October 2025
Your mindset, which can be dictated by everything from childhood experiences to modern-day pressures, may be the most important determinant in your financial life. Financial Planning Advisors Brittany Yudkowsky and Ian Rennick are here to break down the psychology of money and how you can become more proactive about shaping a mindset conducive to true wealth.
Tune in if you’re interested in…
• Understanding how your upbringing influences financial habits
• Shifting from scarcity thinking to long-term growth
• Finding balance between saving for tomorrow and living for today
• Building confidence in your money decisions
Watch previous episodes here:
Ep. 30 Economic Signals We Can't Ignore and What to Do About Them
Ep. 29 Money & Marriage: Finding Alignment with Your Partner
Welcome to Couchside conversations. My name is Brittany. I'm a first timer on this, and I am here with my colleague, Ian. Today's topic is the psychology of money. I'm very excited to talk about this topic today.
The best topic.
The best topic, exactly! How humans like our brains work. So fascinating. So I talked about this last year at the symposium. So we know I can go on and on about this for a really long time. But today we're really going to focus on four main themes of the psychology of money. The first really the history when it comes to money, how we grew up around it, the people that we came in contact with to really affect how we feel about money and then moving forward to how does that affect our present decisions, what the decisions we make right now when it comes to things that matter to us, are we really making decisions based off emotion or our values?
Beyond that, to the future? Like, what does that look like now? Our past experiences, all of that. How do we make decisions in the future based on this information? And then underlying all of that, our behavioral biases. Do we really know why we're making the decisions that we're making?
It sounds like a fully loaded docket. Okay. So you brought up these 4 or 5 different categories that we're going to go through.
Okay. How do we think about like the history of money and these might be these different money scripts that you're kind of talking about.
Yeah. It's really, really interesting. When it comes to the history of money there's this study out of University of Cambridge that by age seven, our money beliefs are set, which is which is crazy, right? What have we done by age seven? So it's there's a huge impact of the people who are around you. But through age seven, it's your parents, it's your grandparents, all of those people who have their own thoughts and beliefs when it comes to money, that really has an impact on you. So hopefully that's that takes some of the pressure off of people, because then by age seven, it's not your fault how you feel about money.
I don't even know if I remember what I was doing at age seven. So that's incredible that that's that's actually a stat.
Yeah, it is crazy too. But not all is lost. If your money beliefs are set by age seven because there are these things were going to talk about is money scripts. So these are really your beliefs when it comes to money. So Michael and Stacy talked about this a little bit in the money and marriage episode. The money scripts too. And that's a whole different conversation of when you bring your spouse's money script, into it. So, go and watch that episode. But the money scripts really are in four different categories. The first, is money status.
And I'll go into what these mean, but let's, let's lay them out. The next one is money focus. The third one is money avoidance and the fourth one is money vigilance. So think about which one applies to you.
Yeah, I think I know which one you are.
I think I'm pretty sure you do too.
Starting with the first one, money status. So what that means is self-worth is your net worth. So the people who really focus on money status, they're going to spend a lot of money, because they are going to show people I matter. I'm worth all of this money that I'm spending.
The second money script, money focus a little bit different than that. It's more like money is the key to happiness. Money solves all problems. So this person is also a spender. But this one has a little bit more spending on experiences. We have a colleague that because you can take the test for this, she took this test and she got money focus. And she was so upset. She's like, money is not all that matters to me, but it really is about spending money on people and things that matter to you. But the result still might be over spending.
That moves us to the third money script and its money avoidance. And this one is so interesting when you think about it, because it's the mindset here is money is bad. I don't deserve money. So this person is actually still going to spend money because they don't want to deal with it. They're not even to look at their bank account, which is so interesting that those first three, they're all spenders, but very different viewpoint and mindset when it comes to the spending.
Yeah, these all have like a negative connotation. But I don't think they're all that bad. But they do sound like they have something that you don't want to do.
Yeah. It's all about the results that come out of it too, I think, especially when it comes to money. Removing that money shame, and removing those words good and bad.
And we'll talk about that throughout this too. But it's just is this behavior getting the result that you want?
That brings us to the fourth money script. And I think this is where, you were indicating I money vigilance. I identify with money vigilance so so much. And it's actually very common. For people in this industry.
So these are our savers, saving a lot of money for the future. But it's not driven by this positive like this empowerment for, oh, I'm going to take care of myself in the future is driven by anxiety. Like there's not going to be enough. So I need to save, save, save now. So again, this is this is me in a nutshell.
I'm aware of it.
This is the one that I thought you were.
Yeah, exactly. You know me so well, so all of these things, these for money scripts and our beliefs being set by age seven, this really informs the history, of what goes into how we feel about money. So I'd love you to talk a little more about, like, how does that, in fact affect our decisions today?
Yeah. Different ages. In your life stages, you have a different perception on money, in the future. So if you think back to when you were like seven years old, ten years old, your in grade school, your perception of money was so much different.
So much different.
I thought $100 when I was 10 or 12 years old was so much money back in the day.
Today, if you asked me how much do I think that is worth? I'm I'm going to give you a different answer. Moving on to, you know, you get into your 20s, you're graduating college, you're entering the workforce, you're making money, you're kind of probably having responsibilities. You have bills now, money means a lot different than what it did back in the day to you.
And so I think looking back, it's tough to really know what you're supposed to be. How am I supposed to deal with money? What am I supposed to save? It's all new to you, going to the next stage of your life. Maybe now you're really starting to ramp up. You're in your earning years now. You kind of have a good feel for what you're supposed to be doing money wise.
Where? Where I'm saving. Okay. Retirement money. This automatically gets taken out of my paycheck. Okay. I'm getting a good feel for this now and then, even escalating that more toward retirement. I've been doing the same thing my whole life. I've been saving. Now my perception of money is a lot different. Now it's time to spend my money. Yeah, and sometimes that's a really, really hard mindset shift for our clients and probably people in our lives that have had to be faced with.
I think just each stage of your life, the money perception is so much different.
Yeah.
The abundance mindset versus the scarcity mindset that people have, I think is very rooted in how you grew up. So, you know, people that might have grown up with, you know, not an abundance of wealth, but maybe they grew up with money.
It might not affect them like somebody where they watch their parents struggle. They are like, okay, well, I don't want to end up like that. I'm going to keep every last dollar that I know. And it's not necessarily a bad thing, but for some people it works for them. And I think it's really just about that mindset shift, and making it okay for, for people to do.
Yeah. And it's, it's being aware, of what you're bringing to the table when you're making these decisions. Because I think as we go through these life stages, especially when you become an adult for the first time, you have responsibilities, but you might not have that awareness that why am I making the decisions? Okay, well, my parents did it. So this makes sense to do it because, you know, financial education isn't really as much of a thing.
Yeah. And I think awareness is going to be a key term today. We're probably going to say it a few times
A bunch of times.
And I think even all of this money, it's going to affect your happiness and your mental health. Can you get more into kind of the effects of that and what that looks like on happiness?
Yeah, I mean, money is a huge factor when it comes to happiness because it just it helps us live our lives. There was a study not too long ago that said that the magic number for happiness, when it comes to earning income was 75,000.
I can't stop. Yeah, I know, I heard it four times.
Yeah, I know we're in California and it just I think for us that doesn't really make sense. But newer research really debunks that because and I think that that intuitively makes sense to us too, is that life satisfaction does increase as your income increases. But as you get to the upper threshold, the, the happiness per dollar really goes down.
So when you think about it, you know, going from $40,000 to $60,000 has a bigger impact on your life satisfaction. Then maybe go to 140,000 to 160,000.
Maybe that's because early on in your growth, like now, your basic needs are being met. And then once all of those are met, maybe the happiness isn't a big as big of a jump.
Exactly. You can take care of everything that you need to take care of. So then happiness takes on different dimensions when it comes to that. There's this, World happiness report, and I just, I love the fact that those are world happiness report out there. It really is a great name. But thinking the 2024 results, even though the US income is increasing here, even though sometimes it doesn't feel like it with inflation, but income is increasing.
But the US dropped down in terms of the rankings when it comes to happiness, especially among the younger people, because there's so many more factors that go into happiness beyond income. It's social connection, it's mental health, it's the community that is around you. There's happiness is so much more than money, even though it's a really important component.
Yeah. When we're making decisions now, our happiness really factors into that. But also thinking through what life stage are we in and do we have an abundance or scarcity mindset at this point that really impacts the decisions we're making now? But how do we bring all those things into our future decision making?
Yeah, there's a bunch of these different biases, and I think I picked up 4 or 5 of them. And it's funny, I'm going through each one of these, like, I think I've done almost all of these. And I think a lot of people will listen to them and say the exact same thing.
Yeah, we're so human. Like, it would be weird if no one said like, I don't. None of those apply to me.
I would think it would be odd if you didn't like you're saying, I think all of these have some subtle differences. But they're going to sound, kind of the same. So the first one is a recency bias. And this is where somebody will take some news that had just happened. And that's what they're going to believe. So they're going to ignore all the historical data ten years ago whatever that might may be. But they're just going to focus on what they just heard. And a really good example of that is, if you're buying a stock and if it had a really good earnings report maybe yesterday and it went out, but for the previous ten years it's been going down and we're going to ignore all of that. We're just going to focus on what just happened. Yeah. Exactly. And then so I've probably been guilty of that because they almost want to just believe, well, that's how it's going to continue to go then, because that's what I saw.
Another really good one is an overconfidence bias. And I know I'm also guilty of this one. And this is kind of where maybe you have a good trade or two good trades. And now you're you're better than the pros. This is this is your game. And, everything goes out the window and now you're the best. And that's what kind of what you believe.
And I know I'm guilty of this. Like I said, but it's very good to be able to take a step back and remember, like, okay, hey, I need to have some, like, self reflect there.
That awareness word.
Yes. That awareness is really important. Yeah. The next one I want to go to is the the anchoring mindset, the anchoring bias.
And this is where, where somebody might buy something and they're anchored to some sort of price that they bought it at. If you think I'll use a stock example again is you bought, let's say Apple at $100 and it goes down now. Okay. Well, it's worth $90 now, but no, I bought it at 100. So it's worth 100 and I know it.
And sometimes you can get in trouble by doing that because it could continue to go down and down. And you're just anchored to a price that has absolutely nothing tied to it at that point.
But not with Apple. Apple always goes up.
Yeah. That's right. Obviously a bad example. But that's a really good setup. And so the next one the familiarity bias where people will just buy things because they know they've heard of it. Like Apple, everyone has an iPhone, a mac or an iPad. There's so many different things. Well, I've heard of it before, so it must be great. They're not going to take into account any of the actual financial data. They're just going to be like, I've seen that, I'm familiar with that. So I'm going to go ahead and continue and I'm going to buy that.
Yeah, exactly. I like the Apple product. So they're always going to be do great forever.
Yeah. And I think there's also that if you try to switch away from Apple, they make it so incredibly hard that you don't even want to deal with it. So you just stay.
I don't want to switch away.
I don't want to switch away either. But I know I have heard that before from some people. Okay. So we've we've talked about all of these different things, these biases, these money scripts, the history of money. How do we solve these problems.
Yeah. And it seems once you're aware of it, our key word of the day, it does seem like a lot. But these things can change over time based on your experiences. So, you know, we said your money beliefs are set by age seven, but they're not static like they can change over time. So I think the awareness is so important. And I'll share a story, with, how this has played out in my life. Yeah. You've been a part of the story from the very beginning, but this year I was definitely set on, like, I'm going to go to Europe, I'm going on vacation. I'm going to have a great time. So there was the whole process of deciding where to go, which was a whole thing, too. And you were a part of that. So we decided on Greece. Like I knew where I was going.
I knew the tour group that I was going with, but it was so hard to press the button to actually pay for it, which was it's understandable. I come from a scarcity mindset, money vigilant, so I'm really anxious about spending money, but it was about understanding what the purpose of it was. So I think this is a great story to illustrate how you reset your mindset when it comes to it. It is that money is a tool that wasn't just money that's going to go out the door.
It's really money that's going to buy me an experience like gain me an experience that's so meaningful to me because for me, and kind of moving on to you spend your money based on your values. So value based spending and for me, I value travel so much, it really feeds into my why to approach things with curiosity and come into contact with new people and cultures so I can evolve my perspective on things.
So knowing that about myself is like, okay, like this money is I'm using it for a specific purpose and money is a tool. It's not meant to just sit in my bank account and stare at me.
You've earned it for a reason.
Yeah, exactly. It's meant to kind of help me live my life better. So kind of going a little bit into, like, the third takeaway from this story is the bucketing approach when it comes to spending money.
So for me, it was okay. I'm anxious about spending money I have in my checking account enough for my living expenses and an emergency fund, and then for my retirement savings. It comes right out of my paycheck and I have money coming out of my checking account automatic, so I don't need to think about it. And then this money I put into my savings account is specifically for travel.
So looking at all of those things, I'm going to spend this bucket of money for travel. Well, I've already taken care of my living expenses. I already have an emergency fund. I already take care of my retirement savings. So it allows me to be like, okay, this is the purpose of this bucket and everything else is taken care of.
So helps me ease that anxiety somewhat. And you know, this, but, I did press, Yes.
And I'm very proud of you.
Yes. Thank you.
You just have to make sure you send pictures to us.
Yes. There will be so many pictures, at this point. And I think once I press that button, I did'nt regret it. I felt so good about it. So it's really awareness, thinking about money as a tool, making sure you're spending your money based on your values, and using that bucketing approach to help you use your money towards those things.
Well, thank you for this conversation. That was awesome. I think now it's time for the our favorite part. This or that. Are you ready?
Yeah. Let's do it.
All right, Brittany, first question. When it comes to money and happiness is more always better or is enough enough?
I think enough is enough. Though,of course, my definition of what enough is, might be a little different than other people's. I think, though, if you ask my dog, more is better. More treats, more cuddles, more playtime with other dogs, just more.
I feel like my dog might be talking to your dog because I hear this. The exact same thing.
I think so too. Okay, next question for you. When it comes to people spending money on you, would you prefer they spend it on experiences or gifts?
If you had asked me when I was younger, I probably would say gifts. But now that I'm married, I think I'm totally going to do experiences.
Okay. Next one, if you were to get, a gift, would you rather have a bunch of small gifts or one big purchase?
So I think I would rather do a big purchase, though of course, for me that means, obsessing about it a little bit beforehand.
And yeah, asking my friends, family and coworkers, about the decision making.
So, okay, final question. I think this is a really good one for you. Check your accounts daily or monthly.
So I'm going to tell you what the answer is. But it's not emotionally driven. I look at them daily, but I it's not because that I'm freaking out or anything like that. I think it's just straight out of curiosity. So daily.
Yeah, I think I think you make a really great point there where it's not necessarily what you do, it's why you do it. So if people looked at their accounts daily and it elicited fear in them, then okay, that's not that's a great for you. But if you can do it with a positive mindset, then totally go for it.
Thanks for tuning in today. If you have any questions about anything we talked about, please feel free to reach out to your Wealth advisor. We'll see you next time!
Wow!
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