Money Habitudes

In October, our Continuing Education gathering (which will be referred to as Featured Resource gathering from now on) focused on practicing coaching.  In conjunction, we debuted our newest resource:  Money Habitudes, a fun, non-threatening activity that helps us explore our habits and attitudes around money.  Money Habitudes cards are availble by request only, as we have a limited supply.  But if you wold like to try the activity yourself, or with clients, we will be happy to let you use them.  Please see the Money Habitudes story below.

How It Started

People unexpectedly began sharing their stories and secrets about money with Syble Solomon, creator of Money Habitudes, during coaching sessions and workshops on life transitions. They ranged from wealthy executives to single parents living on a shoestring. Many were very financially savvy and were saving and investing for the future, including some people living on minimal incomes. Unfortunately, more often seemingly rational, intelligent men and women would confide their irrational behavior related to money. Even though they knew better, they would continue to make poor money choices or never followed through when they had a plan.

Questions Raised

Why would people do this? And why would they suffer shame or guilt, get angry with themselves or accumulate unmanageable debt when they knew they had other options and could have made better choices? Intrigued, Syble decided to research the financial, psychological and behavioral economics literature to see if there were answers. In fact, the relatively new science of behavioral economics studies the patterns of thinking and decision making as it relates to irrational financial behavior. In their book, Why Smart People Make Big Money Mistakes and How to Correct Them, Dr. Thomas Gilovich of Cornell University and Gary Belsky state, “…in the main, we are blissfully ignorant of the causes of most of our monetary missteps and clueless as to how we might correct them.”

Themes

Examples of recurring themes related to problematic money behavior that surfaced in workshops and were repeated in the literature are:

• Having little or no communication about how money decisions are made. 
• Keeping debt, gifts, spending, earnings and investments a secret from a spouse. 
• Knowing there is a need to save and invest for the future but not doing it. 
• Ignoring their financial reality to live a more expensive lifestyle. 
• Living frugally but going into debt for a wedding. 
• Giving generously with no thought about the personal consequences. 
• Having no interest in managing their money and being totally clueless about their finances. 
• Making risky investments or totally avoiding all financial risk. 
• Taking the Challenge

Given the above, Syble became determined to find a way to help people break the taboo of not talking about money and to get them thinking openly and honestly about their relationship with money. Based on her background in education, she knew her solution needed to be interactive, quick and fun. It also had to be non-threatening, non-judgmental and, of course, effective.

Development

After extensive research, Money Habitudes cards were developed as a familiar game-like activity associated with a positive social experience: playing cards. The categories, statements and interpretations were based on the most common themes found in financial, psychological and behavioral economics research as well as popular publications. After being tested on multiple diverse focus groups, the revised cards were reviewed by professionals around the country including consumer educators, financial planners, accountants, psychologists, counselors, personal and professional coaches, military personnel, career counselors, human resource professionals and leaders of financial associations and community programs. They were introduced in 2003.

Matched Savings Program

September’s Continuing Education gathering brought in Alice Gray, our IDA program coordinator, to explain the requirements and opportunities with regard to opening a Matched Savings account with Foundation Communities. As you may (hopefully) know, the Matched Savings (or IDA) program offers select clients the chance to open a savings account in which every $1 that they deposit will be matched by Foundation Communities with $2. The clients have a chance to put this money toward: 1) starting or expanding a business; 2) buying a home; or 3) paying college expenses. For more details on the process of opening an account and the requirements that the clients need to meet, visit the volunteer resource page, and take a look at our featured resource.

During the gathering, Alice also shared with us the story of one of her clients, Veronica, who used her account to open her very own salon. Before entering the program, Veronica rented a chair in an existing salon, but she was unhappy with the owner, whose behavior was inappropriate enough to scare away customers. She had little say in the reputation of the business, and her clients were disappearing due to problems that were out of her control.

Hoping to leave the unprofessional work environment behind, Veronica secured a lease in a different building and put her matched savings toward some of the overhead costs associated with having her own space. After Veronica attended Foundation Communities’ Money Management classes and took the required business classes, she created a business plan, then used her matched savings to bring it to fruition. Veronica effectively paid for only 33% of the costs involved with:

1)      Having the interior freshly painted

2)      Hiring an electrician to install outlets at each ‘station’

3)      Having a new floor installed

4)      Purchasing 2 brand new barber chairs (her husband works as a barber at the salon!)

5)      Purchasing an “Open Sign”

6)      Paying for a year’s worth of insurance on the building (required by the landlord)

7)      Paying her first month’s Gas bill for the building

Even after these expenses, Veronica still had about $260 of her own savings and $520 in matched funds, leaving a total of $780 left to use for the business. She was able to retain some loyal customers and is now developing marketing materials to draw the crowd to her clean, comfortable salon. With time, we hope to see that removing these start-up costs will help her business become self-sustainable.

Clients such as Veronica are being given the chance to make positive change for their financial future, and need to know the support that is available to get them off the ground. If your client matches the basic requirements and is looking to make progress on one of the three qualified goals, you can inform them of this no-risk option. Help spread the knowledge, and help spread the wealth.