So many episodes, 1769, the best of So Money 2024. Science-backed habits that will make you better with money. You're listening to So Money, with award-winning money guru, Farnoosh Narabi. Each day, get a 30-minute dose of financial inspiration from the world's top business minds, authors, influencers, and from Farnoosh yourselves.
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conversation. And until we acknowledge and get aligned and have the same kind of conversation at the same moment, until I say, look, I'd love to talk about this, but I just want you to know I'm feeling really anxious. I feel guilty because I feel like I haven't saved enough for my retirement. I feel I feel bad about myself until the other person says, listen, I hear you saying that. And like, I totally understand that is natural. Let me tell you a little bit about how I'm feeling.
Once we get aligned, we can have that conversation, that emotional conversation, and then we can move to the practical conversation and we can start talking about, okay, what is the plan? What's the budget that we need to put our goals within reach?
Welcome back to So Money, everybody. Happy New Year. Looking back on some of the most powerful episodes of 2024, our guests who shared incredible insights. Today we're focusing on the science-backed insights and habits that can make us better with our money.
Over the years I've spoken with top minds, authors, behavioral scientists, psychologists who give us actionable wisdom rooted in research that can help us shift our relationship with money. And 2024 was one of the best years for this. We had many guests who brought tons of research to help us get better with money. Charles Duhigg, Daniel Crosby, Caroline Adams Miller, Carl Richards, Scott Rick, and Kate Northrup.
We're going to hear from them again in this episode. And whether it's setting goals, improving communication, or finding your financial enough, these experts have proven frameworks that can help transform how you manage and think about your money. Our first guest is Charles Duhigg. He is a Pulitzer Prize-winning journalist and the bestselling author of Super Communicators. Charles dives into why conversations about money often fail and how to make them productive
His advice? We got to ask better questions. Listen in. And this is what the researchers told me when I called them. They said, look, we're living through this golden age of understanding communication like never before. And one of the big things that we've discovered is we tend to think of a discussion as being about one thing, right? We're talking about our budget, or we're talking about the kids' grades, or we're talking about our day. But actually, every conversation is made up of different kinds of conversations.
And in general, those different kinds of conversations, they tend to fall into one of three buckets. There are these practical conversations where we're discussing plans, we're working on a budget together, we're talking about where we're going to go on vacation next year and how we save up for that. But then there's also emotional conversations.
And in an emotional conversation, I might tell you how I'm feeling. I might say, I'm anxious about our savings. I'm anxious about our retirement. And I don't necessarily want you to solve my feelings. I want you to empathize. I want you to show me that you understand that I'm feeling something that's either hard or perhaps great for me. And then there's finally social conversations, which is about how we relate to each other in society.
and the social identities that are important to us. And what often happens is that if you are having a different kind of conversation, it's very hard to hear each other. That's what would happen with my wife and myself. I would come home and I was having an emotional conversation. She responded with a practical conversation. We couldn't really hear each other or connect. And this happens so frequently with money, right? Where we bring something up like the budget or we bring up retirement. And it seems like a practical conversation, but it's not.
It's an emotional conversation. And until we acknowledge and get aligned and have the same kind of conversation at the same moment, until I say, look, I'd love to talk about this, but I just want you to know I'm feeling really anxious. I feel guilty because I feel like I haven't saved enough for my retirement. I feel bad about myself until the other person says, listen, I hear you saying that. And like, I totally understand that is natural. Let me tell you a little bit about how I'm feeling.
Once we get aligned, we can have that conversation, that emotional conversation, and then we can move to the practical conversation and we can start talking about, okay, what is the plan? What's the budget that we need to put our goals within reach?
So what you ask about is the what's this really about conversation. That's really the beginning of a practical conversation. And often what we need to figure out what we're talking about is what we actually want to talk about, what we want out of this conversation. Because if I come to you and I say, I want us to come up with a budget, but I don't say, I want us to come up with a budget, but first I want to talk about like, I'm actually really worried about this. It's been keeping me up at night.
It's going to be hard for us to connect with each other. It's going to be hard for us to hear each other. And so the first step is figuring out what does everyone want from this conversation? Right. You've heard of love language. That gets thrown around a lot. Like, is the shortcut to just know your partner's love language? And that's how you're going to
enter the conversation. I mean, do we just throw everything we've learned about communication out? No, no, no, not at all. But the shortcut is to ask a question. So one of the things that we know is that there are these people who are consistent super communicators. They can, they can connect with almost anyone at any time. They have, they, they're really good at having difficult conversations. And one of the things that they do is they ask 10 to 20 times as many questions as the average person.
Ah. And so when I sit down in a conversation, I don't have, in fact, I shouldn't assume that I know what your love language is. I shouldn't assume that I know what you really want to talk about.
That's Charles Duhigg reminding us that money conversations aren't just about numbers, they're about emotions and values. The full interview with Charles is in our show notes. Up next, behavioral finance expert Daniel Crosby talks about how finding purpose in wealth can transform your financial life. He's a psychologist and the author of The Soul of Wealth. And he explores why having enough money isn't just about hitting a financial number, it's actually about aligning money
with meaning. Here's Daniel on Why True Wealth is holistic.
We're now, as a world, creating enough calories for every person to be well fed. During the founding of this country, 85% of the world was living on what today would be less than $2 a day. Today, that number is around 8%, so we've made incredible strides with a more middle-class globe. And yet,
Even in this peaceful, prosperous time that we live in, people are profoundly unhappy. So, you know, the psychiatrist Victor Frankl said that ever more people have the means to live, but no meaning to live for.
And that's what this book is all about. My previous books were sort of technical. How do you choose a stock? How do you stay out of your own way? How do you keep your behavior from sort of thwarting your best efforts at creating a financial life? This assumes you have got sort of the blocking and tackling in order and says, well, now that we've got that base of Maslow's hierarchy covered, how can we worry about things like friendship and connection and love
and meaning and purpose and contentment. So we're trying to move the conversation up a little bit beyond budgeting and investing and towards fulfillment and meaning. Are we really better off? I feel like the struggle is really real for so many Americans right now, even as the cost of, even as our wages have gone up,
The cost of living has gotten up, where we have inflation sort of under control, but compared to four years ago, inflation may have stabilized, you know, like food prices are still up. People say, you know, my parents who were middle class had more than I, technically making more than them. So I just want to get more of that from you and get us to understand, get our head wrapped around just how well off quote unquote we are compared to previous times.
Yeah, well, as a globe, we're definitely, I'm going to zoom out a little bit. Like as a world, there's no question that we as a human family are better off than we have ever been. If we want to talk about probably the average listener of this podcast, you know, middle class, upper middle class, largely American listeners of this podcast, I assume. Yes.
Yes, I mean, there's been some variability in the last two or three years, but none of it's so great that I think it would negate what I'm talking about here. We're a lot better than we were in the 50s, 60s, 70s, 80s. We have more free time. We have more discretionary wealth. We have more purchasing power. And nobody seems to realize that. I think the common narrative is certainly not that.
And you know, the other thing that I would say is we're well off in some ways, but deeply impoverished and others. Like in some ways, yes, we're more financially affluent than we've ever been as a globe. But then if you look at things like loneliness, Gen X, which is my generation, and younger, most people say that they are lonely.
And when you look at the fallout from social isolation and loneliness, we see that it's the health equivalent of smoking 15 cigarettes a day. It's twice as lethal as obesity. So yeah, we are as a globe doing well. We're more prosperous than ever before as a globe. But we're also more disconnected and more searching, I think.
And so by the soul of wealth, what is the meaning behind that?
A lot of times we talk about wealth in a really two-dimensional way. We talk about it as dollars and cents. There's an ease to that conversation. It's certainly easy to count, stack, enumerate how much wealth you have if you're thinking about it in this two-dimensional way. It's even pretty easy to think about how to get more of it.
But if we zoom out again a little bit, we see that real wealth, this holistic wealth is about a lot more than that. And we also see from some of the retirement literature that people who are over concentrated on that number and ignoring things like self-improvement, meaning, growth, relationships, health, and even deep work,
People that are ignoring these other dimensions of wealth find themselves in a really bad spot. They've been so fixated on hitting that number that they retire with that number securely and check and congratulations. But there's a lot that's missing. So the conversation around wealth has been pretty flat, I would say. Tunnel visioned. Yeah. For sure, it's tunnel visioned.
That's Daniel Crosby talking about how we should start to see wealth as more than a balance sheet. Now, let's get practical. Caroline Adams Miller was one of my favorite guests this year. She's a leading expert on goal setting and she shares why vague money goals like I want to get rich.
Often fail in how science-backed strategies are the ones that can lead to success. Caroline is the author of the book Big Goals in which she breaks down how to set financial goals that stick and her advice in this clip is you got to make them specific, challenging, and measurable. The specificity is, I think, where a lot of us kind of we brush over that. Oh, I want to
get rich. I want to make more money. I want to be debt-free. All noble goals, but tell us how we can make these more efficient.
Well, those are very fuzzy goals. I mean, that's just not helpful to say, I want to be rich. I want to do this. I want to do that. What you have to set are very specific and challenging goals. So you have to know what you're measuring. What are the metrics that tell you you're making progress? You have to get feedback along the way that tells you you're going in the right direction. Maybe you have to pivot. Maybe you have to go in another direction. So start with specificity. Start with learning goal performance goal. Where am I going to get the knowledge and skills? Who's going to mentor me?
What documentary am I going to watch? Where on Wikipedia can I find a role model, et cetera, et cetera, et cetera? Then set a challenging and specific date by which you will have explored a number of ways that adapt to the way you learn things and then have constant accountability checks so it becomes a performance goal.
And then performance goals, let's say you're really good at saving and you know how to save $2,500 a year by having automatic deductions from your paycheck. You've done it before. You did it last year, the year before. I do this with my IRA. I know how much I can put in my IRA because it's automatically deducted the 15th of every month. I figured that out decades ago. So I can say at the end of the year, this is what I'm going to have because I've been specific.
I know how to do it. It's not a learning goal anymore. I don't have to figure out how to do without things. I know how to do it. So now it's a performance goal for me. Does that help? Oh, yeah. Essentially, you're giving us a strategy. This is a goal is not complete until you have the how of that goal and also the why. Let's talk about the why. I think this is so important in our financial lives. Sometimes and even in our careers, I think we suffer sometimes from
these behavioral traps of, well, I'm going to follow the herd, right? I'm going to do what is expected of me. I'm going to establish this goal, let's say, to buy a home or become an executive or go to graduate school because that is what is expected of me. That is what society sort of describes as success and I want to be successful.
Before we even identify the goal, do you have advice or is there science that sort of can direct us in terms of how to figure out what goals to be focusing on for ourselves? Well, there's a very popular word being thrown around a lot these days, icky guy, a Japanese word, which means that which I wake up for. We need to know what our purpose is. What do we bring to the world? How are we showing up that makes a difference in the world that makes the difference
in the lives of other people. And usually that's when we're using our top five character strengths to make a difference to do something well. And when you're lit up by something that's exciting to you, it's important to you. It's not your parents' goal, your culture's goal, your religion's goal, your school's goal. When it's something that you are passionate about, you think about it even when you don't have to. It's harmonious passion means that it's something that brings you pleasure thinking about it and you set that goal regardless of what anyone else thinks.
And at the end of it, it's not about an outcome like being rich or famous or having that house or this toy or whatever it is. It's usually about filling something inside of you that's curious and passionate about what does it mean to become an expert in that thing. What does it mean to find out what you're made of and climb a mountain because
Let's say you overcame a childhood illness into you, climbing a mountain means that you've overcome adversity and sickness and you're healthy again. But there has to be a really powerful why the drives you forward because that's where we get grit. And if you don't have that passion that sustains you through the dark night of the soul and the big goals that always have challenges and setbacks, you're going to give up. You just are.
So it has to be important to you and it has to be regardless of anyone else, what anyone else thinks. And then I want to add one thing. When you have a precious goal, something that is new and important to you, maybe you've never shared it with somebody else. Be very, very careful about who you share it with. Because if you don't get what's called active constructive responding to your big goal, to your goal,
Then what you have in front of you is someone who doesn't have your back, who will give you passive aggressive comments if you make progress. And the first person you share that goal with has the power to make you decide that's not an important goal. I don't want to do that. And that's when people are not happy for you. We're curious about why you set the goal. And women make this mistake all the time. We surround ourselves with frenemies.
And we don't want anyone to think we're not nice, but the power of not responding with curiosity and enthusiasm when you have a big goal like this can derail someone's biggest goal and change the course of your life. So be thoughtful and careful about who gets into your life.
That's Caroline Adams Miller reminding us that if you can't measure it, you can't improve it. And speaking of improving habits, call Richards, the creator of the behavior gap joined us on So Money this year, bringing a unique perspective on understanding, quote, unquote, enough and shifting our financial mindset. In this clip, he talks about how enough is not about chasing more. It's actually about redefining your relationship with money.
This enough word gets us into trouble. Why do we keep going back to it? Like, what is it about this measure of enough that is that we just can't seem to get away from, especially when it has to do with our financial measurements? Yeah, I think it's largely because we know nobody taught us what it actually means. I mean, I think when you think about enough and money, it cannot be a number.
No number will be ever be enough. If you're crazy in your relationship with money, more money won't solve that problem. That's proven to be true. And so money enough can't be a number. I don't think it can be a place you can arrive. I don't think it can be a destination. I think enough is something you only can be.
You have to have enough now in order for you to have enough in the future. That's really like what in the world are you talking about? It feels like drum, circle, and patchouli oil talk. In the end, we gave money a job that it can't do. Money can't do that job.
It's a different job. Now, can money set up the conditions under which enoughness might be more or less possible? Sure. I think we can all argue that if certain things aren't taken care of, then it's hard to have this philosophical discussion or do the other kind of work that I would point to more like as therapy, right?
But maybe money can establish conditions under which enoughness could be easier. But as soon as I say that, I know tons of people with, as part of the 50 fires project, we were thinking about trying to find what I called the wizards of enough. I was like, I've run into a few of them. They're always like hiding under bridges or, you know, like in forests, like they're hard to find.
Yeah, they're like wizards, they're in caves. They're like the wizards of enough and we were thinking about, okay, could we find a billionaire that's a wizard of enough? And they're like, I don't know. I don't know. But I knew I could find people with hardly anything. It was easier for us to find people with hardly anything.
that had enough that felt that they personally had decided they had enough. They felt like they had enough. Then I could a hundred percent a millionaire or a billionaire that felt that way. That's interesting. It's interesting. And I can kind of see why because someone who would aspire to to earn billions.
What that takes, that desire, it's restlessness. It's like a financial restlessness, you know? Like, yes, maybe there are other things associated with the achievement of making a billion dollars that's, you know, you're looking for that sort of achievement, that validation, that win.
It's an adrenaline rush. It's a thing you want to prove. But also like, wow, that has to be like just this really perpetual nagging voice in your head that's like more and more and more and more and more. Because you could have stopped at 7 million, but you kept going to 70 and then 700 and now 7 billion like, what is that about? What is that about? Have you studied that?
Yeah, I mean, I think I think it's often that's the byproduct of somebody just being insanely like we all know these people and work and in many cases we're glad they exist right like the change they've made in the world and it can be a byproducts but then you've got the people who it was literally just about money and I just I think
I don't know. I just know that for most of us, enough can't... What is that great story? I can't remember who it was Vonnegut, I think, at a party, right? And at a party at a billionaire's house talking with another author and the other author said something like, hey, how does it feel to know that this guy makes more in a day than you'll make in your lifetime?
And Vonnegut or whichever one, I'm sure I'm messing this up, said, well, I have something they can never have. Like what? And he said, enough.
That's Carl Richards, creator of the Behavior Gap, encouraging us to pause and reflect. But what happens when financial stress overwhelms you? My guest Kate Northrup this year came on so money to talk about how to avoid financial burnout and find balance. Kate is an entrepreneur and a best-selling author. Here's her take.
I love to look at nature as my greatest teacher, and I look at, okay, what are the plants and the animals doing? I need to really take a look and say, okay, there is a springtime, there is a summertime, and then there is fall and winter, and we are nature. Our bot, we are animals.
We are animals and we need to really be like building that in as well and not constantly expecting ourselves to be in full bloom because it's impractical and it does lead to energetic emotional and financial burnout.
Yes. And that's your special sauce. You use nature, biology, the cosmos. As proven blueprints, we know these work for everybody else. Humans have yet to really get on board with the seasons and their biology and their cycles. Let's talk about money and stress. We kind of touched on this, like financial burnout. What's your best tip for somebody right now who's feeling really financially
Inxious, stressed. Now this is airing in the summer, so maybe not the season for it, but I know that come fall, come winter, especially with the holidays and a lot of like seeing family. It brings up a lot. It brings up a lot. So what we really need to understand is that stress is a physiological response.
The stress is happening in our bodies, not our minds. So our minds are part of us, but our bodies are actually what are feeling the stress. And yet, we try to fix the stress from thought, from cognition. But we can't fix something physiological from the cognitive. It doesn't work that way.
And so if we're feeling stressed and panicked about money, anxious, I mean, money anxiety is so real for, I barely know anybody who doesn't experience that sometimes. I don't think I know anybody. So if we're feeling anxious about money, what is not the right thing to do?
is to sit down and try to solve the problem immediately from your cognitive. Because what we know is when our body is in a stress response, in a sympathetic nervous system, stress response, so we get the email from Bob and accounting and we're in a full-on panic like we're being chased by a lion.
irrational, but this is what's happening. So our survival mechanisms have taken over. We are feeling a deep threat of a financial lack, essentially. And it feels like from a physiological level that you are being chased by a tiger or that you need to fight a predator, right, or a adversary.
Neither of these things are true. I don't. You're just like getting an email from your CPA or like a letter from the IRS. We can figure it out, but we cannot figure it out from the stress.
response because when we figure when we solve a problem from stress, we create more stress. What we know is that our brain's full capacity for elevated cognition is not available when we're in a sympathetic nervous system response. Our blood is getting all diverted into our external extremities to run or fight.
And so we're not actually getting proper oxygenation to our brain. We're not getting proper connection between our left and right hemispheres. We're not getting enough cerebrospinal fluid running up and down our neck to even feed our brain what it needs to make smart decisions. And so what I recommend when we feel money stress, when we feel money panic,
is to do something that regulates our nervous system first, which brings on board our best problem-solving skills. So first we have to signal safety in our bodies. Let our bodies know, hey, sweetie, you are not being chased by a tiger. You do not need to fight anyone. This is simply math. And then we can really make great decisions from a place of safety and wholeness as opposed to from a place of like, I'm going to die, because you're not. You're not going to die from a letter from the IRS.
Thanks to Kate Northrup, a reminder to embrace balance, which I think resonates very deeply this time of year. And finally, Scott Rick came on the show. Scott is a behavioral scientist, author of the book Tightwads and Spendthriffs. He explains why couples often clash over money and what the science tells us in terms of how to bridge the gap. Here's Scott.
So I've always been fascinated with spending decisions and why we differ consistently. Some people spend more than others very consistently. I wanted to understand that psychology. And once I got into a long-term relationship with someone who spends very differently, I'm the spendthrift and my wife is very much a Taiwan. I got kind of fascinated by how other couples manage these differences because they do need to be managed. And now we have,
a bunch of kids and i'm trying not to turn turn them into total spin thrift so i've gotten fascinated with how parents can have fun to the next generation so it's there's a lot of research involved yes yes i'd say start right what you know right what you're struggling with at least have the book help you if nobody else but this is going to help a lot of people
I've always understood, and I've been working on studying personal finance for a long, long time, that opposites attract when it comes to relationships, including financial opposites. Is that what you have found that Spentheriffs tend to like to hang out with tightwads, at least in the beginning?
At least in the beginning, yes, this is one case where you do get a strong opposite subtract pattern. We think part of it is tight ones and spin thrifts don't love being tight ones and spin thrifts. And when you encounter someone who has something you don't like about yourself, it really shines the uncomfortable spotlight on it. It really just makes you uncomfortable to see it playing out like, Oh, is that how I am? And so we think at first it's kind of enchanting and charming and interesting.
just to kind of hang around and learn about someone who approaches money very differently. It can be quite fun. At least when you're dating, when you get married and have to make kind of bigger, more impactful decisions about houses and where to live and where to send the kids to school, I can get a little less exciting.
Yes, yes, it wears off the initial attraction. That's what I've also understood. So you say that a lot of what we bring into a relationship in terms of our financial tendencies, these are personal
revelations. These are things that we have, you know, we've developed over the years. We've been conditioned in certain ways. How does our psychology influence the way that we then manage money in a relationship before we were independent? Now we're in a relationship and what's going on psychologically?
Yeah, no, there's a lot of like what we call status quo bias. There's things that you develop that are hard to shake. Once you get in a relationship, you know, we see people getting married later and they're coming in with more, much more developed preferences about how they handle money. And so it's hard to change those on the fly. But you know, time wads, especially are kind of fascinating in this sense. So a lot of them seem to have had a period in life where money was really tight.
where they felt money was tight, and they developed a protective response to keep them from overspending a lot of anxiety. I know this is related to a lot of your work, and this could be helpful. It's there for a reason. But once their circumstances improve, it's hard to shake these kind of well-learned responses. I quote a character from Love and the Time of Cholera. He grew up poor, but became a rich industrialist.
And someone calls him rich and he said, no, no, I'm not rich. I'm a poor man with money. It, you know, the mentality and the feeling stick even when the circumstances change.
Thanks to Scott Rick, showing us that understanding, not judgment is a secret to thriving financially as a couple. Thanks to my guests, Charles Duhigg, Daniel Crosby, Caroline Adams Miller, Carl Richards, Scott Rick, and Kate Northrop for their insights. And if you enjoyed this episode, be sure to go back and check out their full interviews. I've linked to those episodes in our show notes.
Thank you so much for sticking with me in 2024, and I look forward to bringing you so many more insights and wonderful guests in the new year. Happy new year, everyone, and I hope your day is so money.
