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November 14, 2024 • 41min
The #1 Money Rule to Live By: Understand The Psychology of Money
The Mel Robbins Podcast
In this episode, financial expert Farnoosh Torabi joins Mel Robbins for an in-depth discussion about fear and anxiety around money. They explore why so many people struggle with financial fears, where these fears come from, and how to transform your relationship with money. The conversation provides practical insights for anyone looking to better understand and overcome their money fears.
The #1 Money Rule to Live By: Understand The Psychology of Money
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Key Takeaways
- Money is a tool for power and autonomy - Having your own money gives you power over your decisions and choices
- Fear around money is normal and universal - The key is learning how to use fear productively rather than letting it paralyze you
- Top 5 money fears: Not having enough, losing it all, wanting too much (especially for women), passing money issues to children, dying without a financial legacy
- Financial fear often stems from childhood experiences and family dynamics around money
- The solution isn't to be "fearless" but rather to understand your fears and use them as motivation to take action
- Financial independence is especially critical for women to have autonomy and agency in their lives
Introduction
In this episode, financial expert Farnoosh Torabi joins Mel Robbins for an in-depth discussion about fear and anxiety around money. They explore why so many people struggle with financial fears, where these fears come from, and how to transform your relationship with money. The conversation provides practical insights for anyone looking to better understand and overcome their money fears.
Topics Discussed
Understanding Money as a Tool (14:04)
Farnoosh explains that money should be viewed as a tool that provides access and creates bridges in life. She shares her personal story of growing up watching her immigrant parents fight about money, which shaped her understanding of financial independence.
- Money is not just a "nice to have" - it's essential for autonomy and choice
- Financial independence is particularly important for women
- "Being financially independent is your right" - Farnoosh Torabi
- Having your own money gives you power over your decisions without consequences or permission needed
The Power Dynamic of Money (16:33)
Mel and Farnoosh discuss how money equals power, both in relationships and society at large. They explore the complexities this creates, especially in relationships.
- Money provides options and autonomy in life choices
- Important distinction between power over others vs. power to help and support
- Having your own money means being able to make choices independently
- "Imagine a world where you can roam freely and choose for yourself by yourself" - Farnoosh Torabi
Top Five Money Fears (24:36)
Farnoosh outlines the most common fears people have around money and explains why each one is significant.
- Fear of not having enough - especially relevant given current economic conditions
- Fear of losing everything - being one job loss or mistake away from financial ruin
- Fear of wanting too much - particularly impacts women who fear being seen as too financially ambitious
- Fear of passing money issues to children - worry about repeating cycles or creating new problems
- Fear of dying without a financial legacy - concern about estate planning and leaving something behind
Tracing Financial Fears to Their Root (28:07)
The discussion explores how understanding the origin of money fears is crucial for addressing them effectively.
- Many money fears are inherited from family experiences
- Important to ask: "Is this my fear or someone else's?"
- Some fears may have served a purpose earlier in life but are no longer helpful
- "Sometimes you need to trace it to its root. Where did this fear come from? Is it even my fear?" - Farnoosh Torabi
Addressing Home Ownership Fears (36:59)
The conversation turns to specific fears around home ownership and what they represent.
- Fear often connects to deeper beliefs about financial maturity and success
- Important to examine cultural messages about homeownership
- Question assumptions about renting being "money down the drain"
- Consider what homeownership represents beyond just having a place to live
Using Fear as Motivation (38:21)
Farnoosh introduces a powerful technique for transforming fear into action.
- Imagine worst-case scenarios in detail to create urgency
- Use fear to motivate present action rather than paralysis
- Create concrete plans for handling feared situations
- "Don't just sit in the what if. Go to the place where things have really fallen apart for you because you are scared now." - Farnoosh Torabi
The Fourth F: Figure It Out (40:19)
Beyond the traditional fight, flight, or freeze responses to fear, Farnoosh introduces a fourth option.
- Fear often appears for valid reasons - especially around major financial decisions
- Use fear as a signal to create action plans
- Transform paralyzing fear into productive problem-solving
- Fear can serve as a protective mechanism when properly understood
Practical Steps for Managing Money Fears (44:09)
The discussion provides concrete strategies for dealing with financial fears.
- Move from "what if" to "what now" thinking
- Create specific action plans for feared scenarios
- Research resources and options before they're needed
- Use fear as motivation to build financial security
The Value of Having Fear (45:13)
The conversation concludes with important insights about the positive role of fear in financial decision-making.
- Fear can be a valuable ally in making sound financial decisions
- Being "fearless" isn't the goal - using fear productively is
- Fear helps identify what we value and want to protect
- "When we are able to face our fear, I think we're only getting closer to who we really are, what we value, what we want to protect." - Farnoosh Torabi
Conclusion
The episode emphasizes that fear around money is normal and can be transformed from a paralyzing force into a motivating one. The key is understanding your fears, tracing them to their origins, and using them as catalysts for positive financial action. Rather than trying to eliminate money fears, the goal should be developing a healthy relationship with both money and the fears that come with it.