#57 Dr. Alex Melkumian – Transcript

Louis van der Merwe
Welcome to another episode of Financial Planners, South Africa. I’m very excited to have with me today in the studio, Dr. Alex Melkumian. Dr. Alex, thank you so much for joining me it’s been in the making for for actually quite a few months. It started off with us connecting on LinkedIn, you finally publishing your book and we getting to read it and the wealth of knowledge that you shared around the work that you’re doing in financial psychology, and the promotion of financial planners and the great work that we get to do every day. Thank you so much for being here.

Dr. Alex Melkumian
Absolute pleasure to be here. Thank you so much. I’m so glad we made it happen. Today’s a great day for it for a chat about money.

Louis van der Merwe
Absolutely. I think every day could be could be a great day. Alex, you you have a unique story about ending up in America. And it’s something that you’ve shared quite a bit. But if you don’t mind, can we maybe start with that kind of origin story? How did you get to where you are today?

Dr. Alex Melkumian
Well, my origin story, it all started way back when many years ago in the Soviet Union, I was born and raised in Moscow. And I used to be much more open and talking about that, obviously, the political component to what’s happening right now, between Russia and the rest of the world, I’m a little bit more shy in disclosing that. But you know, this is my story, this is my money story. And we’re kind of probably we’ll get into that a little later. That component. And so growing up in a communist country, sort of at the tail end of the communist regime, you know, in the form of a lot of what I did or didn’t do with money, my beliefs about money. And I emigrated to the United States, Moscow to La It sounds very glamorous, but it really wasn’t, you know, I didn’t really have a really deep connection with money, it was just something that was and again, in a communist country, and never was at the forefront of any conversations, right. And the second piece that’s really important to bring up here is that, you know, when I went to emigrate, it actually did not speak English, I only knew a few words, probably three of them are not, are not really podcast, podcasts were they. And the other few, I did learn French in school. So there were a translation from French to English. And, yeah, it was quite a journey to assimilate and, you know, become a part of and really learn the cultural narrative, the cultural norms, of living in a completely opposite or extremely opposite cultures, such as the United States. And so I’m pretty passionate about financial literacy, because I feel like it’s a something that I can really, really relate to, as someone who did not speak a language. And, you know, one story that I oftentimes share is, you know, I think I was in you know, junior high or high school and still really was not fluent at all. And I was, after school sort of wandering around and kind of got lost, lost in time, spaced out and the next thing I know, I have to get home and I realized that I don’t know how to ask what time it is. I don’t know how to ask, you know what bus route to take. I don’t know how much how to ask how much the bus bear would be. You So this pivotal moment of not being able to connect, not being able to understand, feeling completely isolated and also ashamed, right, the shame component, that there’s something wrong with me, that that really left a major imprint and a mark on sort of my own psyche and how I dealt with the world. And so, a lot of times that my company, my financial Psychology Center, you know, this is a lens through which we view and help clients sort of organize their,

their behavior with money. You know, a lot of times what I hear from clients and my staff bring the same narrative is that our clients feel like they don’t speak the language of money. Like somehow, either they didn’t learn in school, which is partially true, there’s not a lot of financial literacy happening, at least in the States. And secondly, it’s oftentimes that they feel like they’re not naturally good with money, right? So they feel isolated, those same feelings, isolation, shame, maybe even guilt in some way, right. And it really kind of boils over into feeling dread, in dealing with money, feeling despair, oh, if I don’t make this happen. Now, this is my, this is my big move. If I don’t make this, you know, 100% successful, then I’m doomed. And so it comes with this, all or nothing sort of thinking. But what we start talking about is, you know, becoming literate. And becoming literate really delves into learning the alphabet first, then putting the those letters together into words than sentences, sentences and paragraphs, and eventually you become financially literate. And you get to learn the speak the language of money. And I think, for somebody who’s not necessarily again, feels like they are naturally good with money. It’s a narrative narrative and a context that they can relate to. And it takes a helps it takes the judgment out of sort of the only dealing with money in a practical sense, in a more rigid mathematical equation only got assets. So that’s probably where I would kind of slow down here and see what feedback you have.

Louis van der Merwe
At least that’s, that’s such a wonderful story, and how you specifically how you mentioned, you know, people feel like they’re not speaking the language of money. I’m just curious, kind of what type of questions would you ask for them to get to that understanding? Like, where do you start these conversations? Because I would imagine someone doesn’t just say, Hey, I am not comfortable dealing with money, like, how do you? How do you start unraveling? That?

Dr. Alex Melkumian
Great question. So I think a great starting point, and I mentioned this, this term, is a Money Story. And I think the Money Story is such a fluid and non judgmental way of talking about your personal experience with money, that a lot of times, that’s the starting point for our clients is, can you write down or even tell me in session? In a meeting? How did you What was your experience of money? I mean, tell me about your memories, earliest memories, a lot of times we start conversation only talking about, well, you know, my dad was, you know, working a lot, so much so that, you know, he prioritized being a provider, but I felt like money actually took my dad away from me, something like that. And, you know, we’ve heard that, you know, quite a bit. You know, a lot of times, it’s, you know, either do as I as my parents did, because they were pretty good with money or do the opposite. Because they were, they made such a horrible example of how they dealt with money. So, you know, many clients come into the two sessions saying, I, my, my mom or my dad, the way they dealt with money was completely atrocious. And I just do not want to make the same mistakes that they did. So I’m here to learn. I’m here to understand, you know, what is it that you know, I’m, what patterns Am I repeating in my own life that I may have picked up from them? And sort of, kind of going back to a bit of a, the My Story of origin. My background is in clinical psychology. And, you know, I kind of got the the fire and the passion to work in the financial field at the tail end of the last great recession in 2008. Eight, nine, when my clients were talking about the financial stress that they were feeling, and when I started to sort of ask my fellow clinicians and therapists about, Hey, are you really, you know, hearing the same things? And what tools are you using to help our clients deal with financial stress and, you know, depression, that’s, that’s ensuing at the, you know, and the mental health impact that money has on our daily lives. And unfortunately, yes, the other therapists did, mentioned that their clients were also experiencing these, but there were no tools to deal, no clinically, no political tools, or evidence based practices that were developed at that point, that would be, you know, helpful in dealing with financial stress and all the other issues and symptoms that I discussed. So that kind of perpetuated me getting in getting inspired and sort of building it from scratch. And I’m not trying to say that I’m the first one or the only one, there are many people who came before me. But we’re a small group, and we’re very passionate about financial wellness, financial, literacy and financial psychology.

Louis van der Merwe
What is it about money? That is this unique aspect that cause these things? You know, I’m just wondering, how is it different from stress that schools do a problematic Korea or problematic relationships? Why, why is money so unique in that aspect,

Dr. Alex Melkumian
it is unique, but it’s not at the same time. So when you mentioned the work, they’re actually obviously related. So when we’re worried about our profession, or being able to sort of, you know, maybe rise to the top of our professional field, or some, you know, professionally related questions there at the root of it, I think is, is our relationship with money. And as I mentioned, in my book, financial psychology, restoring financial wellness in a postcode, a COVID. Economy, it’s our relationship with earning, right our relationship with earning that, you know, some people think that, you know, if they earn enough, or earning is the answer to all of their problems. And that delves into some research done by Dr. Brad Clontz. I’m sure most of most people know who he is, and the money scripts that he came up with. And so that’s a money worship belief system, that as long as I have more money, and I can act and earn, then all my problems will go away. And I kind of started saying, after, you know, working with clients, I said, you can’t out earn your ego, sometimes. Just earning and earning, earning, but then spending equal amounts, right, or even more, so that equation never, never goes well, right? That’s a that’s a road and a journey into, you know, deprivation and not being able to sustain the type of life that you’re, you’re building. So

Louis van der Merwe
are you using those manuscript assessments with your clients? Or would your sessions typically worked very

Dr. Alex Melkumian
well, and I love so that for me, and I talked about in the book, you know, part three of the book really delves into the clinical treatment, the psychological treatment of the clients that we work with. And my preference, and my, my, my evidence based practice that I usually try to implement with clients is starting with a narrative piece starting with the money story, because it’s so non judgmental, it’s so non threatening, but in there is everything in there is your life experience and your beliefs, and how you feel about money. So based on that, that’s the starting point. And when we start talking about scripts, you can actually read through your money story and pick out literally pick out, you know, oh, this is a, you know, money worships. This is a money status. This is a money avoidance script, which is probably actually the most common, right. And so it’s actually makes it makes it a lot easier to deal with the cognitive and behavioral and the belief system that our clients bring into sessions when when you have the money story right in front of me. But to get back to the question you asked about, what is it about money? That’s so difficult? Actually, we have to kind of look at what happens in our brains. And how does our brain process money? And what research have shown is that money, food and sex money, food and sex are processed by the same part of the brain called the basal ganglia. And that’s located in the emotional part of the brain. So what happens is that it’s it basically triggers the survival mechanism, the survival instinct, the same way that, you know, famine would the same way that you know, some sexual urges would. So that’s why this this relationship with money runs so deep.

Louis van der Merwe
So would this be every time you have to make a financial decision that part of your brain would be firing? Well, it depends.

Dr. Alex Melkumian
It depends on if you feel stressed or not, I think the initial the way I would answer it is, if you, you feel like there’s a lot riding on this decision, right? And one of the narratives that our minds tell us is, this is the this is my one shot, right? I have to make, you know, do this perfectly, or I’m never going to make it. So these sort of extreme ways of looking at, you know, this, this next action, let’s say, I don’t want to talk in hypotheticals. How about, you know, at the beginning of the pandemic, and everything that was going on financially, and people actually sort of starting to start to play with investment and stock and being day traders, right? You know, let’s say you’re in an industry that was eradicated by COVID. And now you’re sitting in front of a computer screen trying to make sense of, you know, the stock market, because your life really depends on, right. So what happens is that we get into what’s called a survival, survival response, or the fight flight and freeze response, right? Nothing, nothing, sort of brand new. But that’s an instinctual response, that we’re either going to fight through this, you know, whatever is happening with us right now. And a lot of those people who were in their fight mode or on LinkedIn, and pivoting and making moves, and all of that, and then some people really needed to take a step back. And we’re in sort of this flight mode, they really needed to retreat and take care of themselves and take care of their emotional well being, and psychological well being before they were sort of ready and able to go out there in the world and start start pivoting as well. And sometimes it’s the indecision over what to do. So that’s okay, as well.

Louis van der Merwe
So Alex, when these clients are going to see their financial planner, and the financial planner on noticing the stress, these problematic symptoms, what can that plan to do to better prepare the client before they come to you to almost set the stage for the work that you would do with them?

Dr. Alex Melkumian
Well, I think what we’re talking about as the human side of money, the emotional side of money, I think there’s numerous terms that are used in the financial wellness space. Also, I’ve heard it called interior finance versus exterior finance. Right? So how are we aligned internally? And what are we like? How are we likely to respond? And again, this is what makes financial psychology is what makes personal finance personal, that unfortunately, or fortunately, depending how you look at it, each one of us is unique. Alright, so obviously, economists look at patterns of behavior on sort of this macro scale. But when we take that macro scale funnel, and then funnel it down to the, to the personal level, it may not be so and this is partially what sort of again drove me to the work that I do is that economics is based on on rational choice theory, right. But at the personal level, as a psychologist with a clinical training and in clinical psychology, I know that rationality is not probably at the forefront of most of our behavior and thought process. We’re unique, we’re impulsive, we don’t know why we chose the shirt that we did this morning to wear navies because it was the cleanest or I just felt like wearing blue today, right? We don’t know, when we start talking about these things. I think the individualized process and this is what we were chatting with you and I prior to getting on the call is what kind of conversation can we have with our clients that is going to make them feel heard understood? About what stress they’re going through? How can we help them feel heard about the goals that they want to achieve? How do we make that conversation very meaningful and and personal to them. Because then if we can create that environment, that feeling of being heard and secure and safe, then they’re much more likely to trust us to engage with us. And to feel like yes, this person has understands me exactly.

Louis van der Merwe
Can we talk about that? Yeah, I mean, in in that space like that, that physical location, you know, you may be walking into the bank to see your financial planner, like, are we? Are we setting ourselves up for success to have these type of conversations? What are the things that you’ve seen in financial planning practices, or maybe even therapists offers that are that are really not working, that we should be avoiding you shouldn’t be, should be going the other way to actually set the physical scene because I think this is sometimes something we’re not talking about enough, I would focus

Dr. Alex Melkumian
on the relationship, right, the relationship is the most important piece. So some data and statistics, this is strictly from the clinical psychology side is that the data is 30% of treatment, or the modality that the therapist chooses accounts for 30% of the success of the treatment, let’s say you chose narrative therapy, or psychodynamic, or cognitive behavioral, or maybe a combination. That’s only 30% of the success of the treatment, you know, what the other seven years the relationship, the rapport, if our clients don’t trust us, don’t feel comfortable with us. They’re not, you know, all of the interventions, and the techniques are a moot point at that point. And the same thing can be applied in really any walk of life, whether you’re doing you’re doing sales, whether you’re doing financial planning, it’s the relationships. So how many times have we heard about great salesmen? They’ll never, you know, sit you down and start asking practical questions. They’re gonna ask you random questions just about you. Just you understand who you are.

Louis van der Merwe
It’s the same thing true for when your clients coming to see you. Like, where do you? Where do you start that conversation? I know you’ve spoken about the money story, but is there a piece before that, to get them comfortable?

Dr. Alex Melkumian
Yeah, so I mean, there’s different sort of ways of addressing wanted, it just depends on what the client is bringing in sort of my last client a couple of weeks ago, was really, really feeling the pressure of all of the credit card debt, and felt like they were in crisis. At the end of the first session, they were able to share with me that they have passing thoughts of taking their own life. Nothing serious. But that’s the place where our mind goes when we feel isolated, ashamed, all those feelings that we were just talking about earlier. And like, there is no way out that there is no solution. So part of the first meeting or first several meetings is to address the most important or important issues important to the client, right? It’s almost like we, you know, coming from a medical model way back when it’s triaging, right, if you’re, if you’re hemorrhaging blood, we have to address that particular crisis. If you’re hemorrhaging, hemorrhaging debt, we have to address that first. Otherwise, the client will not hear us, right. But if they’re walking in without necessarily that level of intensity, and those type of issues and problems, and we can start somewhere else, then we can start with, you know, a Money Story. But, you know, again, it’s sort of falling back into my clinical background. You know, there’s a cliche phrase that is always used as meeting the client, whether or not they’re the expert, and they will let you guide them. So you ask them, you know, where they feel they are financially right now. What are they willing, you know, what have they tried? What happened? They try, and, you know, I like to have fun, I like to have this, you know, build a relationship and have a conversational sort of lightness to the session, if permitted, and we’re not talking about Paris, suicidality. That’s a big term. So I have two rules. Number one, if it works, do more of that. And if it doesn’t work, change it and do something else. And of course, they log it logging in, and they’re logging in with Dr. Alex Melkonian. And they’re, you know, waiting for this big, you know, either financial plan or a whole strategy, and we can talk about strategy, but I think the lightness of it really takes away the distress that they’re walking in with my my goal always is to provide help my clients, just like it happened with the client I just described, she walked away from that particular session, saying that, you know, she felt hopeful that at least until the next week that we meet, she’s willing to, you know, please think about and do some of the interventions that we discussed. And that’s a big step from somebody who was sort of contemplating contemplating ending it all. Again, not in a serious way. But you’ve offered

Louis van der Merwe
that helping hand, how did you determine that it’s not in a serious way, because I’m asking that, because I’ve often not often, but I’ve been in a few conversations where suicidality has come up. And if my first response is almost as a well, we need to make sure that you’re speaking to someone that can actually deal with this, which I feel is the right way. But as a clinician, what process do you follow? Or is that just experience based where you can say, well, actually, I think this is probably not that serious, but it’s something to work.

Dr. Alex Melkumian
Yeah, it’s a little bit about obviously, I’m colloquially trained to deal with the most difficult situations. So, you know, in financial therapy, it’s actually a sort of a delineation to planners, even, even though the planners would sort of learn more of the human side of money. They’re not necessarily equipped and trained to deal with somebody who is struggling, psychologically, in a clinic that, you know, in a clinical way, clinical depression, maybe even sort of bipolar disorder, or something like that, those disorders can really have a huge impact on how we deal with money and money impacting our mental health as well. But having said all that, and then being clinically trained, and in dealing with suicidality, things like that, you ask questions, you know, are, how serious are you and you have to be somewhat direct about that, you know, and sometimes the clients actually appreciate that sort of direct type of questioning, because nobody’s asking them that question. And there’s a reason why because most people feel afraid that they will not be able to handle the fact that there’s, you know, somebody else saying heads saying, Hey, I’m really thinking about taking my own life, and they don’t know what to do. And to anxious people are not necessarily a good equation for success in that moment. But going back to that particular client, she mentioned herself, that I just came to the end of my rope. And those thoughts were just sort of flying around in my head. But I was I know, I was not serious. So that’s how I knew. Right. And then the other part is, you know, really being transparent and vulnerable with with clients like that, and discussing how much you appreciate the fact that they have enough trust in us in me to divulge that information, because it because it is a big step. And part of you know, therapeutic techniques, does involve recall it, you know, validation and normalization, that you’re not alone. You have you have knee and you know, basically I go into oftentimes, you know, other examples of people who have been able to get out of a similar situation that this particular client was going through. You know, the other piece, and sort of related to this as is, I think it’s the first time for a lot of our clients where they realize the major Deep Impact that money has, that it’s so deep, that it can cause these type of thoughts. And unfortunately, I also do, you know, sprinkle in some examples of that are not so fun. I often talk about somebody named Adolf Merkel, who was and I talked about him on my book. He was a German billionaire. And in 2008 or nine, he in one day, he lost a third of his portfolio on the stock market in a crash of VW stocks. He went from, I think, 12 billion to eight or 9 billion or something like that. So what happened for him is that he ended up walking in front of a train outside of Munich. And so when when I bring that example up to my clients, because a lot of times the question that they’re asking themselves, or the belief is that it’s money worship, belief, right? If only I had more money, I mean, I would never even have these kinds of thoughts. And here’s a

Louis van der Merwe
guy billion would be fine. Yeah.

Dr. Alex Melkumian
Okay. You lost you know, you lost $4 billion. You went from 12 Denine what’s the big deal, but here is a case in point that it’s not just about the money. It’s not the money. That’s the issue is how we relate to the money. That’s the issue. One of my favorite quotes about money in mental health. And so what happened is that, you know, I don’t know, why Adolf, you know, did what he did and chose to end his life, I can only speculate. So in a way, barring maybe conversation about real underlying depression that say, that may have not been disclosed. He was 72 years old. And you know, for somebody who became so successful, obviously, it involves, you know, a lot of business acumen and, and hard work, but also a pretty big ego. Right. And so maybe it’s the fact that at 72 years old, he did not see that there’s enough sort of time left for him to recoup that money. And that’s my particular perspective, that somehow his ego, convinced convinced him that, you know, this is, you know, so bad. And they’re so so unrepairable, that the only way to save face is to do what he did.

Louis van der Merwe
Looks, if we take that example. And we say, that might be a client with limited time, and maybe there’s a few years, you don’t have the opportunity to go back and rebuild your wealth. But they’re getting to a point where they’re physically running out of money, they’re not having enough money to cover the expenses. Where do you start unpacking? And where do you start creating that, that hope to almost say, hey, things are going to be better? Or get you to the realization, when you might be struggling? Or maybe your financial planner that’s struggling to see any signs of hope? Great question.

Dr. Alex Melkumian
So I think what we can talk about is the narrative, the narrative that we discussed earlier, which is, you know, the financial literacy and the language of money, right. And I think you and I connected on LinkedIn, and I think you’ve seen some of my social media posts, and something, you know, one of them is the four languages of money, right? So we have the practical, the emotional, the cultural, and then the spiritual. Those are the lenses through which are the languages you can say, right through which I choose to work with my clients and how they look at money. But ultimately, what we can sort of boil it down to is the practical and the emotional. And so a lot of times with financial advisors, they they focus on the practical, right, and again, go back to treating it like a math equation. And there’s absolutely so much validity, and so much solution in that. I’m not saying that you’re not addressed the practical piece. But I almost feel like I was bringing this up as it’s a two prong approach, we have to address the practical as well as the emotional. And so the thing I came up with is, if you’re worried about the financial part of financial stress, you’re missing the point, right? So yes, we can. There’s all kinds of practical strategies in dealing with financial stress. But there’s also an equal amount of psychological strategies, therapeutic strategies to deal with the stress. This is why somebody this is why the difference between somebody who’s living in poverty, who has real reasons to be financially stressed, is experiencing the same symptoms, right? The same sort of mindset, that somebody who is earning who’s middle class, but they are experiencing the mental side, the financial distress part of financial stress. And it’s almost like if you actually sit there across from them, and you listen to how they’re describing their life, sometimes they’re worse off mentally and mental health wise than somebody who’s living in poverty. Right. So then dealing with Yeah, dealing with financial stress on both fronts, the practical and the emotional, is absolutely crucial. So how do we do that? You know, I can talk a bit about some practical and emotional strategies. So I think most 70% of our clients are money avoidance, money, avoider. So right from from that the manuscript of financial avoidance, and they oftentimes engage in retail therapy, of all of this sort of financial behaviors. You that we oftentimes discuss its financial enabling financial hoarding, will retail therapy and shopper holism is the predominant behavior that most people engage in. Right? It’s the sort of the guest star of that list. So, if we take that particular client, for example, they have a hard time saying no to themselves, they’re very impulsive. And so sometimes it’s what we call a psychoeducation. So we do go into the neurology, what happens in their brain. And we talk about, you know, food, money and sex, like we just did. And then the second piece that we discuss is something called a amygdala hijack. The amygdala hijack is a fancy word for the emotional part of the brain, overtaking hijacking the logical part of the brain. And it actually happens during the fight or flight response. So this is how you promised yourself 100 times that you’re not going to buy

that TV or that purse or whatever is in your Amazon account the little cards, right, and then the next thing you know, is, you ended up clicking by somehow some way, right. And then the next thing you know is, it does create this, this shame cycle. And in order to deal with that shame cycle, you engage in coping strategies. And if your coping strategy is to shop, it’s basically a vicious cycle, right? That’s what I’m describing. But the practical tools for somebody like Shopaholic would be creating a 48 hour rule, where you just leave the item that you bought in the shopping cart, this is the modern day 2220 22 version of window shopping, for those of us who are old enough to remember when they’re shopping, yeah, 48 hours, you don’t touch it, I mean, you put it in that cart, and I’m gonna see Amazon is smart, they will resend your reminder email, right? Once you want this, you know thing, the bag or the new phone or whatever it is that you’re buying. So that’s the 148 hour rule. Second, unlinking your cards from as many accounts as you can, so that when you log into Amazon, it’s not so easy to click Buy, it’s not so easy to click Buy on, you know, another Starbucks Frappuccino that’s now here in LA, I think it’s I don’t know, $6 or that, right on average, then all of a sudden is like, Okay, you have to go get your card, you have to sit in front of the computer, you have to type in the number and the expiration, they and this CVV code and all of that. So putting some barriers, automation, something that financial planners have used quite often. And you know, for a long time, pay yourself first and automation are sort of, you know, there’s a combination there, if you don’t see the money in your account, and let’s say, you know, you have four or five accounts, so you get the main account, that you get paid in and it’s automatically withdrawn. Same day, when you receive your your check, and then you only use your spending account, you know, for shopping and the rest. So you don’t see that. So those are, let’s say some of the practical ways. We can you know, address somebody who has a shopping, addiction shopping issue. Actually, one more I’ll mention is mandatory splurging. The reason why it’s important, and isn’t that I came up with that because it’s a fun, name, fun sort of label and clients do that, you know, tilting of the head, and they’re like, oh, yeah, that’s, that sounds great. So manager was splurging, your cheat day for money? Exactly. You know, there’s so many parallels between food, sex and money. So a lot of the things that we do with monies is similar to how we deal with food. Absolutely. And so it’s a way to, to stave off the negative emotion of deprivation. deprivation is such a powerful emotion or regret or resentment, those three right and then ultimately, underneath all of that is shame, shame that I can’t just, you know, be good about money. I’m damaged goods. So by adding that line item into our budget or spending plan, whatever term your planners use, it basically reverses that my So, all of a sudden, it’s you’re not holding on for dear life, trying to be good and are trying to be perfect at, you know, your spending plan for the next six months. And what happens at the end of that six months? As is that big sigh of relief? Oh, I need it. And the next thing you know, as your unconscious mind goes, Okay, time to spend time to make up for all that last time. Right. So, with mandatory splurging is, you know, obviously, there’s a very personal conversation about if your monthly earning is $1,000, then allocate $50 a month, to mandatory splurging, you can take that money and donate it somewhere, you can take that money and I don’t know rip it up, like literally you can do anything you want with it. Right? If you earn $10,000 a month, you can take, you know, 500 bucks. And actually, it’s a great technique for when we work with couples, right? Because that way, the couple makes this rule that we are doing mandatory splurging. And I don’t get to ask you what you spend your money on. And you don’t get to ask me what I spent my money on. And we both agree on the amount each, each partner gets to spend 500 bucks. If it’s a purchase above 500, then we have to kind of check in with each other and see, you know, if as a family as a couple as a unit, we want to you know, make that purchase or not,

Louis van der Merwe
Alex, it’s amazing how many of this or how much of this is actually just setting the foundation and the ground rules saying no, we have a framework. Now we have something to work with, oh, here, you can splurge. This is what you need to do. And I don’t think we will obviously we’re not born with that. So it doesn’t come automatically, you have a passion for financial education. So, you know, is this a big part of that financial education to say, hey, here’s the framework. This is how to pick your brain, essentially, when it comes to finance?

Dr. Alex Melkumian
Yeah, I agree with that. And actually, I would sort of add that I’m not solely passionate about financial education, because education alone, knowing what to do, does not necessarily equal results. And this is exactly the conversation that we oftentimes have in the food and diet industry, right. We all know what to do, as far as, you know, consuming calories and working out. But and the same thing with money, right? But somehow we know the theory, but somehow not all of us are, you know, super thin and wealthy, walking around living our best life. Yeah, so just the knowledge alone. And I’m not trying to sort of downplay that. Knowledge is very important. But it’s financial literacy and financial knowledge Plus Financial psychology, then that together equals financial wellness,

Louis van der Merwe
we had Dr. Maura summers on a previous episode, talking about the compliance aspect, you know, getting people to actually take your advice and start implementing it. And what I’m hearing you saying is also, you know, you need to have the knowledge, you need to have a partner to keep you accountable and help you but also you’ll have these mental hurdles that you need to work through or get through and you’ve shared so much of the language that we can use when we start having these discussions with our clients. I want to talk a little bit about the actual communication method, because I find that a lot of clients really struggle to speak to their spouses about money. Are there any processes or discussions that you would have to simplify that you’ve mentioned a little bit now saying, hey, let’s have a designated spending amount? What other communication preferences or or tactics? Would there be that you can share with us?

Dr. Alex Melkumian
Sure, I think where we sort of left off was we talked about the practical piece, but we didn’t talk about the psychological piece, right. And the communication is a huge part of that. The communication and we’re that we can kind of go back to that narrative of building a relationship. And when we when clients can, can feel like they can relate to what you’re saying, you automatically get that buy in, right? So where I would start this conversation, and I oftentimes kind of start here with clients as well as talking about the financial inner critic, and it’s sort of a big taboo, but somehow, every time I’ve mentioned that term, financial inner critic or just inner critic, I don’t have to sit there and have law explanations, or what that term means everybody just just like you did. They just sit there and not and they know exactly what I referring to, it’s that it’s actually our ego mask in this, you know, expert financial expert sheep in wolf’s clothing kind of thing, right. And all of a sudden, it’s, it’s, it’s the part of us that demands perfection, but it’s ruthless and mean. And it’s extremely critical and judgmental. Right. And if it’s, you know, if we didn’t achieve everything from the first try perfectly, then why do it at all? So having that conversation, communicating, and that helps them, take that deep breath, that deep exhale and go, Oh, okay. This person, Dr. Alex know exactly what I’m going through. He, I can relate to what he’s saying, Yeah, this, this Inner Inner Critic, financial inner critic, has been berating me about, you know, not making more money on the stock market, when everybody seemed to be when, when the stock market was going up, I should have bought that Amazon, I should have bought that Tesla, right. It’s like, I will never let this you know, let myself live this down. Just saying that out loud, takes the power out of those words, being able to communicate that to somebody else, instead of walking around with all of the all of that stress inside of us. And from there, we can really start the conversation about financial stress and how to deal with it. I really feel passionately that financial stress is an epidemic, not only in our country, but globally, that nobody was really talking about just a few stats to throw at you and your audience. At least in the States, both the financial side and the psychological side. both agree that based on their surveys, people 60 to 80% of people are consumed by financial stress. So what are these numbers? What story do these numbers tell us? That’s another framework that I use? What’s what story? Do these numbers tell us? Well, the story is that people are struggling. And if we actually equate that number to, you know, the 60, to 80%, to other chronic conditions, because financial stress as a chronic condition, we have to deal with money on a daily basis, almost, we cannot live up, you know, productive, meaningful life, you know, on the grid without dealing with money. So what that means is Oh, sorry. So what happens is, if we compare financial stress as a chronic condition, other chronic conditions, it’s almost double heart disease, diabetes, a few others that are, you know, not coming from my mind right now. But it’s double, even compared to COVID, which was at 60%. I’m not trying to say that financial stress is as devastating as all of it was. But COVID was 60%. And of course, we have, you know,

these counting down and on the news, and there was a whole conversation, of course, I understand that. But also, we need to address the financial stress. And so my framework for dealing with financial stress, it comes from somebody named Susan David, who is a professor of psychology at Harvard. And she came up with this idea of emotional agility, and emotional agility as she describes it as a skill set, to be able to feel our emotions in the moment and being able to adjust in the moment and get through that emotion right here right now. Because if we don’t do it, in the hearing, now, it gets repressed, it gets stuffed down somewhere in there. And it has a weird way of coming out. So we don’t want that. And so when we start talking about financial stress to our clients, they really Oh, yeah, I’m financially stressed. I’m stressed about this, I’m stressed about that. And what we’ve come to learn is that financial stress is actually a label, this huge label that we just throw at, you know, everything that we experience, like you just brought up a few minutes ago when we’re talking about profession, right? profession and money and well being or my family and be feeling and being successful. Like it’s all tied in together, right? So all of that is this snowball of financial stress and this huge label of financial stress. And so what Susan David talks about is not only do we have to remain emotionally agile, but there’s something called Emotional granularity a fancy word for breaking down a label and into smaller parts and just smaller granules in being able to you know, label more What we’re feeling right now. So can we do a little? Can I ask you a question and tearing up turntables a little bit? Yeah. All right. So if I would ask you what, what are the kind of two or three most common things that you feel concerned and maybe financially stressed about in your life? Or maybe

Louis van der Merwe
it’s specific items. Now, there are things that might be coming up.

Dr. Alex Melkumian
What comes up to you? Yeah, yeah,

Louis van der Merwe
I guess paying for my daughter’s education, when she has to go to university. At some point, increasing interest rates. So paying a mortgage, living expenses, things are getting more expensive. Those will be the top three.

Dr. Alex Melkumian
So what are the now? So that’s the label of financial stress? What emotion are you feeling when you’re thinking about your daughter? Let’s say

Louis van der Merwe
uncertainty? I guess a little bit, a little bit of anxiety. Yeah, uncertainty is probably unsure. Okay.

Dr. Alex Melkumian
What about when you think about the volatility of the market and inflation? Interest rates?

Louis van der Merwe
Yeah. How long will this last? How big of an impact will it be? What impact will it have on our business? What impact will it have on my personal finances?

Dr. Alex Melkumian
Right. So even in that example, what you’ve described this two different emotions that are underlying those experiences, sounds like there’s not a lot we can do about, you know, the state of the world and inflation, right. So that’s something that will oftentimes in in the recent times address with our client, how financial stress is a is a is a is a call to action. Sometimes, we worry about random things that we shouldn’t be worried about that sometimes there is a reason to be worried, there is a reason to look at certain things. And so in the disc, in the example you described regarding inflation, yes, that is a viable concern, right. But again, at the same time, there’s not a lot we can do about that. So incessantly thinking about that will not necessarily be very productive. And we go back to the idea of internal versus external locus of control, if you can’t do anything about it, why drives you will drive yourself crazy, right? Can you leave that alone? That thought, can you tell your inner critic to be quiet? And, you know, a lot of our clients have a harder time doing that. There’s an intervention that we use, it’s kind of funny as well. It’s called the worry session. So the worry session is something like, Okay, well, this, you’re gonna wake up at 6am, then I want you to set your timer for 30 Minutes, from 730 to eight o’clock. And that’s the time you can worry till your heart’s content. After that, the rest of the day, you’ve done your worry for the day, so your quota has met has been met. And try not to worry, obviously, there’s also discussions of mindfulness and really taking, taking time to implement mindful techniques to help yourself not unnecessarily stress and worry. But this is something that’s called a paradoxical intervention. Which can be can feel, or we can think of as unnatural, almost right. And it has a little bit of this humor to it. But it can be helpful, it can be helpful. What I’ve seen from clients is, after a week of doing something like this, all of a sudden, they’re not so keen on, you know, worrying for the rest of the day, because they have, I don’t want to set the timer for 30 minutes, or 20 minutes, or you know, less than that time. So that’s another intervention that we’ve utilized with clients.

Louis van der Merwe
So so instead of just being sprinkled through your day, you actually have a designated time and say, Okay, this is now now this is when I’m gonna do it. I’m scheduling that in.

Dr. Alex Melkumian
Absolutely. And so what happens is that we want to be mindful of how we’re spending our day. Another narrative that we, that I usually use with clients is if we take that 60% that we discussed the financial stress, what if we take that and apply it to the day, the day to day life of any average person, and what happens is, obviously, out of 24 hours, we sleep about eight hours a day. So that leaves us 16 hours and 60% of 16 is about 12 hours. That means 12 hours a day we spend maybe not actively being financially stressed, but it’s in the back of our mind. It’s in our unconscious. There’s something running in the back there, that does not let us experience life for what it is and just feel the beauty of The current moment, right, we’re still kind of the antennas are the financial stress antennas are up, we’re financially stressful. So we know that people, people who are financially stressed, don’t sleep eight hours, right? You wake up, you’re worried. So let’s say it’s six hours of sleep, that means it’s almost 13 hours of, you know, being concerned with money. So that’s the framework that I that, you know, we, we work from, as well with our clients and being able to impart that framework really sort of is eye opening to our clients. And where we sort of take it to is, again, that emotional glad granularity. And instead of looking at the financial stress label, we look deeper and say, Okay, if you are worried about the economy, and you have fear that something is that, you know, everything is gonna go to a bad place. That means that you have, we have to work with that fear. But the example that you gave about your daughter, it may be that you’re feeling a little bit of guilt, and shame. And so the practical steps to deal with that guilt and shame is completely different, right, than dealing with the fear and anxiety of the volatility of the market. In order to help yourself deal with the shame and guilt of providing for your daughter, then the practical steps you would take would be what earning more money or hybridising, saving out of your earnings towards your daughter’s education, and shifting your spending plan in a way that would prioritize them. So all of a sudden, we give the power of choice back to our client, we’re not no longer stuck in that emotional space of financial stress. And I can’t do anything about it. I don’t know how to think about it. I’m just stuck.

Louis van der Merwe
We’ve printed that we will have emotions at our office. And I found it so useful to help identify, Okay, you’re angry, and then you can go one step beyond Okay, well, what type of anger and then it ends up the emotion with the label of that emotion being very different from what you initially thought? Is that something practical that you would do with your clients as well?

Dr. Alex Melkumian
Absolutely. And sort of another framework that I I would bring into this conversation is the one of emotional budgeting, that emotional budgeting. And if we think of money as a currency, and emotional currency, then we can think of certain emotions being much more expensive or taxing on our mind and our body, like, shame is that one of the most expensive ones, regret or resentment, deprivation, all of those are extremely expensive on the mind and body, and so on the whole process of labeling emotions, and helping to sort of almost allocate a certain currency amount to a particular negative emotion. And I don’t want to mislead you and your audience that it’s only about negative emotions. Positive emotions can be just as blinding and unhealthy as negative emotions. When we’re blinded by love, and we’re spending money we don’t have on impressing a partner that we want to court. That’s and that’s No, that’s no good. If we fall in love with the idea of buying this one amazing stock, I mean, I know there’s no way this thing can go down, right. And that sort of blind faith infatuation with that idea comes from this policy euphoric feeling like, oh, this is this is going to be alright, so the point is that our emotions, our data, and we take them into account and when we make our decisions, but they’re not leading our decision making process, they’re motivating us. But when we come to talk about decision making, from an emotional budget standpoint, we want to get to a place of equanimity and emotional neutrality, so that we’re not implementing an amygdala hijack and we’re not emotionally overwhelming our logical brain, but we’re leading with our logical brain and also checking in with our emotions and going okay, yes, I feel motivated my love to provide for my family. Now, what does that look like practically? And so together? We we use the concept of a wise mind is the combination of both the logical and the logical and emotional events.

Louis van der Merwe
I love that idea of the wise mind. And Dr. Alex’s we coming to a close this, this wealth of knowledge and this wonderful structure that that you’ve put, I want to urge people to pick up your book. It’s available on Amazon and we’ll add a link to the show notes. It’s it’s a wealth of knowledge and structures and statistics that you can share with your clients and people that you do work with. If people want to reach out to you, what’s the best place to get ahold of you?

Dr. Alex Melkumian
So my website is financial psychology center.com, as well as I’m on most social media from LinkedIn, to Instagram, Facebook and Twitter at financial Psychology Center.

Louis van der Merwe
Brilliant, thank you so much for being here. It has been served up to the expectation, and it’s been extremely valuable. Thank you so much.

Dr. Alex Melkumian
Thank you so much, Louis. Appreciate you.