← Think Fast Talk Smart: Communication Techniques
Think Fast Talk Smart: Communication Techniques
254. Start Fresh: How Framing, Timing, and Talk Can Improve Your Finances
00:24:52
Loading summary
Transcript43 lines
- [00:00]
A
Hi Matt here. Just wanted to let you know that our December newsletter is now out. Read it to learn how to use a back pocket question to get you out of tricky situations. Plus, you'll learn about all of the exciting things we're up to, including our new learning community. Check out our newsletter on LinkedIn or at Faster Smarter IO under Resources and Newsletter. Now a word from one of our sponsors. Their support allows us to bring you quality, quality content free of charge. Hi Matt here. I recently have done some international travel and I'm always amazed when people can speak the language of the country they're visiting. So for my upcoming trip I'll be using Babbel, my go to app for science backed language learning. Babbel lets me practice real life conversation step by step without the stress. It helps me build the confidence to speak up when it matters. From ordering a coffee or chatting with new friends. However, you learn best by listening, speaking, reading or writing. Babbel adapts to your style and keeps you motivated with personalized learning plans, real time feedback and progress tracking. Right now Babbel is offering up to 55% off your subscription at Babbel.com TFTs that's Babbel B A B-B-E-L.com TFTs to get up to 55% off. Rules and restrictions may apply.
- [01:28]
B
One of the most challenging conversations we can have is about finances. My name is Matt Abrahams and I teach strategic communication at Stanford Graduate School of Business. Welcome to Think Fast, Talk Smart, the podcast.
- [01:42]
A
Today.
- [01:42]
B
I look forward to speaking with Wendy Delarosa. Wendy is a professor at the Wharton School at the University of Pennsylvania and she's the co founder of the Common Sen Cents C E N T S. Her research focuses on understanding and changing consumer financial behavior. She studies how small changes in a person's financial environment can have a large impact on their spending and saving habits. Well Wendy, I am super excited to have this conversation. Thanks for being here.
- [02:09]
C
Happy to be here. Thanks for having me.
- [02:11]
B
Yeah. Should we get started?
- [02:12]
C
Let's do it.
- [02:13]
B
In your work on financial decision making, you've spent some time working on the Fresh Start effect. Can you share what that is and how we can actually leverage that in our own motivation?
- [02:22]
C
That's such a great question. I want to give credit where credit is due. So the Fresh Start effect is identified by Katie Milkman, one of my amazing colleagues here who leads our initiative Behavior Change for Good. And in her work she sort of identifies the fact that everybody wants to change. We want to be better humans. We want to be better parents, better spouses, et cetera, better with our money. But the how and the when is always a little bit hard, bridging that gap between intention and action. And so one of the key findings in behavioral research is that we need to time our interventions really well so that your motivation to act is activated and peaked. And so we know from research that the number one time when people download financial management apps at the App Store, for example, is December 31 and January 1, right? New Year, new me. But a fresh start effect doesn't just have to start there. We can think about our birthdays, we can think about new seasons, the beginning of every month, the beginning of every week. One of the experiments that I conducted with a company called Silvernest, we used this idea to do something that I think was really unique. So Silvernest is this company that tries to connect older adults with each other to try to solve a problem. One, housing is so expensive now in the United States, but two, we have a loneliness epidemic. And we know one of the biggest predictors of our long term health, even our longevity, is the number of daily meaningful interactions we have with another human being. And so they try to pair up older adults. And as you can imagine, that's a hard ask, right? Let me invite somebody that I don't know into my home. So we ran a couple of experiments on their marketing, mostly on Facebook ads, to say, hey, you're 64 turning 65, have you thought about a change? Or you're 49 turning 50, or you're 53 turning 54, have you thought about a change, versus you're getting older, have you thought about a change? It's not a surprise people know their age. It's not new information, but, but it's a cue to say there's a meaningful change happening. Maybe I should reexamine how I'm living my life. And we saw that it led to higher click through rates on the ads, it led to more activity on the website. And so we were really excited about that.
- [04:36]
B
This idea of finding signals that can help move people from intention to action is really important. And it can be a particular date, it can be some other significant event that just helps us refocus. And it sounds like it leads to not only more focus, but actually more action.
- [04:54]
C
For me, I think timing is everything, not just in relationships, right? We have that old saying, timing is everything, but timing is everything when it comes to behavior change. It was one of the core sort of findings in my dissertation that even the timing of how we receive our money. So if you receive your PayCheck every week versus every two weeks versus every month, that fundamentally changes how much money you think you have. So higher payment frequencies, right? When we have shorter time intervals between when we get paychecks, it makes us feel a little bit richer. And so therefore we're more likely to spend on the margins. So it paradoxically can undermine our financial well being, holding constant the objective level of income. Right? So we're both earning whatever it is, 50,0001-000001-50000. But just by changing the timing of it, all of a sudden our relationship with money changes. And we have so many examples of showing the importance of timing as this underexplored but really important aspect that we should all be thinking about in our lives.
- [05:52]
B
So if I'm a manager running an organization, how could I leverage your insights into timing to perhaps motivate my employees more help with efficiency and productivity? Any ideas on that?
- [06:03]
C
Well, I think there's two key recommendations I would have. The first one is we know that productivity is fundamentally tied to, to financial wellbeing. So if your employees are financially stressed, they can't show up with their full self at work, their brain activity, their attention is going to be focused on something else. And so as a manager I always say, look, you know that when your employees are sick, you give them a sick day when they need vacation, when they need to rest to avoid burnout, right? We have vacation days. I suggest giving everybody a financial health day because everybody, again, going back to this intention, action gap, we all know that we should go back and revisit our retirement allocation and increase that. Right? We all know that we should find finally get around to opening up a 529 account for our children. We all know that we should probably create a will and all of these things that people know they should do. The critical piece is time. So if you create a norm in your organization, create a financial health day to say, everybody on this date, we're all going to try to get our collective act together. Take the time to finally call your credit card company and ask for a lower interest rate. Take the time to finally cancel that old subscription that you know you should have canceled 20 years ago or whatever the case may be, because it's not just something good to do. Research has shown it increases the productivity of your workers. So that's tip number one.
- [07:21]
B
I like that idea and you've just motivated me to go change some subscription I have. So thank you.
- [07:26]
C
You know, I always tell people, put it in Your calendar, love yourself enough to prioritize you today. But the second piece is to really fundamentally think about the timing of when you're asking your employees to make financial decisions. For example, we ask our employees to make critical financial decisions in the first week of employment. Like what's your retirement allocation going to be in the first week that you've just hired somebody? They're probably trying to have multiple calls with it to figure out what their login, username and password is going to be to remember whether or not your name is, you know, Dig Joe or Harry. Right. There's so many things that are happening in that first week of employment. Like it's just not set up in a way that's sustainable. So I think that's one like create space for employees to go back and actively encourage employees to go back to really think about that decision. If you don't already automate it.
- [08:18]
B
I think you're dead on. Right. When we ask people early on in their careers to make all these fundamental decisions that they're just trying to get which end is up figured out. I felt the same way when my wife and I got engaged. There were all these questions about what do you want for your gifts, et cetera. And had I had a year into the marriage, I would have changed everything about what I was asking for. And so the idea that we can help our employees by having them make these decisions that are long term, a little later, once they have a more appreciation, I think is a great idea. You studied the power of framing on financial choices. Can you give a specific example of how a leader or manager's communication, framing of, let's say a budget cut or some new financial policy can either trigger a scarcity mindset or or inspire a problem solving mindset. How come the words we use and the way we position it influence how people see it?
- [09:08]
C
That's a great question. I, along with Stephanie Tully and Eisha Sharma, have looked at this concept called psychological ownership, which is like people's feelings about things, places, ideas. Do I feel like I own Stanford? A piece of Stanford? Do I feel like Stanford is mine? I think about my own laptop. I even say this is my laptop, even though the ownership of it is actually the University of Pennsylvania's laptop. It's really important to think about what is the psychological ownership that your employees feel over the organization. Because if this is my organization, clearly I'm going to care much more about that organization and go out of my way to make sure it succeeds versus if the framing and the communication is all about you are just on loan here. You're not going to get the same level of investment, motivation, attention from people who just recognize that this is not something, that this is not a dream that I own. I don't own a piece of it. I'm not invited to even dream about a future here. And so when negative things occur, if you involve people in the process and are transparent and treat people with dignity so that they can feel psychological ownership, I think that's really important. Suzanne Shu at Cornell has done some work looking at if you increase the sense of psychological ownership of citizens over public lands, people are much more likely to take care of that land. So this is one of the psychological constructs that goes beyond just ownership of a thing. Right. We can think about ownership of places, ideas, membership, institutions, organizations, and oftentimes we ignore that. And so I encourage any leader listening to this. Check yourself, right? I'm from the Bronx, so just check yourself. What are the words that you're using to describe your own organization?
- [10:51]
B
I'm going to go home and try this with my kids. Talk a lot about your room, your cleanliness, and see if I can get them to pick up the stuff around. But this idea of it's how you can connect people to their work and to what they do, and then that changes the relationship they have and the care and concern they put forward. You discussed the concept of financial shame.
- [11:13]
A
What is this?
- [11:14]
B
And how can we talk about money more openly with friends and family to overcome this barrier so we can actually have more honest, open conversations?
- [11:23]
C
Yeah. Shame is one of these negative emotions that's paralyzing in many ways. And I think we have, and I'll talk about this more in sort of the US Context, we have thought about financial well being as this individual pursuit. Right. If I am financially successful, by and large, we make dispositional attributions. Basically, it's because of your work ethic, it's because of your intelligence. All of these internal factors versus external factors. Right. We tend to downplay luck. Our communities, our support systems, our mentors are all of these things. And so when people find themselves in a place where they are not financially secure, where they feel like they are doing everything they can and yet they're struggling because we've created this narrative about financial well being being, this individualistic pursuit, then who is to blame other than myself? Only me. And so that vicious cycle creates this shame where how can I even talk about this openly? Because me talking about this openly is only going to lead to me recognizing my own personal failings. Over and over again. And shame, more so than any other negative valence emotions, leads us to ignore. And in financial well being, that's the worst thing you could do, right? Not doing anything is the worst thing you could do. So what I like to tell people is let's breathe and try to melt the financial shame away because we have to recognize that every company out there is getting faster, smarter, more efficient. Of course, we haven't even talked about AI in this conversation at getting you to part with your money. It's not even a David versus Goliath metaphor, if you like that metaphor. It's a David versus thousands of Goliaths. And so once you recognize that the environment is not necessarily set up for you to succeed, then we can have a little bit more empathy with ourselves and then recreate our environment. And that's the critical piece, right? We can't just sit in the current environment and expect things to change. Let's figure out how we can do our best to recreate our environment.
- [13:21]
B
What are some things people can do to recreate that environment so they feel a sense of agency rather than being the victims of not doing what they should be doing.
- [13:30]
C
That's a great point. So first I tell people, you know your financial situation better than anybody else. You know your vices and your virtues. Take the financial health day as we talked about earlier, to get a handle on your vices. And what does that mean for some people? It's, I recognize that I can say no to that new jacket one time, but when it follows me throughout my entire online journey day in and day out, I may not have the willpower to say no the hundredth time. And so how do we recreate our environment and install ad blockers throughout your entire financial life? The convenience of a doordash or instacart or Uber Eats is just so high. And so I tell people, either make the decision to remove that app from your phone or link it to a prepaid card where you're installing and instilling a mandatory limit on yourself. And then the third piece is timing matters. So much so I sound like a broken record now, but it just is so critical. Take a look at when you receive your pay and take a look at when your bills come in. And if there's a fundamental mismatch there because you get paid on the 1st and your big credit card bill is not due until the 17th, then now you're allowing opportunities for overspending. Call the credit card company and change your payment date so it aligns with your Paydays.
- [14:47]
B
It sounds like you're talking about automating some things that keep you on that path and also looking at all the automations that already exist and challenging some of them so that you can not necessarily fall victim to some of that work. As somebody who might want to give advice or to help someone who is perhaps not in as much control of their finances as they'd like to be, do you have advice and guidance on how to give that kind of feedback in a way that doesn't feel threatening and can truly be heard and helpful?
- [15:18]
C
I like to frame it from the concept of love. Like when we see somebody that we love with a broken arm, we don't just ignore it. We don't just turn our head and pretend and hold their other hand. That's not what we do. We try to address it. We encourage them to go see the doctor for whatever reason. We don't do that with financial well being. And finances, I like to say, are the hidden person at the dinner table. If you know you have a friend that's going through a major life change, whether that's a new child, getting married, going to college, moving across the country for a new job, getting divorced, going through a cancer treatment, everything that's meaningful in our lives sadly also come by and large with some financial change. And so to ignore that is actually not loving. And so the first thing I would say is approach it from a place of love. I really care about you. I love you. Help me understand what's going on and how can we help. And help doesn't have to be always lending or giving money. Help can be helping someone walk through a situation, or connecting them to the appropriate resources, or just providing time and support. There's all of these ways that we can help. The second thing I'll say is that there are troubling statistics showing that people are much more likely to talk with their friends about their political ideology, their past dating history and sexual escapades and all of these things. But for whatever reason, money is still taboo. So much so that engaged couples, like 40% of engaged couples, have not shared their income with one another. Like you're about to say, I'm ready to go through life with you, but I don't. You don't want to share your financial picture. There's something fundamentally broken there. And this is maybe a little cliche, but if you're going to spend life with someone, have the financial conversation, make it a date, get a bottle of wine, put on the calendar and say, let's be vulnerable together. Because what else is love if not vulnerability?
- [17:18]
B
Framing it as love and as a gift of concern for somebody, I think is a great way of doing it. Rather than I have something that you don't have and let me help you. I really like the idea of turn it into an event. Make it something that isn't a labor. It's something that actually can be fun, if you will, just to have this.
- [17:36]
C
Kind of connection and change the norms around the discussion. One of the things that my girlfriends and I used to do is we used to have monthly brunches just to talk about finances. So how did you ask for a raise? What are you getting paid right now? These are all important conversations that aren't tat and that help everybody. But it's odd to have that conversation. So you have to create a norm. Hey, we're going to be transparent with each other about this because we care and we're going to lift each other up. And so, yeah, let's do it over boozy brunch.
- [18:06]
B
I think that's great. I have found in my life with lots of topics that are taboo, that just initiating the conversation opens up the opportunity for others to share. And I love this idea of let's make it fun or let's connect and let's show how we're supporting each other.
- [18:22]
A
We'll be right back to finish our conversation, but first we're going to take a quick break for a message from our sponsors. These sponsorships support the cost of making our show, allowing us to bring it to you free of charge. Hi, Matt here. As the year winds down, many of us take a moment to pause, reflect, and think about the stories we want to tell in the year ahead. And one of the best ways to share those ideas is by creating a clear, confident presence online. This episode of Think Fast Talk Smart is brought to you by Squarespace, the all in one platform that helps you bring your ideas to life. If you're hoping to launch something new in the new year, Squarespace makes it simple. Their Blueprint AI tool helps you build a polished, customized site in just a few steps. And with built in email campaigns and analytics, you can stay connected with your audience and understand what's resonating all in one place. So as you look ahead to 2026, consider giving your ideas the space and the stage they deserve. With a website built on Squarespace, head to squarespace.comtfts for a free trial. And when you're ready to launch, use the code TFTs to save 10% off of your first purchase of a website or DOM. That's squarespace.com TFTs offer code TFTs.
- [19:40]
B
Wendy, this has been a fantastic conversation. Before we end, I like to ask three questions of all my guests. One, I create just for you and two, are similar across everyone. Are you up for that?
- [19:49]
C
I am.
- [19:49]
B
So, Wendy, you've done a lot of really interesting in depth research. I'm curious what has surprised you most in the work that you've done?
- [19:56]
C
I think the core finding has sort of always stuck with me is that we always tend to think about income as this unidimensional construct. Right. It's all about I earn 50,000 and you earn 70,000 or I earn 100,000 and you earn 200,000. And that's actually just one dimension of income, which is level. The thing that has surprised me the most is how much we can change and alter and influence consumer behavior by altering the other dimensions of income, like the frequency, like the income, volatility of income, like the source, whether it's coming as a bonus or as a salary. All of these things that we didn't really get into in our conversation really matter and frame how people think about that money and fundamentally spend that money.
- [20:44]
B
That idea of widening the aperture to look beyond income as just one unitary thing can really make a difference. Thank you for sharing that question. Number two, who's a communicator that you admire and why?
- [20:56]
C
Oh, so many. I will say Adam Grant has just been such a powerful force. I was his student his second year when he joined Wharton, and I think he has, like, such an amazing way of connecting with people by sharing his own vulnerabilities. And so I like to emulate a lot of my teaching based on him. He's been highly influential in my life and I'm so lucky. But I think the most direct and most influential communicator in my life has been my mother. She is the queen and master of Caribbean idioms that just cut deep in a way that no one else can. Right. I was sharing recently and I just find myself now repeating her idioms. Learn to love those who love you. And that was. Those are just words from my mother or there's a lid for every pot. Or like all of these things that have so much wisdom.
- [21:45]
B
I was just gonna say wisdom in common vernacular sayings.
- [21:48]
C
Yes. In a way that is so succinct, it doesn't waste any words. She is a great orator, but it's her ability to just pull on these idioms that make her so amazing.
- [22:00]
B
And how they hit a chord. They strike a chord. And if your mother is like my mother, they come at just the right time.
- [22:06]
C
Oh yeah. Sometimes when you don't want them to, but you need them.
- [22:09]
B
And they reverberate for a while and you really see how they hit. Final question. What are the first three ingredients that go into a successful communication recipe?
- [22:19]
C
So the first, I would say, is curiosity. You can't actually engage in a conversation without being curious about the other person. If not, then you're just engaging in a soliloquy. The second would be humility to understand that what you're hearing is not necessarily what the person is saying. There's so much loss in hearing. And then I think the third is clarity. So in order to be an effective communicator, you need to be clear in your own wants and your own needs and in your own message. And so much gets lost in vagueness. I think people keep saying clarity is kindness. I think that's so true.
- [22:56]
B
Curiosity, humility and clarity. A wonderful recipe. The point about curiosity is the bridge to connection. Humility to realize that we bring a lot to our conversation that might actually get in the way of what's really being said and making sure that we are focused so that people can understand. Thank you. And thank you for providing the focus we all need to be thinking about when it comes to our finances, but more broadly about how we learn and approach very difficult, challenging situations in our lives. And financial information and finances are one of those things. This has been wonderful. Thank you, thank you. Thank you for joining us for another episode of Think Fast, Talk Smart, the podcast. To learn more about how to be more effective in your financial communication, please listen to episode 104 with Katie Milkman and episode 59 with Suu Ki Huang. This episode was produced by Kathryn Reed, Ryan Campos, and me, Matt Abrahams. With special thanks to the Wharton Podcast Crew. Our music is from Floyd Wonder. With special thanks to Podium podcast company. Please find us on YouTube and wherever you get your podcast. Be sure to subscribe and rate us. Also, follow us on LinkedIn, TikTok and Instagram. And check out fastersmarterio for deep dive videos, English language learning content and our newsletter. Please consider our premium offering an extended Deepthinks episodes. Ask Matt anything@fastersmarter IO premium before we.
- [24:32]
A
Wrap up, I just want to say thank you for listening. It really means a lot to hear how people all over the world are using these ideas in their own lives. It inspires me and the whole team that brings you this show if you want more episodes and resources, feel free to follow, subscribe, and explore past conversations. We're grateful for your support of Think Fast, Talk Smart.