Money Mammoth by Brad Klontz & Ed Horwitz & Ted Klontz

Author:Brad Klontz & Ed Horwitz & Ted Klontz [Klontz, Brad & Horwitz, Ed & Klontz, Ted]
Language: eng
Format: epub
ISBN: 9781119636052
Publisher: Wiley
Published: 2020-12-15T00:00:00+00:00

CULTURAL FLASHPOINTS

In addition to our ancestors, our family, and our direct experiences, we are also impacted by our culture. Our culture is the sea in which we swim. Often we are not even aware of its impact on our beliefs and behaviors. Our culture creates images and directs our thinking in an attempt to influence our subconscious beliefs about money. Consider the popular nursery rhyme “Hush little Baby.” In essence, the message is that if you're crying, don't worry, your parents will just buy you the right thing and you will be all better. If that doesn't work, they will just buy you something better.

We have discussed the impact of the Great Depression on a particular family and individual. But such events have a much broader impact on someone's relationship with money. Many people who went through the Depression ended up being anxious about having enough money. Many who lost their money in the banking industry's collapse had difficulty ever fully trusting financial institutions again. Many children of people who went through the Great Depression can attest to the anxiety and frugality of their parents.

A recent example of a cultural flashpoint can be seen with Millennials (people born between 1980 and 2004). They lived in a household impacted by the 2008 recession and housing crisis. Research surveys suggest that Millennials are generationally underrepresented when it comes to owning property or investing in stock markets. One hypothesis for this is that they lived through the crisis. Many saw their parents lose homes. Many saw their parents' delay retirement or return back to work as their retirement accounts sank in value. It is no wonder that they may be hesitant to get into real estate or invest in the stock market. After experiencing the financial devastation their family went through, with possible anxiety and fighting, it's no wonder this generation formed a negative impression of home ownership and the stock market.7 While the messages might not have been overt, the feelings were registered harshly and deeply into the psyche.

But Millennials weren't the only ones profoundly impacted by the Great Recession. We conducted a study of financial planners in the wake of the stock market and real estate meltdown.8 Over 90% of those we studied were experiencing medium to high levels of posttraumatic stress. They had difficulty sleeping; they were anxious; they had trouble concentrating; they were worried about the financial well-being of themselves, their clients, and their employees. The study also found that this intensely emotional experience was leading to cognitive changes too. Many were questioning the validity of what they thought they knew about how to help people and that the economic situation was evidence of a fundamental change in the rules of investing. In the years after the crisis, there was a significant shift from buy-and-hold strategies to more active investment approaches, suggesting that the emotional impact and cognitive changes led to behavioral changes in investment strategies. The cultural impact of the Great Recession has had a profound impact on beliefs and behaviors of consumers and professionals alike.

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