— Sarah Newcomb (@finance_therapy) April 25, 2016
Orono native Sarah Newcomb is turning personal finance on its head.
It’s not a subject many people get excited about at first, but Newcomb’s new book, “Loaded: Money Psychology and How to Get Ahead Without Leaving Your Values Behind,” is getting a ton of buzz. Among those to laud the paradigm-flipping work have been Money magazine, Reuters and MarketWatch.
So what’s Newcomb writing that has everybody so intrigued?
Well, when it comes to personal finance — a subject a lot of people find stressful — it’s not necessarily all about the money. It’s about you.
“The numbers are an important part of our financial plan, but they’re only a small part,” Newcomb told MarketWatch.
Newcomb urges readers to look at money in terms of what it represents, rather than numbers on a spreadsheet or bank statement.
So income — the money you make from your job — should be thought of as your time, skills and expertise, while expenditures can be thought of as reflecting “deeper human needs.”
Once finances are broken down in terms of “money stories,” they can be more manageable, Newcomb writes.
“Your labor is valuable, so if you lose your job you haven’t lost your asset. You’ve lost a buyer, but you haven’t lost an asset,” she told MarketWatch, for instance, adding that on the spending side, “A lot of people, when they trace their money for a certain amount of time, realize they’re spending hundreds of dollars a month on food and drink at restaurants.
“The need that they’re meeting there is probably not for food,” she continued. “It might be for social connection, in which case hosting a potluck can meet that same need without costing nearly as much money.”
The author, now a behavioral economist for the investment research firm Morningstar in Washington, D.C., also said many people struggle to save for retirement more because of these mental hangups over time and money.
Looking at retirement saving less as a number that needs to grow to a certain size over the coming decades and more as a value that reflects a future quality of life — specific needs and your particular life — can make a difference in how you approach it, she suggested.
“There is some encouraging work out there on how to counter those effects,” she said in the MarketWatch interview. “We can hack our brains in a sense, do little visualization exercises that put a lot of clarity and detail into your mental picture of the future. Even age progressing your face [can help].”