Recently, I came across the idea of Financial Abstraction: the notion that as money becomes more of an idea and less tangible, it changes the way we interact with it on a regular basis. Adam Carroll, an internationally recognized financial literacy expert, discusses the idea of Financial Abstraction in his Ted Talk, “What Playing Monopoly with Real Money Taught Me About My Kids–and Humanity” (linked below).
His playful experiment with his own family through a high stakes game of Monopoly highlights an example of our attitude toward money—our willingness to spend and desire to save both change drastically as the consequences of those actions are more visible.
Translate this off the Monopoly board where Adam’s experiment took place, and into our daily lives. Looking at spending alone, this century has seen numerous changes in payment methods; having cash on hand is becoming more of a rarity, and the ability to tap a card, or even your phone, to complete a purchase is now expected. As you might expect, consumers spend more when using cards than they do if they must physically fork over the cash for a purchase.
Adam discusses what happens to today’s youth when money becomes more of a concept than ever before. If boundaries and good habits are not learned, the impression that money is just an idea sinks in at an early age, and suddenly as an adult that “idea” has very real and harmful consequences.
I believe this to be a valid point when it comes to dealing with personal and household finances and educating the next generation. I also believe that this can be taken a step further to investment and savings goals. With the digitization of the financial landscape also comes ease—more data, quicker processing, and hopefully more transparency.
It’s our goal as professional advisors to help you use these tools to better yourself financially, and make sure attainable goals are in place to produce real results and avoid these evermore frequent pitfalls. Whether that means helping you and your family plan and prepare for the future, establishing a regular deposit program, or discussing current or planned spending, we’re here to support those needs. Meeting with your advisor regularly will help maintain a current strategy and ensure that goals are achievable. In a world where money’s natural state is becoming increasingly opaque, we can help shed light on your financial future by building a plan that works for you and your household.
Check out Adam Carroll’s talk below for some interesting thoughts on our behavior around money, and don’t hesitate to reach out to your Fiduciary Investment Advisor for advice or counsel. We look forward to hearing from you!