We All Make Money Mistakes
After 30 years of couch sessions with her clients—and after dealing with some financial losses of her own—Wynnewood-based psychologist Maggie Baker realized one thing: We’re all fundamentally screwed up about money. In her new book, Crazy About Money: How Emotions Confuse Our Money Choices And What To Do About It, she gets to the heart of “financial psychology” (yes, that’s a real thing) in totally understandable, relatable terms. Get her on the phone, and she dishes on why we’re all crazy about money; why we can blame our parents for it; how we can actually gain sense about our, er, cents; the bizarre things even wildly successful people do with their money; and why my recent splurge on a pair of impractical pony-hair pumps isn’t really all that crazy.
In a nutshell, why are people crazy about money?
They were children at one time, and their parents were crazy about money.
Is it actually possible to be sane about money?
I think so, when you have a sense of mastery over your own behavior. If people don’t understand some of the unconscious factors in their belief system that play out in money, it’s going to be really hard to get their hands around their money situation and manage it effectively. To me, financial literacy and understanding your relationship to money are 21st-century survival skills.
How can we even begin to get on the right track?
It’s very similar to people who are trying to diet: It’s all about self-awareness and self-regulation. I advise people to—whether they’re trying to lose five pounds or trying to understand their relationship with money—write down what they eat, write down what they spend, with no judgment.
I just impulsively bought a very expensive pair of pony-hair pumps. I’m completely nuts, aren’t I?
Absolutely not. If those things are really important to you, buy them and enjoy them, but if it makes it so you can’t pay your mortgage, then you have to reevaluate your relationship with money: “Do I control money, or does money control me?” Spending money is great, but you gotta have it to spend it.
What crazy things do successful, otherwise sane people do with their money?
One person I saw loved to shop. The clothes piled up to such a great degree, and the husband got very frustrated. He made a lot of money, so he bought a separate apartment for her to use as a closet. It worked for them. In one situation, the wife was much more conservative about money, but the husband did the food shopping. He would ask for cash back at the store and she wouldn’t notice. He stowed it in his briefcase and he’d save it up and buy whatever he wanted. Until one day someone broke into his car and stole his briefcase.
So, how are you crazy about money?
It’s embarrassing. I’m a vegetarian and don’t like to drink a lot. My husband is very much a carnivore and he tends to drink more wine. I noticed that when we go out to dinner, I was spending half of what he was and it wasn’t fair. So I asked him to pay me the difference when there’s a huge inequality in the bill, and I can go and spend that money whimsically, on things I want. Now that’s absolutely nuts.