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#3: Breaking Financial Barriers w/Dr. Ted Klontz | NEW MONEY NEW PROBLEMS PODCAST

November 03, 2022
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Join us for our first #AskTheExpert interview with Dr. Ted Klontz, author of Mind Over Money, who shares how to break out of financial comfort zones and recognize triggers to self-defeating money habits.


Mind Over Money Book 

Money Disorder Assessment 

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NMNP: Ted Klontz Interview

Brenton (2): [00:00:00] Hello, hello! My name is Brenton Harrison. I am the host of the New Money, New Problems Podcast, where we believe that new money leads to new problems that require new solutions. And we're here to work through them together. I am extremely excited to have as our first guest, a person whose teachings in research were a big part of why we wanted to start this. .

And that is Dr. Paul ted Klontz. So I want to read to you his bio and then a quick 10 to 15 second explainer as to how I came across him and why I wanted him to be our first guest. Dr. Klontz is an associate professor of practice of financial psychology and behavioral finance at Creighton university Heider college of business and a founder of the Financial Psychology

Institute, and is based in Nashville, Tennessee. He has a 40 plus year career in counseling consulting and advising that has included authoring, co-authoring and/or contributing to five financial psychology related books, [00:01:00] including Money Mammoth, Facilitating Financial Health, Wired for Wealth, The Financial Wisdom of Ebenezer Scrooge, and the subject of today's interview, Mind Over Money: Overcoming the Financial Disorders That Threaten our Financial Health.

And we will put a link to all of these titles in the show notes. I came across Dr. Klontz in my first year in financial services, and he was talking about many of the principles we're gonna discuss today. Dr. Klontz, thank you for being here.

Dr: Klontz: I appreciate the opportunity. Thank you for asking me

Brenton (2): Now, we talked briefly off stage, but I didn't get to your answer.

Do you even remember talking at Innovative Financial Group's annual meeting in 2009 and seeing a young me in the audience, or do you at least remember the presentation? .

Dr: Klontz: Yes. I do remember actually because I'm always excited to be able to speak to audiences different than the one, the world that I come from.

And the world [00:02:00] is set up pretty well to work for people like me financially. And it's not set up to work so well for people who are not like me. And so to have Chinese people come and Japanese people and Netherlands and people of African American ancestry, Latino, the whole thing, it's all good.

We can actually help people make a difference and it's not just the people who already find it easy, or easier.

Brenton (2): That's such a great point because a big reason, and I encourage you that when you read the show notes to check out this book, Mind Over Money, a big reason that it spoke to me is, the presentation you gave was from the perspective of the hidden guilt, the hidden things that we bring with us into adulthood when it comes to how we deal with money.

And some of it is not as simple as, oh, we didn't have. And now we do. So I'm very interested to know what was it in your research that led to you even writing the book? ?

Dr: Klontz: Actually 25 years ago, there was no field of [00:03:00] financial psychology or behavioral finance. Did not exist. And actually the whole field began when I began asking myself the question, why do I do what I do with money?

And it really, at that time I thought I was the only one who had any issues around money. I found out later, I wasn't the only one. And then we began doing our studies. And even though I came from a very poor environment. And that, I said to my wife one day, which really is initiated this whole field in a way was, I think poor.

And she said, what do you mean by that? And I said, I have no idea, but I know there's something about my thinking that is poor thinking. It's like poor people think. I came from really poor people and we think a certain way, and it's keeping me from doing what I need to do in the current world. And I don't even know what that is.

So that's where my interest began . And then the more I got involved in it, the more I realized how universal this is. Because we're living in a world that has some opportunities, [00:04:00] that for my father, didn't have to worry about what to do with his money. He always owed everybody something.

And so he had nothing to give. And he didn't have to worry about what people said about the kind of car he drove. Cause we all drove cars that barely ran.

And in, in my years, I've gotten to understand there's rich thinking. There's all kinds of thinking that goes in and that thinking really will determine our financial futures and that of our descendants. Which is really an important thing.

Because our kids are watching, even if we don't talk to them directly, somebody said 'do you think it's important to teach our kids about money?' I said, you already are. Even if you don't say a word they're watching. Yeah. They're watching exactly what you do. And they're making stuff up about how it works.

Brenton (2): It reminds me that in the book, one of the things that, that struck me was you saying that our mind does not like incomplete stories, and that even if we don't have the full story and the full context, we're gonna make up whatever we need to [00:05:00] complete that story.

As it pertains to money, can you tell me a bit about how the adolescent mind takes what they're seeing and forms stories about how they associate with money?

Dr: Klontz: The first point is kids belief systems and attitudes, and sense about money is pretty much formed by the time they're seven or eight years old.

So a 17 or 18 year old is just an extension of whatever they put together as a seven or eight year old about how money works. And the environment is not determinant. I was just talking with a guy who has a ton of money. He's a young father, and he's already noticing the difference between his six year old and his eight year old in terms of

money. One is very conservative and saves everything. And the other one's looking at Lamborghinis and airplanes, and the father is like what do I do with that? A lot of it has to do with what they already [00:06:00] know by the time they're seven years old. It's, " here's what money is kids.

Here's what we do with it. We save some. We give some away and we get some to spend and that's what we do". And that's what mom and dad do. And that, that becomes the normal. So they become somewhat resistant to the mass media push to get their money, basically, separates them from their money.

A study just came out of how the games for four to six year olds are filled with attempts at actually managing behaviors to get them to buy things. They're already being programmed by it, and not just games like a ABC animal. And if you watch carefully, there's a, to get this special access to this animal, then do this. And of course the, the I, in some of my classes I asked of my students for about, take three weeks.

I want you to listen to every commercial on TV and find out how many of them are strictly save money messages. None, not one. There's not one message [00:07:00] that says, the deal is save money. Now people say, save money if you buy this or save money and invest it with us so we can make money off your money, but there's no pure saving is important here.

Brenton (2): Yeah. The name of the podcast, new money, new problems it tells you who we believe we're speaking to. A lot of the people that we come across that were the reason that we started this, it is because they are so far removed from the money environment that they grew up in that there's so many things going on emotionally.

Like some of them feel guilty, that they can do things that their parents can't do. Some of them are still spending money, the way that their parents spent money. They have philosophies about it in terms of how it should be managed, that don't really match up with what they're earning. For someone in that situation, that, that lack of comfort,

when their circumstances have really changed for the better. What is going on when that person is [00:08:00] removed from that comfort zone in terms of their emotions?

Dr: Klontz: I, I think you nailed it and that is guilt, right? So we're all born into a zone of what's okay with money. People who have more than we do we tend to discourage them and people who have less than we do, we discourage them. So this is an environment where I come from and suddenly I'm up here and the people here in order to maintain their beliefs, that some start copying attitudes about me.

So one way of trying to diminish that is I give away so they like me. So that they, so I don't lose, I don't lose my tribe. This that we call it financial comfort zone and we all have one. I use this metaphor, understanding the ceiling is what's possible on the upside and the floor is what's possible on the downside.

And we're born into that. And if we move out of that by good fortune or [00:09:00] talent or whatever, and we move up here, it's terribly stressful. What will people think? What will my people think? And it doesn't matter who your people are. They're gonna have feelings about this and they typically are not gonna be positive feelings if you don't behave in a certain way.

I work with a lot of entertainers who came from nothing, country music world, many of the entertainers come from nothing. And suddenly they're here. And typically what we see right now, we're beginning to, meet with them right at the beginning saying, okay, here's, what's gonna happen.

I always tell people who are financial professionals, you're not gonna change this. And that thinking is, if it's born into 'em at five, six, seven, eight. You're not gonna change that thinking unless you can convince them to totally deny their history, which is rare. Most people won't do that. So how can we build in safety things so that you stay safe and your children can take advantage of things that you didn't have the advantage of. At the same time, honorably serve the [00:10:00] people that you came from. It doesn't have to be black or white one or the other. And when I first entered this field with financial planners, it was black or white, I want everybody to save 25 million in their music career and I don't care what you think. But once we began, okay, so your family's really important to you, right?

And your community is really important to you. That's why everyone in your crew is a brother, sister, uncle, aunt, cousin, whatever. The crew is your family. How can we take care of them and take care and what they care about and take care of you and what you say you want for your children and, a good education or whatever it might be.

We can do both, but people don't know that cause they've never experienced that.

Brenton (2): It sounds like when you talk about that guilt, all those things, you can tell, I've read your book many times. You're describing financial disorders. And I'm wondering for those who haven't read the book, if you could give a preview of what some of those might be, and if you can specifically, what you would expect [00:11:00] from someone who was one of our listeners. You're in that scenario where you're earning more, what would be the, like the name or even some of the characteristics of those disorders beyond guilt?

Dr: Klontz: I didn't have the final say so on the title of that book. I really don't like the word disorders. Cause it sounds like there's something wrong with you, right?

So when you were talking about this 16, 17, 18 year old, one of the things, one of the ways of thinking is financial worship. Like I don't care what the question is. Money more money or all the money. That's the answer. And if it's I'm unhappy or my family's not going very well or my family of origin and, it's like more money will fix that.

And that's what we call money worship. We give money, extraordinary power that it doesn't have. And the reason there's never enough money is because that's not, what's going to fix what's going on, more money. The opposite side of that would be the money avoider. Like they don't wanna look, they don't wanna talk and [00:12:00] in the clientele that I have, many entertainers, they don't wanna know anything.

They don't wanna know how much they make. They don't wanna know how much they spend. They don't wanna know where any of it goes. And you end up in kinda distress, right? Just like the person who worships money. So this would be the two things that I would think would be the primary one. And then we get in for the person who has money, we get into a couple other things too, and that is financial enabling. So what's the best way for me to help my granddaughter, because I have money.

What's the best way for me to use that money to help her? One way would be every time she calls say yes. And this is really uh, very common in the generation out of poverty is the financial enabling. So I'll buy you a car, I'm gonna buy you a house or I'll provide the down payment or whatever it is.

And I often get calls from parents who go, my kid doesn't live in the real world and I said he lives in his real world. In his real world there's a daddy and mommy who [00:13:00] always bails him out. So he's living in his world. That's the only world he's known, so to him, it's now that's not your real world. But it's his, and we're the ones who taught him how the world works.

And so we have to go back and do some lessons. The flip side of that is the financially dependent. And this is quite often the generation underneath the wealth makers. That the wealth makers cast such a huge shadow that offspring don't get any light.

And all these things really are, we call them disorders as if it comes from the inside of the person, but it's really how the outside world has interacted with them around money.

Brenton (2): When you are in a situation where your mind and your heart and all these forces are trying to keep you in your tribe as you described it. What advice would you give to a young professional, a young family who [00:14:00] is trying to fight that as best as they can and really take advantage of what's in front of them?

Dr: Klontz: To me, it's a simple thing. I would say go find five people who would represent the success that you're looking at or the success you had. And you simply say, how do you make it okay to have more than the people that you came from? How do you justify that? And that's really what helped me out of my core thinking, as I started talking to people who had more. And one of the rules of thumb is that you are about as successful financially as the five most successful people we hang out with. People who have more think differently.

Doesn't mean you have to adopt their thinking. It just means how do they make it okay? And I promise you, you're gonna come across a person with a value system that matches yours. That you see wow, I could be even more of who I am. I could be even more effective. I could help [00:15:00] even more people and suddenly what you allowed yourself to make it increases. Because you are not changing.

It's just what you can do

Brenton (2): Wow.. That is extremely insightful.

Dr: Klontz: Can I give you an example? My son who's in this business with me, last year was having a dinner. Like $450 for each, for his wife and him for dinner. He never did that, but he's sitting across from a guy and they're talking and he asked this guy who's a high performer, ' how much, if I came to you, how much would you expect to pay me?'

And the guy said $40,000-$50,000. Now the most my son had ever gotten is $7,500. He came back and immediately raised it to $30,000. And now he's booked into the hundreds of thousands of dollars and speaking. And it's just a different way of thinking, that how much a person who does what I do, how much should we be making? And it doesn't mean you have to adopt it. It just [00:16:00] means you're listening.

Brenton (2): When you bring up fees, I cannot tell you, including myself, entrepreneurs or first generation entrepreneurs in terms of wealth of any race, creed, who feel such guilt in charging their value and have such a tough time assessing what their true value is.

And this is something that I've struggled with, even in setting my pricing. A feeling like, 'what are these people gonna think of me if I even charge market rate?' Much less if I said actually I feel like I'm more credentialed or have more to offer than what the market has to offer. Oh my goodness.

I see these people out at the grocery store. What are they gonna think of me if I tell them that it's gonna be X? When in reality, we should be trying to figure what does the market say I'm worth and what do I feel like I'm worth? Regardless of what I feel the person who helped raise me would want to pay.[00:17:00]

Dr: Klontz: Yeah. And the only way that I know that to do that is to find people who charge more that I like. And understand how they feel okay doing that. That's part of what I call poor thinking. You decide how much I'm worth, right? If you say nothing, okay. I'm letting other people determine my value for me.

And that's a learned thing that comes from this poverty thinking. What I call poor thinking, is I have no value unless you tell me I do to the degree that I do. And if I start pushing against that, I start pushing back down. Who do I think I am kinda thing.

There's a a larger world involved that we don't want people to have any idea of how much they're worth cause the minute they start thinking they're okay, then there's a whole bunch of systems that are in trouble. And they don't want trouble.

Brenton (2): Well, Dr. Klontz, this has been an extremely insightful conversation. I can't thank you enough. By the time people are listening to this we'll have launched, but I reached out to you [00:18:00] prior to launch and said, I would be so honored if you would share some of your work as the initial guest.

So I'm honored that you did it. I appreciate you, Dr. Ted Klontz, ladies and gentlemen. Thank you for listening.