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BAM Intelligence

The Dual Roles of Money

Money is an interesting actor that plays two roles in our lives.

In the first, money equals money. It fits in a spreadsheet. It’s something to be calculated. In the other, money equals stories. It’s what we tell ourselves about our relationship with money.

Let me share a story I’ve told myself. For six years, we have rented a home in Park City, Utah, and put off making any long-term real estate commitments. We knew we would get to it — eventually. Well, eventually arrived, and we looked at the spreadsheet.

Even after entering conservative assumptions (guesses, really) about income, savings, housing prices, and the renting-versus-owning calculation in Utah, the numbers don’t lie. The spreadsheet shows that if we want to stay in the community we love, the best thing we can do is buy. That’s great news, right?

But here’s the story I’ve told myself: The moment I, Carl Richards, buy a single-family home, this one action will cause a global financial meltdown. The housing market will crash. The financial markets will collapse. It’s a powerful story based on strong emotions around my experience losing a home in Las Vegas.

I know I am not alone here in telling myself stories that are almost certainly not true. So what stories are you telling? Maybe you have told yourself a story that you don’t need to worry about the spreadsheet. If you just try a little harder or get a little luckier, things will be fine. You don’t need to bother with the actual dollars and cents. I think we know how that will turn out.

Or maybe your spreadsheet is perfect. You live within your means. You have even saved enough for retirement. But that doesn’t stop you from telling the story that you’re a day away from living under a bridge.

Even when the numbers add up, fear and anxiety can still drive our stories. So dealing with money is both a science and an art. We need the cool logic of the spreadsheet to help us separate fact from fiction. But we can’t ignore that we tell ourselves stories to figure out how we relate to that money. It may seem like a small thing, but paying attention to and understanding both roles can be the difference between feeling good or feeling miserable about money.

I choose to feel good. Check back with me again once we have moved into our house.

This commentary originally appeared June 13 on NYTimes.com

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© 2016, The BAM ALLIANCE

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Carl Richards is the creator of the weekly Sketch Guy column in The New York Times and is a columnist for Morningstar Advisor. Carl has also been featured in The Wall Street Journal, Financial Planning, Marketplace Money, The Leonard Lopate Show, Oprah.com and Forbes.com. His simple but meaningful sketches served as the foundation for his first book, “The Behavior Gap: Simple Ways to Stop Doing Dumb Things with Money.”

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