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Explaining financial behavior on a napkin

Marketplace Staff Mar 10, 2011

Explaining financial behavior on a napkin

Marketplace Staff Mar 10, 2011


Tess Vigeland: Yes, personal finance can be complex. Investments, accounts, spending and saving priorities. But sometimes it’s just common sense concepts. So simple, all you need is a bar napkin and a Sharpie to convey them.

It’s just that simple for Carl Richards. If you’re a fan of the New York Times Bucks blog, you know his work. He’ll take an economic term or idea and draw a simple picture that captures it. Carl welcome to the show.

Carl Richards: Thank you Tess.

VIGELAND: So these drawings are really some of my favorite ways to get at the behavioral concepts in finance. The best part about it is that you take these very complicated issues and boil them down to a napkin drawing. Is this how you tend to think of things anyway?

RICHARDS: Yeah, I guess there’s been a tendency for a long time to try and get to, what we refer to, as the simplicity on the other side of complexity, right? Just trying to get to the point where even I can understand the concept was the goal.

VIGELAND: Yeah. Well, art on the radio is always a challenge, but let’s go ahead and see if we can describe one of these napkins. And the one that I’ve picked out, you have a square and a circle and you talk about my view of money and your view of money.

RICHARDS: That was interesting. Most of these are generated by conversations I’ve had with people. And I was trying to capture this idea of two people not seeing eye-to-eye, this idea that we all bring different perspectives and views to our conversations about money. And that day I was trying to capture two people not seeing eye-to-eye. And I don’t know how to draw, so I couldn’t draw two people. So I was trying to somehow capture my view of money is from your view of money. We need to remember that.

VIGELAND: So you say that these drawings are based on actual conversations that you have or hear. What was this one?

RICHARDS: This one was probably… Most of the conversations around money, the series we’ve been doing, has been based on conversations with my wife… So it was probably one of those days where I was like, gosh, it’s so interesting that after 15 years of marriage — and this being my profession — that we still don’t see eye-to-eye. And we have to take this time to pause and say, “Hey, is this what you meant?”

VIGELAND: So we have this square and we have this circle, so we have two different views of money. What was your point behind that? I mean, it’s obvious that we all have different views on money. So again, how are we supposed to square this peg?

RICHARDS: The point behind that entire series has been, often we have these conversations around money. Instead of talking about it specifically, I don’t know when this started, but money, politics and sex, I guess, were the things that you didn’t talk about in polite company. At least my generation. So, we’ve never really been given the tools to discuss money in a healthy way. And that certainly hasn’t been good. Money’s one of the number one causes of divorce. Certainly, one of the number one causes of the heated discussions in my family.

VIGELAND: Then how do you approach that subject with a spouse or with a long-term partner. Because I mean, if it is one of those verboten things where we try to talk around it all the time, how do you get to the point where you can be direct?

RICHARDS: I think it’s actually deciding to stop for a second and have a conversation just about that. If you are repeatedly — and this is sort of what happened to me in the last year or so — ’cause I realized we were repeatedly having the same dysfunctional conversation, over and over for the last 10 years. And I’m not smart enough to recognize it until it’s been 10 years, but I finally said, “Wait a second, why are we having the same discussion again?”

VIGELAND: And you’re a certified financial planner.

RICHARDS: Amen. I mean, that’s like, it’s not necessarily the cobbler that’s got holes in his shoes. But we all bring this baggage and, you know, we’ve talked about whether it breaks on gender lines, whether it’s based on education or your upbringing or your family. And it really in the end it doesn’t matter. What matters is that we’re all bringing this different set of glasses.

VIGELAND: We will have a photo of this napkin drawing on our website. And we’re going to be visiting with Carl with more drawings and some explanation of the gap in behavior that we find among all of us trying to manage our money. Carl, thanks so much.

RICHARDS: Thank you Tess.

Vigeland: In addition to the drawing, we’ve got a link to Richards’ Behavior Gap blog.

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