Q&A with David Krueger, Author of “The Secret Language of Money”

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People have weird relationships with money. The value we give to currency and wealth goes beyond its mere value to buy and sell goods. Money has meaning. It can make people feel good or bad, envious or inferior, lucky or distraught. People can get emotional about money—and bad decisions are often the result. The concept of money is so powerful, so fraught with complications and deeper meaning that it can be said to have its own language, a secret language.

David Krueger, M.D., a former psychiatrist and current financial coach, discusses money’s deeper meanings—and how consumers need to become aware of their conscious and subconscious relationships with it—in his new book The Secret Language of Money: How to Make Smart Financial Decisions and Live a Richer Life. He also discusses these ideas in a Q&A with The Cheapskate Blog.

Cheapskate: Why is it that people think that money can solve their problems and make them happier?

David Krueger: Because money can solve many problems, or at least make them easier. Someone once told me, “I’ve never seen a problem that money has made worse.” With the exception of drug or alcohol addiction, he has a point.

But then we overreach, to make money solve more than it should. It gets pressed into service because it’s a commonly accepted social and personal resource—it makes people feel self-sufficient.

And we also compare our inside to someone else’s outside—and think money can bridge the differences. We give money meaning: we attribute emotional value, build a relationship with it and make it bigger than it is. We use money to regulate moods, increase self-esteem, and even control others. We use money to try to soothe emotional pains, buy the respect of others, and ourselves. Money can make any statement and carry any message.

Money is the legal tender of desires. Money becomes the inkblot of the Rorschach test: when our eyes look straight at it, there is only a design on paper. But when offered the chance to imbue the design with meaning, the interpretations will be as wishful and varied as the fantasies of the respondents.

CS: What are some of the most common foolish ways that people waste money?

DK: We do strange things with money. Intelligent people spend money they don’t have. Sophisticated people scheme and get scammed. Rational people trade in leisure time for money to buy back some of what they forfeited. Gifted people can’t figure out how to exchange their talent for proportionate income. Otherwise balanced individuals spend extravagantly or hoard compulsively. Reliable people ignore financial matters until they snowball. People with integrity write their own exceptions to rules about money.

CS: Why aren’t people more aware that they’re being wasteful and therefore stop what they’re doing?

DK: An internationally known self-help guru said, “You know, Dave, I don’t know how to tell my money story to myself in order to know what to change.”

We struggle to embrace change. Many of the methods to facilitate change are contrary to how the mind and brain work. Neuroscience and quantum physics—and strategic coaching—have a lot to teach us about change. And resistance to change.

Our money stories tell us less about money and more about the human mind and its operations. At times our both our minds and our brains can work against us. When you think with one part of the brain and fell with another, you need a map. So we have to outsmart our brains.

The prefrontal cortex says: “Let’s think about retirement savings.” The limbic system says: “Ah, let’s have that second cognac and order the 24” iMac.” (My amygdala even specifies the brand of cognac.) Each part struggles over the same dollar, hopefully without tearing it.

The moment we begin to make money more than the simple, tangible thing it is, we stop understanding it. The more we give money meaning, the more we lose what it really means.

CS: On page 11 of the book, the phrase “as good as gold” is used. But why is gold good?

DK: Before money, two goats were exchanged for five bags of rice. Then, coins enter as a symbol of value—a tangible equivalent unit of exchange. Coins were replaced by paper bills. Then paper checks. Then plastic. Then a pure abstraction of numbers stored and traded as configurations of electrons.

Madoff and Stanford didn’t do their sleight of hand with gold coins. They used symbols of symbols—derivatives of little-understood equities.

The vast majority of our money management occurs not through our hands, our broker’s hands, but inside our minds, in a complex interplay of thoughts, emotions, and neurological wiring.

CS: Why do people place value in gold, or diamonds for that matter?

DK: As money becomes more abstracted, transactions are easier, but our understanding of money fades. And our relationship with it changes.

Gold coins are tangible, real—you can hold them, bite them, wear them—even hide them, and they’re still there. (And it glitters—I don’t want an iron Rolex.)

CS: Isn’t the value we place in “precious” stones rather arbitrary?

DK: Absolutely. Same with tulip bulbs, Beanie Babies, dot.com IPO’s. For any stock, the value is based on what another bidder is willing to pay at that moment. It’s really an auction more than a market, which activates the variables of mind and brain.

CS: Since there is a secret language of money, what are some simple tips for learning the language, so to speak?

DK: We all know that money talks to us, that we talk with money, and that we talk with each other using money. The Secret Language of Money decodes those conversations. It’s the psychological and symbolic language that you use to make money say whatever you tell it to.

Your money story is not your income, expenses, assets, debt, or your net worth. It’s your relationship with money: the plot and storylines of your money autobiography.

Your money story is the Secret Language of Money at work. It’s the unconscious tale you continually tell yourself about what you say with money, what money means to you, what money says about you. It’s a running dialogue about how much you deserve, how much you think you’re worth, how much you’re capable of.

We speak with money: It says whatever you tell it to. It can convey any message. The wonder of money is that it can represent anything. It’s a stand-in for what we idealize and desire yet fear and lack, for what we covet, crave, spurn, chase or follow. We use money to show how much we care, or how little. We use to it measure success and buy happiness—or try to. We use it to bolster our self-esteem, to regulate moods, to influence others. We use money to communicate. Money can make any statement.

Part of what keeps money language a secret is that it remains largely unspoken. We can debate financial markets and economics but not personal income or debt. Ask the host of your dinner party, “How much money do you make?” and you won’t see the next soiree. Ask, “What amount of debt do you have?” and you may not see dessert.

We have internal dialogues in our minds before making a decision to exchange our money – our time and energy – for something else. An example is the debate I had with myself in my first official job. At age 8, I earned 10 cents a row chopping cotton for my Dad on hot summer days on the farm. (Family farms were below the radar of child labor laws.) Later when school started, I saw my classmates enjoying soda and candy. I asked myself, “Is that candy worth ½ a row of cotton?” “Do I like this soft drink enough to pay one row of cotton chopping?” I soon answered, “No” to both questions.

CS: How do we become more aware of what money can and can’t do?

DK: At times, emotional valuation can overwrite brain valuation. An emotionally significant equation can be one that became coupled in the past. For example, money can be equated with emotional signifiers such as power, freedom, evil, or greed. So the mind can sometimes attach meaning—especially emotional couplings—that derail logical choices.

To recognize these meanings we have to monitor choices, question our ideas, and probe our reasoning. There are two simple questions to ask with each important choice we make:

What choices are worth making?

How much does each choice cost?

Whatever meanings and significance we attribute to money, the one reality it determines across all classes and cultures: choices.

CS: If spending makes people feel good (at least in the short run), are there ways to get that same good feeling (or better) through saving?

DK: It’s hard to save because of the way our minds work and our brains are wired. It’s hard to resist the immediate pleasure of buying—it activates the same pleasure center in the brain that dopamine does. It’s difficult to substitute a theory (future need; long term saving; retirement) for the immediate. And our optimism bias makes rainy days and disabilities an abstraction.
Credit cards decouple buying and paying: the pleasure of the purchase is segmented from the pain of future payment.

Here are some possibilities to counter each of these tendencies:

1. Neuroscientists in London have shown that imagining a future purchase has the same effect in the brain as getting it.

2. Saving is easier when it is for something specific that we can envision.

3. It is easier and more specific to create a distinct vision for each goal, such as a vacation, college tuition, a new house.

4. Tangibly calculate the cost of debt so that it becomes real figures.

5. Concretely represent the magic of compound interest. Figure out what the money you spend would be worth in 5 years. In ten years. At retirement.

6. Automatically deduct retirement savings each month. This commitment device is a decision you only have to make once.

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