ttu life love money unit three lecture notes PDF

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lecture notes for the exam for unit 3 including poll everywhere question and answers....

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3.1 Couples and Money… ● Money arguments #1 reason for divorce ● Engagement rings & marital duration ● Weddings & marital duration ● Education & marital duration ● Sources of marital money conflict Sources of Marital $ Conflict ● Clashing money styles ● Managing resources – pooling vs. separate? ● Money management expectations – stems from family of origin, money story/money script ● Generating money – Power issue? Control issue? ● Understanding vulnerabilities – stress, risk ● Conflict resolution (know yourself & your partner) ● Children – BIG INVESTMENT!! (time & money) Clashing Money Styles ● Spender vs. Saver ● Can induce lying in the relationship ● Not good for trust, marital satisfaction ● Need to know each partner’s style AND have a plan to address the combination ● Managing Resources ● How do you view money management? ● What are your money habits? ● How does this work with your partner? ● How do you keep money in the marriage? ● Pooled? Separate? ● Evidence that pooled induces greater commitment, correlated with higher marital satisfaction Money Generation ● Who makes the money in your marriage? Equal/Unequal? ● Power issues? Maybe – depends on your role expectations... ● Gender Roles ● Traditional – Men are responsible for taking care of the family financially (sole provider) and making the final decisions while the women are responsible for taking care of the home (cleaning, children) ● Egalitarian – Men and women are equal in their responsibilities toward providing financially, making decisions, and taking care of the home. ● Who makes the money in your marriage? ● Equal/Unequal? ● Power issues? Maybe – depends on your role expectations...

● Extra Credit Self Assessment – Gender Roles ● Control issues? Who manages the money in the relationship? Financial risk? ● What is the level of financial literacy? Understanding Vulnerabilities ● Money often a taboo subject ● May cause stress to think or talk about ● Other stressors may trigger money arguments ● Work on open communication – get help if you need it! Conflict Resolution Approach ● Not IF you argue, but HOW you argue Detrimental relationship patterns: ● Negative Reciprocity ● Demand-Withdraw ● When you argue with spouse/partner: ● Avoid escalation ● Consider forgiveness – increases both relationship & individual satisfaction (if it’s infrequent & partner is sincere) Children ● Are resource intensive (money & time) Sources of Marital $ Conflict ● Clashing money styles ● Managing resources – pooling vs. separate? ● Money management expectations – stems from family of origin, money story/money script ● Generating money – Power issue? Control issue? ● Understanding vulnerabilities – stress, risk ● Conflict resolution (know yourself & your partner) ● Children – BIG INVESTMENT!! (time & money)

3.2 Money Personalities ● Is influenced by your internal motivations and are based on two dimensions: 1. Present vs. Future Orientation ● 2. Willingness to Take Risk ● These two dimensions can be used to identify four basic money motivators that drive personality types: P = Pleasure E = Entrepreneurial R = Recognition S = Security ○ Everybody has elements of all money personality types. The dimension you scored the highest on will be the main driving force that influences your Money Personality (MP). Motive: Recognition ● Characteristics:

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Relatively conservative in terms of risk, but have a strong desire to succeed. More concerned with present consumption to denote wealth. Are analytical and cautious in their approach Usually well-educated, have high paying jobs, and ambitious career plans. Are status conscious and will spend money to demonstrate affluence and success (home, car, private school, designer clothes, overseas holidays) Have high spending, but usually items with lasting value Benefits = these people make the world more beautiful! At the Extreme: Can become POSEURS Challenge: Avoiding overspending and taking on too much debt – saving financial capital not easy!

Motive: Pleasure ● Characteristics: ○ Are people who take risks with money and experiences for the sheer enjoyment of it ○ Would rather be adventurous & experience fun than accumulate wealth ○ Tend to have high incomes used for instant gratification ○ Love the “thrill” of spending/new experiences and have trouble thinking about the future ○ Tend to have credit cards with high balances or maxed to the limit ○ Love retail therapy – shopping or buying new experiences is thrilling! Benefits = these people make the world more fun! At the Extreme: Can become GAMBLERS Challenge: Once the thrill wears off there is often remorse and can be overwhelmed by debt. Have control issues and may need to use commitment devices to control spending behavior. Motive: Entrepreneurship ● Characteristics: ○ Are the true creators of wealth – prepared to take higher risk for greater return ○ Much more future oriented than those with a recognition motive. ○ Can succeed despite having low assets or income, do not feel restricted by a lack of money (will use someone else’s!) ○ Use money to create wealth – buy a business, pay for education, embark on a new venture (rather than spending on lifestyle) ○ Money represents opportunity – provides choices for realizing passion to generate wealth Benefits = these people make the world more progressive! At the Extreme: Can become SWINDLERS Challenge: Too much confidence can lead to too much debt – can be a millionaire one day, and bankrupt the next!

Motivator: Security ● Characteristics: ○ Tend to avoid risk and put more emphasis on the future than the present ○ Are careful and conservative money managers ○ Feel more comfortable when they have a budget and knowing exactly how they spend their money ○ Prefer safer types of investments with little or no risk ○ Avoid debt and pay off credit card bills in full each month ○ Feel most comfortable living within their means Benefits = these people make the world more stable & safe! At the Extreme: Can become HOARDERS Challenge: While they have no problem saving, they may be too conservative with their investments and can miss out on wealth building opportunities. Money Habitutes ● Giving ● Carefree ● Security ● Status ● Planning ● Spontaneous

3.3 What is money? ● Money, by itself, is good for very little – representation key FUNCTION: ○ Money = resource; fungible. ○ Universal form of currency that can be acquired, earned, and/or exchanged for goods & services ○ Requires management (need financial literacy) PERCEPTION: ○ Money emotions/beliefs guide our decisions – conscious/sub-conscious money identity/history ○ Can be efficient but not always effective (may not be in best long-term interest) ○ Requires management (need money self awareness) Your Money-Related Human Capital ● Your MONEY SELF: Money Identity ○ Money Personality (in class) ○ Money Habitudes (in class) ○ Money Risk (Investment Risk Tolerance SA in BB) ● Money Story ● Crazy about Money, Chapter 5 ● Your MONEY PERCEPTUAL PROFILE = Your MONEY SELF + Your FINANCIAL

LITERACY Money Risk ● The Investment Risk Tolerance scale is a 13-item instrument to assess your level of risk tolerance for investing ● Possible range from 13-45 ○ 13-18 LOW tolerance for risk ○ 19-22 BELOW AVERAGE tolerance for risk ○ 23-28 AVERAGE/MODERATE tolerance for risk ○ 29-32 ABOVE AVERAGE tolerance for risk ○ 33-45 HIGH tolerance for risk Money Story ● MONEY STORY (Krueger, 2009): ● Subconscious tale you continuously tell yourself about ● who you are, what money means to you, and what it says about you. ○ Running dialogue about how much you deserve, what you’re worth, capable of, what would happen if you had more/lost it all. What do we use Money for? ● THREE MAIN PROVISIONS: ○ SAFTEY – AVOID PAIN/DANGER to protect you and help you take care of what you’re afraid might cause pain in the future. ○ REWARD – SEEK PLEASURE acquiring things that provide you with happiness and satisfaction. ○ CONNECTION – BE VALUED BY OTHERS to meet obligations to and desires for connecting with your family, community, and society at large. What does Money Represent? ● According to Chapter 2: ○ Security ○ Necessary evil ○ Substitute for Love ○ Consolation ○ Self-esteem ○ Self-importance ○ The “easy life” ○ Self-confidence ○ Obstacle to Altruism ○ Somebody else’s responsibility ● Other’s have said... ○ Freedom ○ Happiness ○ Power ○ Greed ○ Envy

○ Shame ○ Opportunity Validation ○ Control ○ Alibi ○ Feeling alive What does Money mean to YOU? ● Meaning is derived from our history (money story) & personal views and experiences (money identity) interacting with money. ● Meaning of money becomes MORE than simply a resource ● So, what does money mean to you specifically? What is your money story?

3.4 Do you know WHERE to go? ● FINANCIAL LITERACY ASSESSMENT TEST (FLAT) TWO PARTS: ● Objective Score – right/wrong answer ● Recorded in BB gradebook under FLAT-O ● Subjective Score – self-reported confidence Recorded in BB gradebook under FLAT-S Flat-O: Objective Score ● THREE FINANCIAL LITERACY (FL) ZONES: ● The higher the score (0-100) on the FLAT-O, the better ● Target Zone – 80 or better ● Higher knowledge and ability to apply knowledge ● Caution Zone – >50 to + 10 point spread (SS-OS= >10) ● You think you know more than you do! ● Can lead to poor financial outcomes, especially when OS low! ● UNDERCONFIDENCE: > - 10 point spread (SS-OS=...