The #1 Money Rule to Live By: Understand The Psychology of Money

Farnoosh Torab (00:21):

Why are we all wrapped up in this idea of being fearless? Perhaps fear is here with a message. Imagine a world where you can make your own financial choices for yourself, by yourself. You have autonomy, you have agency. You can choose for yourself. Choose to stay in a job, not stay in the job, stay in a marriage, not stay in a marriage, start a business, not do it. This is your roadmap. This is your plan of action. This is what you need to do today.

(01:40):

I know that gut wrenching anxiety when you go to check your bank balance and you just hope that it won't be in the red. You may not know this about me, but there were days when my husband, Chris, and I were so terrified that we wouldn't be able to pay the bills or worse that we were going to lose everything. Just over a decade ago, we were on the brink of complete financial ruin. I was 41 years old. I still remember sitting at the kitchen table staring at the pile of bills that had been sitting there for weeks wondering, how the heck are we going to pay these things when we don't have any money in the bank? I mean, at one point my husband and I were $800,000 in debt. Yep, you heard that, right? $800,000. Now, I don't know about you, but when I thought about my life plan or I made a vision board, I never pasted up an image that said bankruptcy, $800,000 in debt.

(02:42):

That's not exactly how I thought my life was going to turn out. But what ended up happening is that my husband had gone into the restaurant business and the first location was pretty successful. Select complete idiots. We poured our entire life savings home equity line, maxed out credit cards into it, and boom, the business started to fail, and we were drowning in debt with no way out of sight. It felt like no matter how hard we tried, we couldn't dig out of the hole that we had put ourselves in. And that fear, the fear of losing everything, became my constant companion. Now, if you've ever had that fear, you know how crushing it is to not know how you're going to pay your bills. And I want you to know something. You're not alone. That fear has shaped how I approach money today. And if you are in that place, you can learn how to tap into that fear and change how you relate to money too.

(03:43):

I mean, just talking about it, I can still feel the pit in my stomach. There was a time where I felt completely powerless over our finances. I mean, the debt was so fricking big, it felt like it felt impossible to get in front of it. I felt like I had lost control of my choices, my future, my family's wellbeing. And even after we started slowly, holy cow, it was painstaking. I'm not going to lie to you. It wasn't glamorous. It was grueling to try to chip away at the debt. Even as we did that financial failure, it loomed over us for years. I think as a parent, the biggest fear that you have is failing your kids, especially when it comes to providing for them. I mean, there was a time when I couldn't even figure out how are we going to get groceries on the table this week?

(04:33):

How are we going to pay for you to stay in town soccer? I mean, let alone start putting money away into their college funds. I mean, that's kind of the funny thing about financial advice, right? When you can barely make the ends meet, how the hell are you going to put things away for the future? The idea of not being able to give my kids what they needed, paralyzing and the guilt and the shame that my husband and I felt. I mean, it was just consuming. It makes you question your worth as a mother, as a provider, as a human being, as a parent. And so let me be real with you. There is shame around money. And for years I was embarrassed to talk about our financial situation. I didn't want anyone to know how bad it was. But here's the truth. I have learned over the last 14 years that financial fear is universal and it doesn't have to control your life.

(05:26):

It doesn't have to drive your decisions. In fact, if you learn how to face it head on, if you lean into that fear and you unpack where is this coming from? You can flip it from something that paralyzes you into this force that motivates you to do what you need to do to figure things out. And you are more than capable of that. And that's what we're going to do today. 

(06:24):

That's the cool part. We're going to use it as fuel to create the financial future you deserve. Now, Nu is going to help you unpack why so many of us, especially women, feel guilty or afraid about being financially ambitious. And more importantly, she's going to show you how to start taking control of your money, whether you have any or not, your mindset and your future. And by the end of this episode, I promise you, you'll see your financial fear in an entirely new light because you're going to know how to leverage it. Farish, Tara Robbi, I'm so excited that you're here. I cannot wait to talk about fear of money with you.

Farnoosh Torab (07:01):

Thank you so much, Mel.

Mel Robbins (07:03):

Well, this is an extremely timely and important topic

(07:08):

Because there's uncertainty all around us and there's also opportunity. But what I'm present to, at least with people in my life is a lot of fear around money. Fear that I'm never going to make enough fear that I'll never be able to afford the kind of neighborhood that I grew up in, even though it wasn't the world's fanciest neighborhood. Fear that I'm never going to be successful, fear that I'm going to run out of money. Fear that I'll never make enough fear that I'll never get out of debt, fear that I won't have enough retirement savings, fear that something bad's going to happen and I'm going to lose it all fear that I'm going to make the wrong investment in the stock market, and that's going to be a dumb pick fear that I missed out on buying Amazon way back when, and now it's that Nvidia AI stock that I missed out on. Fear that I don't understand what's happening, fear that I've spent too much fear that I'm an idiot. It's just nothing but fear. And so I'm not only excited for you to unpack fear, but to normalize that this is a very common experience and that there are specific things that you can do to take control and understand these fears and actually address 'em.

Farnoosh Torab (08:13):

Yeah, I've been a financial advisor for 20 years and people are like, what? You're writing a book about fear? Yes, because it is the emotional underpinning of so many of our financial questions. When people come to me and they say, should I buy a house? Should I get married, divorce? Have kids take the job, quit the job, start the business file for bankruptcy. There is advice there to be given that is tactical, but to really get to the root of the solution, you have to go deeper and usually address the fear. I want to first start by saying that fear can be a tool in your life. Why are we all wrapped up in this idea of being fearless? I am a daughter of immigrants. I am a daughter of the 1980s in Worcester, Massachusetts. I grew up terrified and I say things worked out, and it wasn't because I abandoned fear. It was because I got to a point in my twenties when I was trying to be fearless and I would get into a lot of dead ends and I would make a mess of things. But I said, you know what? This fear is not going away. I am just that person that has this fervor all the time. And I thought, let me look at it and try to understand what it's trying to tell me. Perhaps fear is here with a message.

Mel Robbins (09:27):

Can we start by having you just talk to the person listening and tell them what they could experience in their life that's different if they take everything to heart that you're about to teach us

Farnoosh Torab (09:39):

Today? Imagine a world where you can make your own financial choices for yourself. By yourself. You have autonomy, you have agency. You can choose for yourself. Choose to stay in a job, not stay in a job, stay in a marriage, not stay in a marriage, start a business, not do it. And I'm not saying those things are easy, but with money and with financial independence comes so much confidence. You can sleep better at night and the world's a scary place sometimes. And with money helps when you experience fear in your financial life, which for me sometimes is a lot of the time. I think that if you are able to apply some of these learnings, you will not experience fear as paralysis. You will experience it as opportunity to know that when fear arrives in your financial life, it doesn't want to create stasis or keep you stuck. It wants you to find a solution to help you to engage with your fear is to engage with your values, to engage with what's important to you and what you want to protect. And you have to be clear on these things before you make any financial decision. So when you're good with fear, you can be good with money.

Mel Robbins (10:54):

So I take it it's normal to be afraid of money.

Farnoosh Torab (10:57):

Oh, yes. I mean, money's a limited resource, okay? Money inherently creates scarcity in our minds, and that is terrifying because you make a financial decision, you can't rewind, and now you're with less money than when you started. Potentially there is risk inherent to making certain financial decisions, and money is personal. So when we make a financial choice or a decision or we think about something financially related, we can't help but make it really personal and think about, well, what does this say about me? If I do this thing, how is it going to reflect on me? All the list of fears that you mentioned make a hundred percent sense to me because as humans, we want to protect our resources, right? And money, I mean, talk about an important resource. Well,

Mel Robbins (11:43):

And a lot of times I didn't have it, so I was also afraid of never having that resource. 

Farnoosh Torab (11:58):

It's a tool. It is an important tool. It's a tool that's going to give you access. It's going to help you create a bridge in your life when you need it most. I got into this space as a financial author, as a journalist, not because I had all the credentials, but because when I was young, I saw my parents argue about money constantly. I saw how it was weaponized. Listen, money can be a tool for good and it can be a tool for evil, for bad. And in my parents' marriage, I saw as a result of my father being the breadwinner and the fact that he was a man and he associated his manhood with financial dominance. My mother also had her own issues in terms of not speaking the language, so she wasn't able to work right away. And America as immigrants, they came from Iran and I watched them fight around money.

(12:50):

And on the one hand I was grateful. I grew up in a household where we did talk about money freely as middle Easterners, that culturally it's not as taboo, but often the topics around money were discussed with, I say with fisting on kitchen tables. It was a lot of crying. It was a lot of silent treatment. And I quickly saw, I mean this was it. This is my origin story. I saw how especially as a woman, if you don't have access to your own money and feel empowered around your finances, then someone will make the decisions for you. And they're not always decisions that you want. They're not always in your best interest. So money you need it. It's not a nice to have. Everybody needs money, particularly women. We don't think that it's our domain because we've been told it's not he'll take care of it.

(13:41):

I've been to restaurants where they give me a menu and my menu doesn't have any prices on it. This is not in America, by the way. This was when my husband and I went on a trip to the Caribbean and I go, what's going on as a prefix? Did we miss the sign in the front? This is going to be like a waitress will say, no, no, madam, you should not have to worry about such things. And I said, it can't escape me. This follows me everywhere and I make more in my relationship. So I had to have a good laugh about that. Like really, I don't have to worry about money. It's all I do. This is important for women to believe that it is not just a nice to have that being financially independent is your right. 

(14:34):

And I say that knowing it's very loaded word. And the reason why I say it's power is because when you have your own money and you are able to make your own money and you're able to choose what you do with your money without feeling a consequence or that you're going to get in trouble or that you got to hide the packages, you have power. You have power over yourself, you have power over your decisions. And the other reason why I use the word power is because I think about the way in which society has glamorized success and glamorized money, and certainly makes all of us believe that when you have more money, you have power. And in our lived experiences, we know when we see people that have a lot of money that they do have access to things that maybe you don't have access to because they can afford it. But I think a lot about that moment when you're at a restaurant and the bill comes and who's going to pay and the person that reaches forward and grabs it, if that happens versus we're going to split the bill. But even the ability to split the bill is power.

Farnoosh Torab (15:50):

Yes, I agree with you. Money is power. The complexity arrives when you're in a relationship and you think that my power means I have power over you as opposed to I have power to heal, to support. There's a difference. There's a difference in how you wield that power. And I want every woman to have power and to use money as a tool for power and men too. But when you're in the context of a relationship, it's about how to sort of dance with money and not be sizing each other up based on what you earn. This happens all the time.

(16:28):

Imagine a world where you can roam freely and choose for yourself by yourself. You can afford yourself options. You can say, you know what, this doesn't suit me anymore and I can leave. And I know there are some risks and I know there's uncertainty down the road, but I have money. I have not just money, but I have financial autonomy. This is what being truly wealthy is. It's being able to understand that the world's a scary place. Yes, money does not solve all of the problems, but money does give us a runway. It gives us resources. It gives us confidence sometimes to believe we can do something and arrive on the other side safe. And as women in this world, I know this personally, I've seen it, I've witnessed it. I've experienced it. Money helps having your own money. Someone else's money is not your money.

(17:24):

Your parents' money is not your money, your partner's money to an extent you share in that. But do you have your own bank account? Do you have your own credit card? Do you have your own source of income potentially? I think that if you are willing to prioritize your financial wellbeing and say that not only do I need this, but I deserve this, it is my birthright. Your world opens up. Who doesn't want options? 

Farnoosh Torab (15:53):

Just five? So I would say that the biggest fear is the fear of not having enough. There's a realness to that. I mean, you look outside, things are expensive, and so there could be a real actual legitimate reason for that fear. Then there's the fear of even if you have enough, losing it all right? You're just one job loss away from losing your house. You're one bad investment away from not being able to retire. There is a fear of wanting too much, and this affects a lot of women. The admitting of, I want to be rich. I want to be financially successful. That's a scary thing to come to terms without loud in front of others because you're worried about what that might say about you and your priorities. The expectation is not that you're going to be that woman, right? The expectation is maybe that you're going to prioritize caregiving, you're going to prioritize your family, you're going to prioritize other things, not money. So we fear that we fear as parents sometimes and caregivers raising our kids in such a way where the cycles get repeated,

(19:02):

Where maybe we grew up with a fear of scarcity, and now we're bestowing that on our children or on the other end, giving them too much and then they don't appreciate it. So again, it's sort of what we all have, which is that lack of financial literacy. I think it's like 60% of Americans didn't speak a word of money growing up. And as adults, that becomes a fear of its own, that not only you're not going to have the fluency and confidence around money, but that your kids who are watching you are also not going to be able to be strong in that department. And then I think for those who are perhaps the boomers, my parents, this fear of dying without a real financial legacy that's important culturally to Americans is to be able to die with the will to pass on some assets to the next generation. And again, I think part of it is like this fear of thinking about death and not doing the proper estate planning exacerbates that. So those are the five things, and I try to pick the ones that kind of go through the generations. There was a recent study that actually found that gen millennials, gen why they're the ones who are most afraid of running out of money.