Book Review of Loaded: Money, Psychology, and How to Get Ahead Without Leaving Your Values Behind

Written By: By: Catherine Sorenson, AFC, Financial Educator with University of Maryland Extension

Loaded: Money, Psychology, and How to Get Ahead Without Leaving Your Values Behind, by Dr. Sarah Newcomb is a great book for all financial professionals. I read this book after hearing Dr. Newcomb speak at the Personal Finance Seminar in 2018 and being very interested in her presentation. She spoke about behavioral economics and how it can help us better understand people and the financial decisions they make. Loaded is a great introduction into that same topic, behavioral economics. A relatively new field of research, behavioral economics looks at how psychology affects peoples’ financial lives. A behavioral economics-based approach to financial coaching and education can differ pretty significantly from more traditional economics-based approaches. In my opinion, this approach can help financial professionals and educators find new tools and resources to improve the work they do. Loaded provides excellent examples of those behavioral economics-based tools and other useful and thought-provoking information.

The book begins by summarizing behavioral economics and explaining how recent research in the area of behavioral finance can help people better understand the way they think about and act with their money. It places a particular emphasis on getting to know ourselves and our own journey with money. From this perspective, getting to know ourselves and our past is an important part of understanding our current thoughts, beliefs, and behaviors with money. Throughout the book, Dr. Newcomb weaves in psychological concepts and evidence from research without feeling too theoretical or in the weeds. For example, in Chapter 2, Dr. Newcomb discusses how we talk about money, what she calls “Money Messages”. She discusses how these messages can develop over time and how they can affect us, or even hold us back, in our relationship with money. In cases where our beliefs about money are potentially hurting more than helping, she also provides some strategies for changing or challenging those beliefs without feeling we are changing our values. 

In Chapter 3, Dr. Newcomb focuses on where money and psychology overlap. Each section is devoted to a different concept, like stereotypes, thinking patterns, and socioeconomic status. For each section, Dr. Newcomb shares what we know from research but also practical examples of how we might see concepts like these in the real world. For example, in Chapter 3 she talks about how we can see some of these concepts in people’s shopping behavior.  The discussion focuses on how the things we buy can be an important part of our identity. When we perceive our identity is threatened, buying things to reinforce our identity can be psychologically soothing. But how do you achieve that same feeling when money is tight and shopping isn’t an option? It’s a tricky question and Dr. Newcomb shares great strategies that come from research and her own personal experiences.  Throughout the book, I found myself thinking back to decisions I’ve made and how the concepts she mentions could have affected those decisions. I also thought back to stories told in my classes and how these concepts could help me better understand others’ experiences. Understanding people and their behavior is critical to the work many of us do, so this book is an excellent resource in that regard. 

However, better understanding people isn’t all we need to accomplish. We also need to be able to use that understanding to help people achieve their financial goals. In Chapter 4, Dr. Newcomb transitions into providing tools and resources that are, in my opinion, extremely useful for financial professionals. This practical focus is a big part of why I found this book to be so professionally useful. She starts off the more practical section in Chapter 4 with the Loaded Budget. According to Dr. Newcomb, The Loaded Budget “puts you at the center of your financial life, and builds a budget around you and your priorities”. The chapter provides an in-depth look at the grounding philosophy of this budget and how it is different from other budgeting approaches. I won’t give away everything, but it provides a framework for creating a “Personal Economy” and, I believe, will encourage you to reconsider how you think about budgeting. After the Loaded Budget chapter, you will find two appendices full of valuable tools. Appendix A provides tools for self-assessment and Appendix B provides interventions and exercises. I think both appendices are full of great resources for many of us in the work we do as Financial Professionals.. 

For Accredited Financial Counselors® (AFC®s) who work with individuals, the self-assessment tools would be great for helping encourage clients to think more critically and deeply about their beliefs and relationships with money. I particularly like the Personal Financial Narrative, which you can find on page 168. It uses guiding questions to help people write a story about how money has been involved in their life. When I read the book, I went through the activity and wrote my own narrative. It was amazing to me how quickly I was able to recall specific loved ones and the things they said about money and wealth. Considering how I had internalized those sayings, comments, and beliefs helped me to more clearly see how my beliefs about money had developed over the course of my life. The activity seems very personal, so clients may not want to share the narrative they write with a financial counselor. However, it is a great activity for self-discovery. It could also be a way for couples to begin a discussion about how their personal financial narratives are similar and/or different. 

I think this book is an excellent support for the counseling aspect of the AFC role. It encourages the reader to think more deeply about people and their behavior. It also provides suggestions for talking with people about money. For example, in Appendix B, the first tool provides a strategy for changing the personal financial narrative. Since people’s narratives might both help and hurt their financial journey, I love that the book provides a supportive and encouraging way to talk with someone about their narrative and the ways it might need to change to achieve their financial goals. This book helped me both personally and professionally. I use concepts and language from the book now when talking with my husband about our finances as well as in working with clients. I think it will be similarly helpful for other AFC®s. 

As both an AFC® and an Extension Educator, I also teach group classes about financial topics. I think this book provides beneficial information and resources for financial educators as well. One of the most challenging parts of teaching financial literacy classes, for me, is making sure I am providing information that is useful for everyone. Often my class participants have varied backgrounds, education levels, interests, financial goals, and financial resources. Providing information that in some way helps each person in the class can be challenging when groups are so different. I think the resources in this book will be particularly helpful because they focus on learning more about ourselves and there always seems to be room to learn more about ourselves and why we behave the way we do. The activities that are included could be built into a financial literacy class as an opportunity for self-reflection. Participants could use the activities to process and think about how the information they have learned fits in with who they are and the way they deal with money. 

For example, a class on budgeting could include the “Personal Financial Narrative” and “Define Your Core Beliefs” activities. Then, the group could consider how their current budgets might or might not reflect their beliefs. Through the Personal Financial Narrative activity, they might identify a belief that they feel is holding them back from achieving their goals. In that case, the “Challenging Core Beliefs” exercise could help participants see how changing their beliefs might help them achieve their goals. I think having time for traditional instruction as well as time for introspection in the class or workshop would be a welcome change of pace for participants. 

Overall, I think this book is an excellent read for any financial professional, but especially AFC®s and financial educators. A variety of useful information is covered without being overwhelming or confusing. Additionally, the concepts presented will likely be new to those who are not yet familiar with behavioral economics. This new approach might help reinvigorate the classes we teach or sessions we have with clients. I hope you will take some time to read this wonderful book!

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