← Alive with Steve Burns
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- [00:09]
Steve Burns
Alive with Steve Burns. Hey, there you are. Come on in, Come on in. Hi. Welcome to Alive. Let me tell you, I am having a day. I'm making tea. I need a cup of tea. You want tea? So I just had to fill out one of those forms, you know, one of those incredibly impenetrable financial money forms with the ridiculous name like delta nozzle 85 b. C. Because I have to form an S corporation for this podcast. And when I tell you that I didn't understand the form, I. I mean, like, it may as well have been encoded Mandarin or something. There was no way I could understand this form. I didn't even understand what I didn't understand about it. And when it comes to that kind of stuff, when it comes to this, like, financial money world stuff, I get so stressed out. Like, I get, like, so stressed out. And that's weird because in any other. Most other aspects of my life, if I don't know something, I'm like, oh, cool, I can't wait to learn about it. Here's your tea. But when it comes to money, it's not like that. I get, like, triggered or something, and I just have this aversion to it. Like, I. I don't know what's going on. Like, why. Why does money stress me out so bad? I don't know. Does that happen to you? Hmm. Okay. All right, so. All right, so this is gonna be great. I'm really looking forward to talking to our guest about this. She will definitely have some perspective for us. And, yeah, hopefully I will calm down a little. Let's get started here. Okay. Okay. So, yeah, so our guest today is Dr. Megan McCoy, who is an assistant professor at Kansas State University's Department of Personal Finance Planning. And she's been all over the place. She's been featured on the Today show, npr, BBC, Wall Street Journal, lots other stuff. And she also has the longest hyphenate I've ever heard in my entire life. Her full title is Dr. Megan McCoy, PhD, LMFT, AFC CFT1. Which sounds to me sort of like the password on the back of the router when you first buy it, but which actually means that she is a certified financial therapist who sits at the very useful sounding intersection of emotional well being and financial health. Yeah, which sounds super, very useful to my current brain space because as I said, I'm having a. Oh, wait, she's here. Okay. Hi. Do I call you Megan? I call you Dr. Megan.
- [03:40]
Dr. Megan McCoy
Megan's great.
- [03:41]
Steve Burns
Hi, Megan. How you doing? Thank you so much for stopping by. We Totally appreciate it.
- [03:45]
Dr. Megan McCoy
Oh, thanks for having me.
- [03:47]
Steve Burns
Yeah. So you have a really exceptionally long hyphenate after your name. It's kind of like a Star wars droid or something, you know? But as I understand it, you are a financial therapist, which sounds like a very cool thing, but I've never really heard of that before somehow. So can you tell us what that is?
- [04:10]
Dr. Megan McCoy
Yeah. Financial therapist can either be a mental health professional who has been trained in financial competencies or a financial professional trained in mental health competencies, really, to address that intersection between our overall well being and our financial well being.
- [04:24]
Steve Burns
Okay, I see. Well, that's particularly interesting to me because something I've realized recently in my life is that money triggers me. Like, money stuff. Like, stuff about money, like, flips me out. I get really, like, stressed out and anxious and frustrated and to the point where I just don't even want to deal with it or think about it. What is that about, Megan?
- [04:52]
Dr. Megan McCoy
Yeah. I have so much empathy because I always joke that I'm reformed money avoidant. Because now I talk about money every day.
- [04:59]
Steve Burns
Money avoidant. Yes. Yes. Right.
- [05:03]
Dr. Megan McCoy
Yeah. I think that we often think money is just numbers. And so some of us who aren't naturally gifted at numbers may get insecure about our ability to manage numbers. But I think the bigger issue is that money is laden with meaning. Like I once heard a quote, that money is the object in which we project our deepest fears, dreams and hopes onto.
- [05:23]
Steve Burns
Whoa, whoa.
- [05:25]
Dr. Megan McCoy
And so talking about money, we're not talking about money, we're talking about what we have, what we don't have, what others have and what they don't have. And. And no matter what, if we are in the haves or have nots, we either feel guilt or shame or. Or almost embarrassment around it.
- [05:41]
Steve Burns
Yeah, I. Yeah, yeah, I see that. I have this much money, so I have this much value.
- [05:48]
Dr. Megan McCoy
Right, right. And beyond that is what are people assuming about me with that VCR, with that iPhone? And so it's multi layered, I can see.
- [05:58]
Steve Burns
Yeah, that's a reason to stress you out, you know. That's a reason to stress you out, you know? And on a personal level, you know, I have had no money. None. None at all. And I've had some money, and when I've had some money, I've been more worried about it, you know?
- [06:22]
Dr. Megan McCoy
Yeah.
- [06:22]
Steve Burns
And that's never made any sense to me.
- [06:25]
Dr. Megan McCoy
No, there's been some great experiments you would find interesting about how money actually makes us more focused on ourselves and more focused on acquiring more. Like my favorite Is some monopoly studies. Have you ever heard this?
- [06:38]
Steve Burns
No, but I love monopoly. I love that game, which doesn't make any sense. Money stresses me out. But I love the game Monopoly.
- [06:45]
Dr. Megan McCoy
That is so interesting.
- [06:47]
Steve Burns
A lot to unpack here today, Megan. A lot to unpack.
- [06:51]
Dr. Megan McCoy
So with the monopoly studies, what they did was actually fixed a winner, right? And then they put a bowl of snacks out on the table and the winner started stealing the snacks or saying, you can't have my snacks and being meaner and ruder as they won more and more. Instead of what you would think that if you don't, if you're winning, you should provide others with, you should be focused on others well being. But that's not how it happens.
- [07:17]
Steve Burns
Oh, Megan, I hate that so much. That is such a bummer of a study. So the. Oh, so the more money you Monopoly money you get, the more you feel like it's okay to steal other people's
- [07:35]
Dr. Megan McCoy
snacks or I think you get more self focused rather than selfish. Because there was another study where they had one room say, hey, just think about anything you want for 15 minutes and then we'll start our experiment. And they told the other room, think, think about money for 15 minutes and we'll start our experiment. And then a goofy researcher like me came in with a white coat and a box of golf pencils and tripped and spilled the golf pencils everywhere. The people who had been primed to think about money picked up half as many of the golf pencils as those who were thinking about any topic at all.
- [08:07]
Steve Burns
That sounds like there's clearly a reverse correlation between wealth and altruism, which is bumming me out. That is bumming me out.
- [08:14]
Dr. Megan McCoy
But luckily the same researcher who did the monopoly study was actually able to show that. If you're able to show a video of like people in needs or family suffering and encourage the participant to give to others that selfishness reversed and their altruism went back up.
- [08:32]
Steve Burns
So one thing you said earlier that I felt and understood is a lot of shame around money. A lot of shame around how you deal with money. And that seems pretty common, at least in my experience and experience of my friends and stuff. So what do you think that is about?
- [08:50]
Dr. Megan McCoy
Yeah, absolutely. I think we do this fun exercise, not really fun, this powerful exercise, I should say, with my undergrads with clients called the money egg, where we have them draw little sketches of the money experiences throughout their lives. And so they draw this egg with the memories. And you would be surprised how many your memories are tinged with the money slant. To it. But one of the ones that is most common that I've seen over and over again is either a realization that you have more or less than others. And both times, it just fundamentally hurts because, you know, for instance, we only. We have the smallest middle class that we've ever had in the United States. It's shrunk tremendously. But if you ask everyone what class you are in, something like 75% of Americans say, I'm middle class because those who are upper class don't want to admit that they have more than others, and those who are lower class don't want to admit that they have less than others. It is painful to be different.
- [09:45]
Steve Burns
Yeah. Yeah. That's something else. I. You know, it's almost broader than money. But this concept of kind of obsessive comparison that we do now, especially on social media. Right?
- [09:55]
Dr. Megan McCoy
Yeah. And more insidiously too, on social media is marketing is no longer the cartoons that I grew up on like that. You clearly knew the Power Wheels commercial was going on. All of that is marketing to say, I need that. I want that. I need that. And so not only doing a comparison, but you are being manipulated to feel like you don't have what you need.
- [10:15]
Steve Burns
I used to feel like I was sort of above that. Like. Like they would never get me. Two days ago, I bought a backpack that I don't need because it was advertised to me for about five months, and then eventually I just found myself buying it. I don't need that backpack, but it's on the way, and it looks pretty cool, but it was just in my social media feed for, like, five months. And then I was like, yes, it's now time. It's time. Now they've planted the seed and it's grown a consumer flower, and now I'm going to purchase this thing that I do not really need. Yeah.
- [10:50]
Dr. Megan McCoy
And now your social media has you because they saw that you purchased it, and now they know what to inundate you with.
- [10:56]
Steve Burns
I know now that I'm saying this, you know, my. My Instagram is just going to be back. We got one right here. Something I've heard you talk about that I think relates to kind of these negative feelings that we're talking about around value and money is generational financial trauma. What is generational financial trauma?
- [11:24]
Dr. Megan McCoy
You know, I like to differentiate big T traumas with little T traumas. Right. Like, my grandparents went through the Great Depression. So every time I cut an onion, right, I can hear my grandmother or my parents saying, don't waste too much. The Onion. That was like a. A story that I had heard. And so those big T traumas of experiencing bankruptcy or the Great Depression, the Great Recession or Covid are being passed down through the generations, through stories, through learn, through modeling, through watching. But there's also small T traumas, like hearing your parents say, don't tell Daddy we went shopping, or watching them stress over their bills or seeing them feel guilt or. Or shame about not being able to afford those, and those kind of get passed down, and we don't talk about them, so we can't make sense of them.
- [12:15]
Steve Burns
I'll tell you, Megan, even just hearing you say some of that stuff, it kind of hurt. Like, I still hold some of that stuff, you know, Because I remember in my family, we sort of had money for a while, and then there were my. My dad started his own business, which didn't work, and then we didn't have money. And it wasn't like something we talked about, and it wasn't like something that created, like, all this sort of conflict about money or whatever, but it was background. You know, I talk to a lot of millennials. Right. Because those are the people who watch Blue's Clues, you know, and largely. Right. And so I know a lot of these people, and trauma is a word that. I think that's how they feel, you know? You know, they certainly talk about this stuff a lot, particularly as it relates to debt. I know some people who feel like they've made a poor decision when they were, like, 18 years old, and now they're in prison and have to live with this terrible mistake that will define their lives for the rest of their lives. And I imagine that's at least a small T trauma.
- [13:24]
Dr. Megan McCoy
Oh, yes. I mean, I had it when I was in college. Student loans were pretty affordable. The interest rates were low.
- [13:32]
Steve Burns
Yeah. But I'm sorry, Megan, you have 15 hyphenates. So even if you have small student loans, it's exponentially compounded times 15.
- [13:45]
Dr. Megan McCoy
You're making me laugh too hard. I worked a bunch of jobs during undergrad, and my friends were like, why are you working so hard? Get student loans. So then I went to my master's, and I was like, bring on those student loans. Well, that was when interest rates had gone back up.
- [13:58]
Steve Burns
I see.
- [13:58]
Dr. Megan McCoy
And so I took on six figures of student loans from just two years of my master's. Yeah. None from my four years of undergrad to 100,000 from two years. And I really did believe that I was never going to come back from it. And it was so Funny how my spending behavior shifted from that. Like, I was never conscientious about speaking savings, but would also never spend money on myself. So it would be these related things where I was eating ramen six nights a week, but then my friends were like, let's go on a vacation. I was like, sure, I'll eat ramen, but I'll spend all this money to be with you and do things. And so it was such a wasteful thing because I was never, I was never going to be financially okay, so why should I even bother trying to be?
- [14:41]
Steve Burns
Oh, I see. So having all of this debt kind of made you think, screw it. Yeah. A financial nihilist. You're like, forget it, it doesn't matter. It doesn't matter. As long as I can eat ramen. Here I justify Cancun because, Because, because I'm so screwed financially. You know, I'm being glib, but that's kind of a, that's kind of heavy. Yeah, that's a heavy way to live your life.
- [15:07]
Dr. Megan McCoy
Yeah. It informed the jobs I took. It informed where I lived. It informed so much of my life. But I, I pretended it didn't matter. Like, I didn't. Student loans were housed at one point because I was like, oh, I just delay paying it back this year because I don't have enough, I'll forbear it this year, or things like that. And so once I finally got a healthier relationship with money through therapy, through literacy, through hard work, then I started a plan. And it took another 10 years, but I paid that off last year. And so if any hole that you're dug into, you can get out of, if you create a plan and you know that you believe in yourself and you hustle, I think
- [15:51]
Steve Burns
raise your hand if you've been putting off a checkup, a cleaning, or literally anything involving a doctor. Yes, listener, my hand is up. See, when something feels off, I'll doom, scroll symptoms, convince myself I'm dying, and then do nothing about it. But this year I'm going to do it differently with ZocDoc. ZocDoc is a free app and website that helps you find and book high quality in network doctors so you can find someone you love. You can search by specialty or symptom, read, verify patient reviews, and see real time availability and book instantly. No phone tag. And appointments happen crazy fast, usually within 24 to 72 hours, sometimes even same day. You can even do a video visit right from your sofa in your sweatpants. So stop putting off those doctor's appointments and go to zocdoc.com alive to find and instantly book a doctor you love today that zocdoc.com alive zocdoc.com alive and thanks to Zocdoc for sponsoring this message passage. As the days get longer, I've been trying to eat a little better without giving up the stuff I actually like, which is kind of tough because what I like is carbs, sandwiches, pasta, wraps, noodles, like all of it. So finding herobread was kind of a relief because it tastes like the real thing. It's soft, fluffy, actually satisfying, not sad, yet somewhat healthy, you know what I mean? But it has 0 to 5 grams of net carbs, 0 grams of sugar, and up to 11 to 32 grams of fiber, depending on what you get. And it's not just bread. They've got tortillas, bagels, even noodles. So you can still make the meals you want just a little smarter. I've been using it mostly for quick lunches and stuff. It just makes the whole eat better thing way less annoying and much tastier. Herobred is offering our listeners 10% off their order. Go to Hero Co and use code Steve at checkout. That's H E R O Code Steve.
- [17:55]
Children Incorporated Representative
Steve.
- [17:57]
Steve Burns
So if you're here watching this podcast right now, I imagine that you are a pretty compassionate person. A person who knows that there are kids and families going through really hard things. And if you're like me, you want to do something about it. But the truth is, sometimes the problem seems so big that it is really hard to know what actually makes a difference. And that's one of the reasons I really appreciate what Children Incorporated does. Children Incorporated works with trusted local volunteer coordinators, people who already know the children that they serve. They focus on the biggest barriers to education. When you sponsor a child through childrenincorporated.org your sponsorship goes directly to tangible support for real kids. Visit childrenincorporated.org to learn more and choose a child to sponsor today. Because sometimes changing the world doesn't start with something huge. Sometimes it starts with showing up for one child who just needs someone in their corner.
- [18:56]
Leah Greenberg or Ezra Levin
Hey, everyone, it's Leah Greenberg and Ezra Levin.
- [18:58]
Children Incorporated Representative
You might know us as two of the lead organizers of the no Kings protests. We're also the co founders of Indivisible, the grassroots movement organizing against Trump's regime.
- [19:06]
Leah Greenberg or Ezra Levin
And this is what's the Plan? Your weekly guide to the state of our democracy and how we fight back. This is not canned talking points. It's a real live discussion space for the Pro democracy movement. We wrestle with strategy together. We take your top voted questions in real time, and we talk about the most impactful actions we can take. Right now.
- [19:21]
Children Incorporated Representative
Democracy is a participatory sport. The fascists win. When we sit on the sidelines. What's the Plan Is about how we get into the game.
- [19:28]
Leah Greenberg or Ezra Levin
What's the plan? Available Friday, January 23rd.
- [19:31]
Dr. Megan McCoy
Wherever you get your podcasts, subscribe, recruit,
- [19:34]
Children Incorporated Representative
discuss, organize and win. That's the plan.
- [19:42]
Steve Burns
If you are someone with this crushing debt, what steps can you take?
- [19:49]
Dr. Megan McCoy
I want to make it clear this is just the way I did it. There's lots of way doing it any way you get to the solution is the right way. But I think what it took for me is I had to be more intentional of making plans, of tracking my spending, of creating a budget. And that meant I didn't need to eat ramen for two weeks straight to go to Cancun. I needed to find balance. Because if you're living in a scarcity mindset that I can't live my life while I'm paying off this debt, what's going to happen is kind of like a binge in the food literature or you're going to starve yourself until you eat everything. And so I think that it's not about living in poverty when you have a lot of debt, but living within your means and spending intentionally. Like spending on the things that make you happy and putting the rest aside.
- [20:38]
Steve Burns
Yeah.
- [20:38]
Dr. Megan McCoy
There's this great researcher named Elizabeth Dunn, and she talked about five principles of using money to make yourself happy. One of them was like buying experiences, which I think has inundated. I think we know that one from different sources now. One was spending on others. That's going to make us happier than spending on ourselves.
- [20:57]
Steve Burns
Oh, yeah.
- [20:59]
Dr. Megan McCoy
The other one was buying small, hedonistic pleasures actually makes us happier than big purchases.
- [21:06]
Steve Burns
That sounds great. Like backpacks.
- [21:08]
Dr. Megan McCoy
Okay, so why are you wasting money on, like the right purse or the right backpack? Just kidding. The these big ticket items. When a Starbucks brings you so much pleasure, don't buy Starbucks every day. Every once in a while, splurge on it and it be intentional. Like almost in a mindfulness way of like, this coffee is so good. I'm so glad that I get to enjoy this small hedonistic pleasure. And if we're able to do that, we're like more grateful, more grounded, and we don't need the other stuff that doesn't give us that much joy.
- [21:41]
Steve Burns
That's really interesting. So the first step in all of that, it Sounds to me is about, as you say, the intentionality and being sort of mindful and bringing like an intentional awareness to your money, which is the opposite of how I feel often about it, which is to avoid. To avoid, to avoid. So I guess that's the first behavior that has to stop in order to have a healthier relationship to your complex financial situation. Right.
- [22:10]
Dr. Megan McCoy
And I think you can have guilt about a mistake you made in the past. Maybe that'll make you not make the same mistake in the future. Or maybe it'll help you make amends to someone you wronged. Right. But once you pass guilt, you enter into shame. And shame is a horrible, not useful emotion. It is just that you're bad, you're broken, you're mistaken, and you can't learn from just you being bad. You can learn from, don't go to a private school in a big city. You can't learn from, you're stupid with money. Like that is not useful emotion. And so that's the next step, I think.
- [22:41]
Steve Burns
So separating guilt from shame. Yeah. Yeah. I guess I've been focusing a lot in this conversation and in my life about how money makes you miserable and the misery that money, you know, generates. But you were just speaking a bit about how money makes people happy.
- [22:57]
Dr. Megan McCoy
Yeah. Giving to other people, time, money, experience, Just giving to other people is going to bring you the most joy. And we know this through all kinds of wonderful experiments. Like for instance, we went to, there's researchers who went to college campuses and gave people money and said, I'm gonna give you money and you can go buy pizza and beer and I'll give you money and you have to go spend it on someone else. It could be buying a friend dinner, it could be giving it to a charity. It is you spending on another soul in this world. And then they called him up and the people spent on others were happier. And then they. Yeah, let me go by first before you question, because you'll love the second part. Then they went to other campuses and said, we've done this study a hundred times. The people who spend on others are always happier than the people who spend on themselves. And they're like, haha, that's good for those guys, but I'm definitely gonna be happy with my pizza and beer.
- [23:47]
Steve Burns
Right, right.
- [23:47]
Dr. Megan McCoy
And they called them up and they were still happier. So giving to people helps. In fact, they did MRI studies. And when you give to others, the pleasure part of your brain lights up when you're told, here's $10, give it to others. Your Pleasure brain still lights up when they say, hey, we're gonna steal $10 out of your wallet and force you to give to someone else. That pleasure part of your brain still lights up.
- [24:12]
Steve Burns
Really? Even. Even when it's not elective?
- [24:17]
Dr. Megan McCoy
Yeah.
- [24:17]
Steve Burns
All right. I'm like, legit, Megan. No, seriously, I'm like legitimately confused now, because there's also studies that say when you have more money, you're less likely to share. Right?
- [24:34]
Dr. Megan McCoy
Yeah.
- [24:34]
Steve Burns
And yet. But it is true. There are also studies that say when you share, you experience pleasure, but for some reason, our impulse is not to do that.
- [24:46]
Dr. Megan McCoy
Yeah. Well, I'm glad your audience is millennials. These, My college students would laugh at me. But I think it also ties back to the FOMO effect that as you acquire wealth, your comparison group changes and it is a finish line that keeps on shifting. And so when you don't have money, you're acquiring your, your peers tend to not have a lot of wealth too. And then, well, your peers become wealthier too. You're interacting with people who have more. And so that FOMO effect, that, that fear of missing out, that fear of others having more than you, just keeps on shifting as you acquire wealth.
- [25:21]
Steve Burns
And that's a negative feedback loop, you know, because that just keeps going. Right. Well, now you can so see that happening because you're like, I have a one bedroom apartment. I never thought I'd have that. And now I have that, but my neighbor has a three bedroom apartment. You know what I mean? And then you're like, well, you know, I have a summer home in the Bahamas. This, it ends in yachts. This is how people have helicopters on yachts.
- [25:50]
Dr. Megan McCoy
This I think, I think it goes to mega yachts after that, right?
- [25:53]
Steve Burns
No, and then it goes to like having a tiger. Tiger having I think is the end, but very few people get there.
- [26:01]
Dr. Megan McCoy
Maybe having your own rocket ship to moon, hopefully will be the end.
- [26:06]
Steve Burns
Oh my God, that's actually real. There are dudes with their own moon bound rocket ships now. We're, wow, we live in weird money times. We're really seeing weird things. Okay. It sounds to me part of dealing with this aversion and the stress, like maybe the first step, at least for me, might be kind of separating my financial decisions and my financial life from my self valuation, you know, from my self esteem a little. How I've handled money in the past, how I'm handling it now is not going to define who I am as a human. It certainly won't define my value.
- [26:50]
Dr. Megan McCoy
Right, right, absolutely. And that includes, forgiving yourself for a past mistake so that you're no longer shameful about it. You're like, I learned from that past mistake.
- [27:00]
Steve Burns
Forgiveness is not something I thought we'd be talking about as it relates to money. But yeah, that makes sense. You know, money is emotional.
- [27:09]
Dr. Megan McCoy
Yeah.
- [27:10]
Steve Burns
And maybe it doesn't have to be as much.
- [27:13]
Dr. Megan McCoy
And I wish it was something we could process out loud like this. Like when you were recounting the story about the stress you were seeing your family, there was no conversations around it.
- [27:23]
Steve Burns
And there wasn't.
- [27:24]
Dr. Megan McCoy
And I think when you were little, if there had just been conversations like, yeah, we're stressed about finances, but we're going to be okay. Or we know we're going to end up those kind of conversations with your kids of like, here's my plan, here's how I'm going to work through it. It lets them know there is a plan in place. Like, we're not going to be like homeless, we're not going to be financially distraught. But also will give them a chance to learn different ways of fixing their finances. So when they come into a similar dip in their economic well being, they have skills now and how to deal with them.
- [27:57]
Steve Burns
Right? Yeah, sure. Let's talk about financial literacy. Because, because that is something where I feel shame. Right. I feel like I don't, I don't know. This whole conversation started because I had to fill out a form to, to start an S corp. And I was like, I don't, I don't even understand what it is. I don't understand. Like this could be in another language. I, there's, there's no way I could understand these things. And I got mad. I was like, why do you think I would know that? Of course I don't know that. No one knows that answer, you know, that kind of thing. And how much financial literacy should we have? Should a person have?
- [28:41]
Dr. Megan McCoy
Yeah, I have so much kinship for you. Because I always joke that most time people become money avoidant for two reasons. One is that we have religious or societal or cultural values that mean that wealth is greedy or wealth is bad. And I definitely grew up with those. And then the second reason is we feel financial illiterate. So it makes us feel insecure when we're around financial. And I always joke that I got the, you know, I went the jackpot because I had both and so had both that insecurity. And what's really helped me is that when I, let's say, have an issue with like my lawn. Right. Like when my lawn isn't Growing. Right. What do I do? I Google it. I go on Instagram, I ask questions to my neighbor, things like that. Right. But when I had problems with my finances, I was too embarrassed to do any of those things. I didn't even know where to start. We actually interviewed undergrads who were forced as financial planning students to go see a planner for the first time. As like, a experience being the client. And one of them said, I feel financially naked in front of. I'm like, you are about to do this to other people. Like, I'm so glad that you realize how vulnerable it is, you know?
- [29:52]
Steve Burns
Oh, financial nudity. Yeah, yeah. Financial nudity is a great. Is a great concept.
- [30:01]
Dr. Megan McCoy
Yeah. But. So I don't need to become a grass expert. I also, even though I talk about finances honestly, don't need to be a financial expert. What I need to be willing to do is ask to seek out that information, to not give up. Like, all the other teachers at my school might get mad at me, but one of the best things about ChatGPT is not the essays I sometimes have to read, but it is the chance to ask ChatGPT, what does this mean? Where do I go to get help on this? Where do I start with this? Can you explain what S Corp is like? That is a tool in our toolbox now that we can use to bring financial literacy experts accessibility to everyone.
- [30:42]
Steve Burns
Right. We must first clothe our financial nudity.
- [30:46]
Dr. Megan McCoy
Yes.
- [30:47]
Steve Burns
With. With the comfortable thermal underwear of information of AI. Right.
- [31:02]
Shan
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- [31:33]
Steve Burns
No, this is all. This is all very, very good. You know, it all does sound like it starts with. With ending the avoidance cycle. People can know these things. We just don't want to because we assume that they're too hard or that money sucks or that we'll never get it or. And we're dealing with all this generational stuff. Can you identify some areas of very useful financial literacy? Like. Like, if. If you were completely financially naked, like, where would you start?
- [32:03]
Dr. Megan McCoy
I'm going to go super basic and up. Up. I think basic is track your spending through an app. You don't need to do A fancy track your spending so you know, if you're wasting money in areas that don't bring you joy, and then after that it is, I believe strongly and not letting your paycheck go to just one account. So my paycheck. Yeah, my paycheck gets broken into accounts because we are not good at managing large sums of money. Like, it doesn't make sense. It doesn't. It's not easy to do the mental math of subtracting my bills and subtracting my savings and subtracting ramen or whatever it is. And so I have accounts for setup that my paycheck gets broken into my bill count, my savings account, my retirement accounts, and then the measly leftover goes into my check account. That is my play money.
- [32:50]
Steve Burns
Oh, that's brilliant. That's brilliant.
- [32:52]
Dr. Megan McCoy
Yeah. Then you don't have to worry about managing it. It just automatically eats it for you.
- [32:56]
Steve Burns
Yeah, it would at least be difficult to get that money. You're at least putting a step between. Yeah, yeah, okay, that makes sense.
- [33:04]
Dr. Megan McCoy
Yeah, yeah. And then after that is understanding investments. Like, I used to think the only people in investments were like the guys who like pounded their chest in like Wall street, but that's not it. Like, almost all of us will have investments through our 401k or 413b or, or any of our employee accounts. And I don't think we realize that those are investments. And there's other ways that we can save for retirement so that that fear of not being okay doesn't come true. And that is what's called an ira, which is another way to take advantage of tax breaks by saving for retirement. And those are investments that historically gain about 10% over time.
- [33:46]
Steve Burns
Okay, I'm going to be honest with you. The first couple of things you said, I was like, yeah, yeah, yeah. That last one was like, taxes, investment. As soon as anyone says taxes, my blood pressure goes up.
- [34:03]
Dr. Megan McCoy
Yes.
- [34:03]
Steve Burns
You know, and I think, I think that's one of the reasons why people. I think the tax code and the complexity of the tax code is one of the reasons that people are so money averse. Because you, you don't under. You can't understand that. It's too. It's insane. It's insane.
- [34:23]
Dr. Megan McCoy
I don't like too political, but like, our country was founded because of taxes. And so founding fathers made it intentionally that every American should be able to do their taxes.
- [34:36]
Steve Burns
We forgot that.
- [34:37]
Dr. Megan McCoy
Yeah, we forgot that. Because what has happened over time is that tax laws have tended to been biased towards wealth and complexity and saving monies and back doors and things like that. And so at the end of the day, my dream with that would be that everyone is able to open their 401k and then open an IRA. And if you got those two things going right, you're doing wonderfully.
- [35:03]
Steve Burns
What is the difference between a 401k and an IRA?
- [35:06]
Dr. Megan McCoy
401k is through your employer. A lot of times there is a match if you work in a non profit like me. Sometimes it's called a 403B. But a 401K or 3B, same thing. You get a little bit of your paycheck into an account and then they actually put that in a basket of stocks. So if you heard of index funds or mutual funds, what that means is that they're just investing in like a soup of stocks. So that if one company does that, all the other ones are going up and it's going to be fine over time. So you don't have to worry about picking the right stock or finding the next Apple. Instead you're just letting the stock market
- [35:46]
Steve Burns
work for you as defined by the company you work for. Your company is making that investment on your behalf a little bit at a time. Every paycheck.
- [35:56]
Dr. Megan McCoy
Absolutely. And you should always try to do your your match at least, which means that your company saying if you do 5% of your pay, I'll do 5% of your pay. That is free money, so give it to the man. But the other thing is that there is a cap on how much you can put in your retirement accounts. And so what you do is you add on an Iraq, that is an individual retirement account. It acts just like a 401k but you could put a little bit on top. So once you've hit your max contribution to 401k, the next step will be doing an IRA.
- [36:31]
Steve Burns
That's a way of further furthering your investment in your own retirement.
- [36:37]
Dr. Megan McCoy
It's like your own individual 401k.
- [36:39]
Steve Burns
Now and I'm not asking you to get too wonky and detailed about these things but, but this is good example of arming yourself with information. Right?
- [36:49]
Dr. Megan McCoy
And the way to think about it is that if you put your earnings into a savings account, you're going to get maybe 1%, maybe if you're lucky at a high yield, 2%. The stock market usually goes up 10%. As long as you're not pulling it out the bottom. You're historically you're used to 10%. So that's a big gain. But what's worse is that inflation is over 2% most years.
- [37:12]
Steve Burns
Right.
- [37:13]
Dr. Megan McCoy
So leaving your money in a savings account means you're actually losing money.
- [37:16]
Steve Burns
Yeah, right, right, right. All right. So it does seem like part of alleviating some of this aversion and the shame and this insecurity about money really is arming yourself intentionally, mindfully with information. Right. With. And you were talking about Googling chat gtp, but you're also talking about financial advisors. And how does someone find one of those? Is that for, like, a normal person? Because that sounds like that's for, you know, the guy who owns a tiger, you know?
- [37:50]
Dr. Megan McCoy
Yeah. So there's actually a lot of financial professionals out there that can help. There are financial planners. And what you're looking for if you're not at the tiger stage yet is someone who is fee only and usually out of XY Planning network. They tend to work with moderate and younger households. The other option is finding accredited financial counselors who tend to charge per hour instead of trying to get your assets under management or charging an astronomical fee. So you can Google Find an AFC, and there's often a lot of pro bono AFCs. So if you really need some help, there's someone who might be able to donate some time to get you back on track.
- [38:30]
Steve Burns
Oh, that's great.
- [38:31]
Dr. Megan McCoy
Yeah. The other option is a financial therapist. And so the organization Financial Therapy association has a find a financial therapy section where you can find someone maybe online or in your neighborhood that can help you with the intersection of money and emotions. So if you need someone to talk to, talk to someone, whether it's a planner, an advisor, a financial therapist, or a neighbor, just find someone to talk to.
- [38:56]
Steve Burns
Well, that's great. Those are great resources, you know, And I love that message that, you know, money is emotional, and these are emotional blocks, you know, and it's okay to ask for help, you know, and that is. That is the first step. Talk about it, you know. This is great, Megan. Thank you so much. I feel better. You know, I. I do. I'm. I was pretty stressed out when we started talking, but I feel like I'm gonna. I feel like I'm gonna be able to fill out this S Corp form, or at least I'm gonna do it. I might not like it, but I feel like I'm gonna do it, so.
- [39:31]
Dr. Megan McCoy
Or call me and I'll help.
- [39:33]
Steve Burns
Okay, I might. All right, well, thanks. Thank you so much for stopping by. We super appreciate it. Bye, Megan.
- [39:39]
Dr. Megan McCoy
Thank you. Bye.
- [39:43]
Steve Burns
Well, okay. That was certainly super informative. I think I learned that I carry all this Stress around money and financial stuff. Because I am what Megan would call money avoidant. Right? Yes. And that's an emotional response that I have because of money issues that I probably observed as a child and conversations that I never had about that. And that created a sense that money was yucky or dangerous or full of guilt or shame or just all these negative emotions. And so I avoided that topic in general and just pushed it aside, put my head in the sand. And that became kind of a cycle that continued and continued and continued and continued until this morning when I tried to fill out a financial form and completely froak out. Also, the way to break that cycle is through financial literacy. Right. Actively intentionally seeking financial knowledge. Yeah, that. That, that wisdom that you learn that the information you get is what will clothe. You will clothe your financial nudity. And in doing this, it is cool and okay to just start small. Right. She was even saying, you know, you can just Google this stuff, turn and face your. All that fear and anxiety and stress and shame and guilt that you don't need to feel. There's even books out there. I like when she said you can like compartmentalize your checking account so that you can only spend a little bit. I thought that was really smart apps to track your spending. Again, just interacting, getting actively engaged in your own financial life. Sounds really smart. Oh, and she said if things get to be too complex and if they do get to be too much, ask for help, you know, and sounds like there's actually quite a bit of help out there. I guess. Financial advisors are not just for tiger owning CEOs. She said there was some that kind of work hourly. Right. That are even sometimes pro bono. What were they called? Afcs. Afcs, right. Accredited financial counselors. Right. Yeah. Yeah. Really, really, really super interesting. Let's. Let's go outside. All right. Huh? Okay. I actually feel a whole lot better. Much less stressed. Yeah. That's nice. I'm just realizing now, by the way, I'm sorry, I just spent all that time just. Just talking about myself and I did not ask you, how are you doing? How are you?
- [43:35]
Children Incorporated Representative
It.
- [44:17]
Steve Burns
Right. Okay. Well, sincerely, thank you so much for doing this with me. It really does mean a lot and. Yeah, I appreciate it. Until next time. God, that. That really is so pretty. Look at. Foreign. With Steve Burns is a Lemonada Media original. If you haven't subscribed to Lemonada Premium yet, now's the perfect time. You can listen to the show completely ad free. Plus you'll unlock exclusive bonus content from me as I reflect on this episode. Just press subscribe on Apple podcasts head to lemonadapremium.com to subscribe on any other app or listen ad free on Amazon Music with your prime membership. That's Lemonada Premium Alive is hosted by me, Steve Burns and produced by Jeremy Slutskin. Our editor is Christopher Champion Morgan. Our associate producer is Akshay Tharabailu, audio engineering by James Sparber. Lemonada's SVP of weekly programming is Steve Nelson. Executive producers are Jessica Cordova Kramer, Stephanie Whittles, Wax and me. We'll see you next week, and you look great, by the way.
- [45:48]
Lemonada Premium Announcer
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