How do your finances make you feel?
If, like many people, your relationship with money is more ‘rocky road’ than ‘marital bliss’, there’s no need to feel guilty or ashamed.
In the words of Martha Lawton: “We all have this image of a person who’s good with money as being logical and rational, but that person doesn’t really exist – most of us make our decisions in a very emotional way.”
Martha is a money coach, the host and co-creator of the Squanderlust podcast and, we’re pleased to say, one of our newest hotdesking members.
Prior to launching her own business, Martha worked in the charity sector for 14 years, specialising in anti-poverty financial education and helping people on low incomes get access to the right financial products for their needs.
What is money coaching, exactly?
Money coaching is different from regulated financial planning and advice.
Regulated financial planning is about matching people with financial products that will help them achieve their goals, while money coaching involves helping people understand how they think and feel about money and “where they might be getting in their own way.”
There’s a big difference between knowing what to do with your money and actually doing it, says Martha. “If you’ve got that intention-action gap, I’m the person to help you get over it.”
Martha often works with people who are going through a life change that has implications on their finances, such as a divorce, and helps them navigate their way through it from a financial perspective.
She also works with people who might be experiencing money stress because they’re not on the same financial page as their partner, or individuals who just feel a bit lost and confused when it comes to money and want to understand their personal finances better.
“I sometimes coach people who have a goal that they never seem to be able to reach. For example, it might be that they want to go self-employed, but they don’t know what to do to get to the point where they’re comfortably ready to live their dream.
“Some of my clients might earn a decent income but find themselves acquiring debt. They’re thinking: ‘I know this isn’t right, but what do I need to do to change the situation?’”
Martha received money coaching training from Simone Gnessen who runs Wise Monkey Financial Coaching. Simone is well-regarded by finance professionals – a lot of her alumni are people who’ve worked in financial services, such as former financial planners.
“There are some money coaches out there who are a bit ‘magical thinking’ and claim that if you just daydream hard enough you’ll become fabulously wealthy.
“I’m more practical, and – wherever possible – evidence based. I’m interested in what behavioural psychology has shown us to be the reality about how we act around money, and how we can use that to be realistic about what we’re actually going to do.”
Understanding the psychology of money
Podcasts about money usually fall under two categories:
First, there’s the ‘If you’re a serious investor who’s serious about money and reading serious newspapers like the Financial Times this podcast is for you and if you’re not a serious investor with serious amounts of money then YOU’RE A LOSER’-style podcasts.
Then there’s the ‘How to find the best deals on absolutely everything!!’-style podcasts.
Squanderlust isn’t either of these things.
It was one of the first podcasts to explore the emotional side of money, unpicking why it is that our actions aren’t always as good as our intentions and, crucially, what we can do about it.
“I’m interested in what behavioural psychology has shown us to be the reality about how we act around money, and how we can use that to be realistic about what we’re actually going to do.”
It’s reassuring to know that “it’s really normal to not be very good with money”, and it hasn’t necessarily got to do with us being stupid, greedy, selfish or lazy.
“Behavioural science teaches us that there’s a huge amount in our innate psychology that says humans aren’t meant to handle money well,” says Martha.
Our relationship with money is flavoured by our personal experiences too, as well as issues around money and gender, money and race, money and ability/disability, etc.
“You don’t have to be ashamed of it, you don’t have to be frightened of it and you don’t have to be bamboozled by the serious people telling you serious things about serious money.”
People interact with money in a myriad of ways, and this is reflected in the podcast.
Although Martha now runs the podcast on her own, she set it up with her friend Alex who co-hosted the first three series.
Martha says Alex was someone who was very uncomfortable with spending money, to the point where she’d be “too hard on herself and not give herself enough money for joy”.
Alex had to think about ways to spend money.
“You can follow her journey throughout the show until she got to the point where she was much more comfortable prioritising elements of her spending that made her feel happy.”
“I was the other end of the scale. I’ve never got into serious debt but I definitely overspent a lot in my younger days. I had to go on my own journey when I realised I didn’t want to be that person anymore.”
[Caption: Episode 36. Are you The Warrior, The Magician or The Fool?]
Ethical investing and investment apps
Martha’s noticed that interest in ethical investing is growing. It’s a fascinating topic, and one that’s covered in episode 27 of Squanderlust which aired during lockdown 2020.
In the episode Martha is joined – remotely – by Georgia Stewart, the Chief Executive of ethical fintech company Tumelo, and Tom Morris, Chartered Financial Planner at Ovation Finance and a director of the Initiative for Financial Wellbeing.
Among other things, the trio discuss what to do if you don’t want your pension or ISA funds to be invested in a particular sector, such as tobacco, coal, or weapons manufacture.
Martha’s also noticed that increasingly, people in their late-20s to mid-30s are getting into investing. But not in the traditional sense.
A lot of budding investors are investing in trendy but potentially high risk companies using one of the growing number of investing apps out there.
These aren’t people who are naturally high risk investors.
“If you talked to them about what they want to achieve with their investments, they’re not looking to take a really high risk to get a really high reward.
“There’s less awareness of the still profitable but lower risk ways of pooling investments so you’re not effectively just betting on one company.”
“They want to grow their money above inflation, achieve a solid return and build a good future for themselves. But their perception of investing is that you have to take big risks.
“There’s less awareness of the still profitable but lower risk ways of pooling investments so you’re not effectively just betting on one company.”
Many investment apps make their money from individual trades, not the profit users make on their investments, so it’s in the app’s interest to keep people engaged.
“They’re not so interested in whether you’re making lots of money or if your investments are appropriate to the level of risk you want to take.
“That’s something that concerns me, definitely.”
It’s time to talk about money.
As Martha says, our relationship with money usually only becomes salient when we go through a life change. Until something significant happens, we coast.
“Most of us spend most of our time coasting and that can be really unhelpful.
“Often, the best time to do something is when you’re not in the middle of the giant stress that is trying to move house, or when you’re pregnant and have a 9-month countdown to baby, or when you’ve just had a breakup and you’re awash with horrible hormones!”
So, it’s time to ask yourself: is your money working the way you want it to?
If not, it might be time to check in with Martha. Either way, we’d thoroughly recommend listening to the Squanderlust podcast for a fascinating insight into the psychology of money.
