Financial Literacy - Retirement income planning
David Krueger
What does money mean to you?

Spotlight: David Krueger

Stumped when it comes to retirement planning?

Maybe you don't understand the secret language of money and the "money story" it has been trying to tell you since before you were born.

In "The Secret Language of Money: How to Make Smarter Financial Decisions and Live a Richer Life," former psychiatrist-turned-executive coach David Krueger casts a clinician's eye at our relationship with the green stuff to find out why rational people can act so irrationally about money.

Bankrate put Krueger on the couch to explore his thoughts on everything from Bernie Madoff to retirement income formulas.

At a glance
Name: David Krueger, M.D.
Hometown: Houston, Texas
Education: University of Texas; Louisiana State University School of Medicine; psychiatry residency at University of Colorado School of Medicine
Career highlights:
  • As CEO of MentorPath, an executive coaching practice, Krueger's clients included CEOs of multinational corporations, best-selling authors and professional athletes.
  • Published 15 books, including "Making Memories: Reflections on Parenting from the Head of a Psychoanalyst" and "Success and the Fear of Success in Women."
  • Serves as mentor coach and dean of curriculum for the Coach Training Alliance.
  • Practiced and taught psychiatry and psychoanalysis for 25 years.
q_v2.gif You've written a book titled "The Secret Language of Money." What's so secret? We earn it, we spend it. End of story, right?

a_v2.gif Yes! (Laughs.) Actually, money is so simple because it's merely a unit of exchange. But at the same time, it is so complicated because it operates in our lives on so many levels that are emotional, unspoken and subconscious. The secret language is really the psychological and symbolic language that we use to make money say whatever we tell it to. Money speaks to us and we speak with money. It's kind of a Rorschach; we imbue it with whatever values or meanings we want.

q_v2.gif You refer to that relationship as our individual "money story." Yet the problem seems to be that most of us have no clue what our money story is, much less how it's going to turn out.

a_v2.gif That's true, in part because we are so close to it. Our relationship with money is the longest relationship of our lives. It began before we were born with our parents' money stories, it ends after we are gone. The key is in how we craft that relationship ourselves. It's important to get it right.

q_v2.gif Research into money and its effects on the brain and human behavior has kicked into high gear recently as the fields of psychology, biology, physics and neuroeconomics converge. Where do you fit into the mix?

a_v2.gif What I hope to do is bring those exciting discoveries together, synthesize them and apply them to strategic coaching. Put simply, I hope to help people learn how to change their money story.

q_v2.gif One money story we have all been following is the Bernie Madoff scandal. Is that a textbook example of retirement investing gone terribly awry?

a_v2.gif What can we learn from Madoff? There are dozens of money mistakes and financial fallacies that we embrace because of the way our brains work. One that applies to Madoff is exclusivity, the desire to be special or chosen. We often see this in scams. It takes a person who wants to be chosen, and that may vault them beyond common sense into an emotional choice. Madoff appealed to people's desire for status by offering them membership in his exclusive club. He would turn down wealthy people. One investor said you had to go to him, he wouldn't come to you, and the first few times he said, "Not yet." Finally, when he did say yes, they would give him every penny.

Another factor is what psychologists call "transference fallacy." He was believable as an authority figure. He was chairman of the Nasdaq. He was a philanthropist. He had a huge following. We tend to idealize people who portray confidence and manifest wealth, in hope we may participate in some of their glory. It's the same form of social contagion that caused the market to lose $1.2 trillion last fall.

There's also confirmation bias. We make a choice, then cherry-pick data to confirm that we made the right decision, obscuring evidence to the contrary.

q_v2.gif Then there was good old garden-variety greed.

a_v2.gif Absolutely. But greed has gotten a bad name. Actually, greed is a rapacious desire for more. It could be a passion; it doesn't have to be a bad thing. But emotion and immediacy can trump logic and thinking. That's one of the basic things we know from neuroscience -- when there is an emotional response, the right brain can hijack and hold hostage the left brain, and reason, logic and long-term planning get trumped.

q_v2.gif Did the nightmare on Wall Street lead many Americans to question their money story?

a_v2.gif Exactly. So many people had done all the right things, made all the right moves and preparations, and still the rules changed. So there is a feeling of helplessness. And that helplessness creates fear and concerns and other things, all of which focus on money.


Take couples and relationships. There is so much focus and concern about money, and some of those issues really are about money. But many others are issues that hitchhike on money because money is something that is tangible, concrete and can represent almost everything.

Money is one of the two or three more common things that emotional issues hitchhike on. Others include food and sex. But money, I really believe, leads the way.

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