Posted September 4, 2020 in Podcast
Why Couples Fight About Money With Dr. Dan Pallesen
Do you and your spouse ever fight about money?
It happens all the time. It’s a sad fact, but financial disagreements are the number one cause of divorce among couples in the United States. We carry an enormous amount of stress when it comes to money management and mindset. Sometimes, it’s incredibly difficult for married people to agree about how they should manage the finances in their households.
Thankfully, today’s episode is part two of my “Money Talks” series with Dr. Dan Pallesen. He shared his psychological perspective about how we can flip the script on our money mindsets to lessen the financial stress in our homes. (By the way, if you missed part one of this series, you can check that out here!)
According to Dr. Dan, it comes down to something called negativity bias. That means that “we feel the sting of loss worse than the pleasure of a win.” Think about that in financial terms — if you invest in a particular stock and make a profit off that investment, you’ll feel some pleasure resulting from your successful investment. But suppose you invest and end up taking a loss. In that case, you’ll feel the pain of that financial loss, and the emotional response will actually be stronger than the positive emotional response you would have experienced had your investment succeeded.
But here’s the thing: Different people have different levels of negativity bias. Some people are highly averse to risk — They’d much rather play it safe and avoid feeling that pain of loss. Other people are more prone to take risks and hope for a big payoff. And when two people with different attitudes toward risk and different levels of negativity bias come together in a marriage, they can end up struggling with disagreements, fights, and, at worst, divorce.
But it doesn’t have to be that way! We can learn to avoid these kinds of arguments over money. It’s all about gaining awareness around our attitudes about money, communicating with our spouses, and learning how to write new “money scripts” to transform the way we manage our finances. But don’t take it from me — let’s dive back into my conversation with Dr. Dan Pallesen!
Who Is Dr. Dan Pallesen?
Dr. Dan Pallesen is the Chief of Investor Behavior at Keystone Wealth Partners, but he didn’t start out in that field. After earning his doctorate in psychology, he worked as a clinical psychologist for over ten years. He worked in some interesting places during that time. He was a prison psychologist in federal prisons and a behavioral health consultant in U.S. military medical clinics.
During his time working for the U.S. military, Dr. Dan often worked with patients who dealt with health issues not specifically related to their mental health — hypertension, high cholesterol, and smoking, just to name a few examples. Dr. Dan realized that behavioral health solutions could remedy a whole range of problems, and he was only one step away from using his psychological approach to financial advising.
One day, Dr. Dan was approached by a good friend who needed a financial advisor to join his practice. He specifically sought Dr. Dan because of his psychology background, knowing that he could better advise clients from a behavioral standpoint. Dr. Dan agreed to join the practice, passed his ethics and law exam, and the rest is history!
I love the way Dr. Dan has combined his education with practical application. His unique approach to financial advising that accounts for our human behavior is something that I think we can all benefit from. He truly believes that when you understand what drives your money behaviors, you harness your power and live life with purpose. Sound like something you’d like to learn about? Then make sure to grab some paper and a pen because you’re going to want to take notes!
Why Do Couples Fight About Money?
Let’s go back to our discussion about why couples fight about money. This is an extremely hot topic right now, and Dr. Dan had a suggestion as to why that’s the case:
“It’s such a hot topic. … I can’t think of any couple that probably has not had a disagreement around money. … We live in a world where money really represents … every resource that we need. Money puts food on the table. It puts the roof over our heads. It allows us to have medical care. So these basic needs are all tied to money.” – Dr. Dan Pallesen
Because money is attached to our basic needs, the stakes are high. Individuals have strong feelings about how they want to manage their households, and it’s often incredibly difficult to reconcile disagreements because the perceived consequences of failure are so huge. That’s why couples often consult Dr. Dan for sound financial advice.
“The most common thing that I see … is: One person wants to do one thing with their money, and the other person wants to do something else. … Easiest example is one spouse wants to save, let’s say the wife wants to save, and the husband wants to spend … and they can’t come to an agreement, and they fight a lot. And so the most important thing to do when it comes to … couples and financial behaviors is to get at what are the emotions that are underneath these behaviors.” – Dr. Dan Pallesen
Let’s go back to that negativity bias I mentioned earlier. Different people are going to have different levels of negativity bias, and as a result, spouses are going to have different opinions about how much risk they should take with their money. According to Dr. Dan, the best way to avoid fights over this issue is to bring awareness to the emotions that underlie our financial behaviors.
The Four Categories of Emotional Responses to Money
When it comes to the ways our emotions drive our responses to money, Dr. Dan said there are four categories or quadrants people fall into:
“We can spend it, or we can save it. … And then you add another axis in this where you can do these financial behaviors, whether it’s spending or saving, with yourself … or others in mind. … It kind of sets up these four different quadrants. So saving for yourself, spending on yourself, spending on others, or saving with others in mind. And in these four quadrants, we tend to have different emotions that come out.” – Dr. Dan Pallesen
Dr. Dan used a couple of great examples that I think illustrate this point very well. Maybe you want to save money with yourself and your immediate family in mind. That might indicate that you are seeking some security and peace of mind around money because your natural emotional response is anxiety. Meanwhile, maybe your spouse is seeking more joy in life, so their response to money is to spend it on experiences like vacations that will bring joy to your family.
“So if someone … is seeking security and then the other spouse is seeking joy, neither one of them [is] right or wrong. That’s just where they are. But they have to understand what’s driving their behavior. And then they can have a conversation about what they actually do with their money. Spoiler alert: It’s usually some kind of a compromise.” – Dr. Dan Pallesen
What emotions lie underneath your financial behaviors? Are you seeking security, joy, or anything else? Those emotions are influencing the way you save, spend, and invest money, and if you’re going to manage a household alongside a spouse, you need to get at the root issues and put yourselves on the same page. When you do that, you can start finding ways to compromise.
“It’s hanging onto some of the assets to meet the need for security, and then also spending some, or going on a vacation or doing whatever it is to facilitate some of that joy. … It goes back to what is driving your desire with your money and, ultimately, how … you see your money as facilitating the values that you have in your life. And when you can align those and have good conversations with a spouse about the emotions that drive the money behaviors, my goodness, we’re off and running.” – Dr. Dan Pallesen
I promise if you create awareness around this issue alongside your spouse, you can reach an agreement. It just takes honesty, insight into your emotions, and a little effort into rewriting your “money script.”
Rewriting your “Money Script”
We’ve talked a lot about our emotional responses to money, but what about our beliefs about money itself? When we got to that subject in our conversation, Dr. Dan kept using that term “money script.” But what does that really mean?
“Dr. Brad Klontz — another psychologist/financial advisor — has sort of developed what he calls ‘money scripts,’ and I love it. … Money script[s] [are] messages around money that were sent to you at a young age that are often subconscious.” – Dr. Dan Pallesen
We learn a lot by watching our parents. We learn how to talk and what to talk about — and what not to. Many of us grow up believing that money is not an appropriate topic of conversation, and as a result, we don’t learn how to have productive conversations about it.
But when managing a household alongside a spouse, it’s essential to learn to have those hard conversations! It is possible to talk to your spouse about money in a healthy and productive way, but you have to find a way to rewrite your money scripts. You have to discover and bring awareness to your limiting beliefs around money. Once you do that, you can find a way to overcome them!
But what’s the best way to rewrite your money scripts? Dr. Dan recommended working with someone outside your household:
“I think the best way to do it is to work with somebody, ideally not a spouse. … You can [see] a therapist … [or] a coach, just someone who cares for you but isn’t in your day to day life. … Practice developing some insight around … what emotions you tend to experience more naturally around money.” – Dr. Dan Pallesen
It’s a great idea to see someone outside your family (an impartial third party) to help you uncover your beliefs around money and money mindset. And this can help you talk to your spouse about money, understand why you have different opinions, and reach compromises that work for both of you.
What is your “money script?” What limiting beliefs about money are you holding onto? I promise, whatever negative triggers or emotions you have concerning money can be overcome, and you and your spouse can reach a financial system that works for you!
Reach Beyond with Dr. Dan Pallesen
I want to encourage you all to find someone who can help you rewrite your money scripts and have more productive conversations about money with your spouse!. This could be any third party, but a trustworthy financial advisor like Dr. Dan is always a great option. If you want to reach out to Dr. Dan himself, you can find him on any of the links here. He’s an excellent source of information, and I’m sure he’d be happy to answer your questions.
Thank you so much for joining me for part two of our “Money Talks” series, friends! Remember that you can check out part one here!
I hope you’re finding this information helpful and inspiring. If you do, I’d love it if you’d share a screenshot of this episode on Instagram. Tag Dr. Dan, @drdanpallesen, and me, @kyle_depiesse, with your biggest takeaways from the episode. And if you have an extra minute, I would appreciate it if you would leave me a five-star review over on Apple Podcasts. Every review helps this podcast find new listeners!
Cheers to your success. I’m rooting for you.
Until next time —