen to this?)

We can help the client discover their emotions themselves, simply by creating a safe space for it. Upon reaching that point of self-discovery, ironically, they feel more understood by us. Once someone feels understood, only then will System 1 sometimes step aside and make them ready for System 2-based factual advice.

Sometimes Advisors Need to Hold the Advice

In a 2016 article for The Journal of Financial Planning, Brad Klontz wrote,


The secret is this: when we are doing our best work, we are bringing little or nothing new to the exchange. We are asking no questions. We are offering no advice. We are making no recommendations. We are providing no analysis or insights. We are abandoning our goals and agendas and are just bringing ourselves. Sure, we are facilitating a process, but we have learned that our effectiveness grows as our ability to be present grows. In our best moments, we are engaged in exquisite listening, which is the best therapy.

Klontz, Van Sutphen, and Fries, “Financial Planner as Healer: the Role of Financial Health Physician,” Journal of Financial Planning, December 2016

Behavioral economics can feel counterintuitive: Expect irrational responses, and accept that feelings are more powerful than facts. By not immediately reacting with advice, we become the best advisors.

For more on applying behavioral economics principles to real-life financial planning, see The Mindful Money Mentality: How To Find Balance in Your Financial Future.

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Read more about the article Minimalism, Kakeibo and Happiness

Minimalism, Kakeibo and Happiness

saving money

Minimalism, Happiness and Kakeibo: Minimalism trends have been around at least a decade. They contributed to the rise of the FIRE (Financially Independent Retiring Early) movement, where 20- to 40-somethings shared ways to “retire” before the conventional 60-something age. Much of the movement’s advice questions how much one really needs to spend to be happy.

While staying-at-home one morning in 2020, my husband and I had a heartfelt talk about the future. We began with guessing how the world might change; and then how our microworld-within-the-world might change. We braved scary thoughts about health, family, finances, and society. Then we shifted to how little we need to be happy.

Choosing Wisely

In other words, should scary stuff happen, we agreed to make a choice about our response to it. The pandemic helped affirm that stuff, even money, isn’t our highest priority.

It’s possible we aren’t the only ones coming to these conclusions. Minimalism might enjoy a pandemic-inspired boost. For example, in 2020 journalist Sarah Harvey described her discovery of the Japanese art of kakeibo (“kah-keh-bo”) in this article: https://www.cnbc.com/amp/2020/01/08/how-this-japanese-method-of-saving-money-changed-my-lifeand-made-me-richer.html

What is Kakeibo?

Kakeibo is the Japanese art of keeping a written financial ledger. Writing Harvey’s expenditures down brought their relative need (or lack thereof) into sharp focus for her. It helped her spend less by watching what she spent on. As a result, she chose more wisely in her spending.

For me, I already keep a spending journal, but joining Weight Watchers also worked the same way. By tracking what I ate, I quickly learned where excessive calories came from. As a result, I ate more mindfully. More frequently, I paused before grabbing the next snack. As a result, I chose more wisely in my eating.

So, kakeibo kind of works like Weight Watchers but for wealth.

Paring Down the Excess, Like, a Car

Looking at our spending during the pandemic caused us to wonder, if we are being forced to do without, what won’t we miss? While being forced to stay home, we discovered upsides to more home-cooked meals; more family time (even if on Zoom); more movies at home; and more neighborhood bike rides. More downsides were discovered to driving, commuting, and shopping in stores.

We began to realize – could we slow down, spend less, and actually be a little happier?

For example, because we got outside more, we met more neighbors. We stayed closer to home for socializing as well as shopping and working. In fact, I was using my car so much less that it began to feel like excess. Why were we paying insurance, license renewal fees, and letting it take up room in the garage? So In July 2021, we sold it.

Minimalism, Money, and Mindset

Like an ecosystem hit by a natural disaster, some parts of our old lives may now begin to feel excessive, or may crumble and not come back. Others will adapt and grow to take their place.

Having to make do with less highlighted that happiness is more dependent on our mindset than our stuff and our money.

What discoveries have you made about your spending in the last 2 years? Share a comment below.

For more psychology of money, tax, and funny video tips, subscribe to the award-winning monthly e-letter, “The View From the Porch,” at https://bit.ly/3t2uwfn.

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Read more about the article 2021 Book Reviews

2021 Book Reviews

books

2021 Book Reviews: Last year I read or listened to 48 books. That’s not a number particularly worth bragging about (I think my bookworm mother probably read twice that many). But, it was enough that I felt like I was learning, re-learning, or being entertained from other authors constantly.

Of the 48, below are those selected for recommendations this year, arranged by topic. For past recommended books, check the Resources page. It includes other recommendations for finance, lifestyle, and life improvement books.

Fiction

19 of the 48 I read were fiction. Of those, The Dictionary of Lost Words, by Pip Williams, was my favorite. Taking place in Oxford, England in the late 19th and early 20th centuries, it chronicles how certain words were left out of the original Oxford English Dictionary. Told from the point of view one of the original editors’ daughters, it reveals the subtle dismissal of women, of the poor, and the uneducated through leaving out their vocabulary. The daughter, who starts out as a youngster underneath her father’s working table, makes her own collection of “lost words” that were literally left on the cutting room floor. Ultimately she becomes a respected scholar, though still with the inferior rank of being a woman in a man’s profession. Women in male-dominated professions everywhere will relate well to this story.

Psychology of Money

I always include this topic in the annual book review list. Last year finally saw the publishing of a book with the actual title The Psychology of Money: Timeless Lessons on Wealth, Greed, and Happiness, by Morgan Housel. Housel reviews the many different tricks our minds play on us when it comes to money, why, and what we can do about it. The field of behavioral economics, upon which the book is based, is difficult to explain in layman’s terms, but Housel does an excellent job.

Finance

Reverse Mortgages, by Wade Pfau, Ph.D. Dr. Pfau upended the financial planning profession nearly 7 years ago when he published research saying, “Financial advisors are not doing their jobs if they aren’t at least considering reverse mortgages.” Initially brushed off, subsequent independent studies have confirmed his findings. Regulations have tightened and these products have evolved into a legitimate option for many different financial goals. His book outlines the details, which can be quite complex, but understandable to non-professional readers. It’s now a reference book on my shelf. I am including it here for the second year in a row because I referenced it enough in 2021 to have read it again.

Life-Improvement: (also known as “self-help”)

Deep Work: Rules for Focused Success in a Distracted World, by Cal Newport, was a perfect segue from reading “Rest” two years ago. Both books emphasize the importance of pausing, rest, and breaks in doing work that requires great focus. Newport begins by listing all the ways that society and our screens keep us distracted. We end up working mostly on superficial tasks. To get into the deep work space, most people require a great deal of uninterrupted, undistracted focus time. In the past, I would try to squeeze in that time between working on the superficial tasks.

As a result of reading the book, I made more changes to the calendar. Larger blocks of time are now set aside for client meeting time, preparation, and followup, in addition to writing time. So I might have 10 days straight of meetings, followed by 5 days of writing and working on course development. I cannot report, sadly, that I am sticking to the plan as well as I thought, but I can definitely sense improvement. (To clients, you may experience longer than expected email response times. But hopefully the responses will be better thought-out than before.)

Life-Improvement XXtra Help

These next two are perhaps controversial and definitely don’t belong on a financial planning reading list, but I learned so much from them I want to include them. Along with money, sex and our sexual anatomy are the most under- and mis-communicated, misinformed, and misunderstood topics in our society. These two books spell e-v-e-r-y-t-h-i-n-g out in simple, understandable, relatable and occasionally humorous terms. If all adults of all ages would read BOTH: The Vagina Bible: Separating the Myth from the Medicine by Dr. Jen Gunter and The Penis Book: A Doctor’s Complete Guide – From Size to Function and Everything in Between by Dr. Aaron Spitz, oh, how much happier we all would be. I considered giving both books to my adult nieces and nephews for Christmas presents but realized they might not open them, and I still want them to visit me once in a while.

What books were life-changing for you in 2021? Let me know in the comments below.

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Read more about the article Monthly Money Dates

Monthly Money Dates

couples and money

Monthly money dates sure don’t sound very romantic. However, it’s said that money and sex are the two biggest reasons for divorce*. Could it be just a coincidence they are also two of the most difficult topics for couples to discuss? So perhaps it might make sense to figure out how to talk about them. Making regular times to talk about a difficult topic can often break down walls within other relationship areas.

In fact, a money date doesn’t have to last that long. Probably at most 15 minutes. (Unlike that other difficult topic, quicker is better.) One suggested format for a money date has 3 parts, with each partner taking turns:

For Part 1: “Here’s what I contributed this month.”

And Part 2: “Here’s what I see for major expenditures coming up.”

Then Part 3: “How are we doing?”

Money Date Part 1: What You Contributed

First, telling what you contributed, no matter how big or small, starts the conversation with recognition for your efforts. If one partner stays home or is out of work, find a way to recognize other ways you contribute – whether it’s nurturing the kids or searching for that next great job.

Money Date Part 2: Upcoming Expenditures

Second, talking about what’s coming up, or could come up, leaves little room for unpleasant surprises. While this may be the hardest part of the conversation, it’s placed here for a reason. Psychological studies show that thinking about how much we spend or have spent can induce the same emotions that lead to depression. On the other hand, counting what we have induces the same emotions that lead to happiness and fulfillment. That’s why the spending question is sandwiched between the other two.

Money Date Part 3: How Are We Doing?

Third, how well you are doing? Ask, what goals are worth tracking? If you are unsure where to start, try the following four indicators: retirement accounts; savings levels; debt levels; and charitable giving. Rather than constantly comparing to an ideal number, find a way to recognize progress from where you were at some point in the past. No matter where you might see room for improvement, walk away with at least one thing you can both point to and be glad or hopeful about.

Money Date Wrap-up: What Next?

Sharing your hopes and working through challenges about money decisions, even for 15 minutes, can be an intimate couples exercise. If you follow this formula successfully, you might find you’re a little more interested in that other intimate topic that’s hard to talk about. (And feel free to take longer than 15 minutes for that one.)

For more tips on the psychology of money, subscribe to the award-winning monthly e-letter, “The View From the Porch,” at https://bit.ly/3t2uwfn, check out Holly’s book, The Mindful Money Mentality: How To Find Balance in Your Financial Future, or sign up for the online Retirement Readiness course.

*see Dr. Dae Sheridan’s Tedx Talk, “Real Talk about ‘The Talk'”

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What’s a Holiday Spending Style?

what's a holiday spending style

What’s a holiday spending style? It’s the approach you take to spending money on others.

How do you decide what to spend at the holidays, and on whom? In her program, Money Habitudes http://www.moneyhabitudes.com, Dr. Syble Solomon breaks down our money habits and attitudes into several different styles. Here are how a few of those styles might apply to holiday spending.

Spending Style: Status

After earning my first real money at 15, I made a list and a budget for each person on it. A few years later, at age 20, I looked at the list of names, each with a dollar sign beside them, and thought “Yikes!” It could appear as if each person had a price tag.

At the time, I didn’t know it, but I was operating under one of Dr. Solomon’s six spending styles, the one involving “status.” In other words, I was too concerned what other people would think about my spending decisions, and as a result, I spent too much.

So next,  I made a “total” budget, and tried to keep track as I went along on how I was doing. Yet that didn’t work very well, since I could always find an excuse to break the budget on something to keep it “fair.”

Spending Style: Security

If you spend very little on others, and on yourself, because you are concerned you may need it for an emergency, you might have the “security” spending style. You might do the bare minimum necessary to get invited back to next year’s turkey dinner. Or you might find ways to celebrate other than spending money.

Spending Style: Idealist

Idealist – If you reject the materialism of the holidays, then you might give everyone something home-made, like cookies, or your own artistic creation. You have the hardest time of all styles making a spending plan, because you despise handling money matters.

Spending Style: Spontaneous

This style can’t wait to see what great ideas are presented each year by retailers. Perhaps you make a spending plan, but you have a tough time sticking to it because of all the fun temptations and opportunities to purchase the perfect gifts presented to you right before checking out.

Spending Style: Caretaker

Caretakers see gift-giving as a way to show how much you care about people. Your spending plan might be more generous than other spending styles (but hopefully not more generous than is financially wise).

Spending Style: Goal-Oriented

Your most important concern is staying within your spending plan. It may take you longer to get your shopping done in order to find the right gift-cost combinations.

What’s Your Style?

If you exhibit more than one holiday spending style, that is a good thing. The key is not to take any one style to an extreme. If you can make a spending plan that is wise for your situation, shows your love and affection for others, and still allows for some guilt-free spontaneity, you have probably found the combination that will bring you, and those you care about, lots of joy this holiday season.

For more on the psychology of money, see The Mindful Money Mentality: How to Find Balance in Your Financial Future.

Or to schedule a call to talk about money matters on your mind, click here.

Continue ReadingWhat’s a Holiday Spending Style?