For the second episode in our Behavioral Finance Week, Jamie talks with Teresa Ghilarducci, a labor economist, an expert in retirement security, and an economics professor of over 30 years. Author of Rescuing Retirement, Teresa also regularly contributes to Forbes and Psychology Today.

As a young girl, Teresa watched money define her parents’ divorce and her family’s subsequent life in poverty. At one point, Teresa’s father showed her a breakdown of his proposed alimony payments, including money for Teresa’s birthday gifts. Even as a child, Teresa recognized that her father’s numbers were off and understood the social implications of a bad budget.

Teresa’s early exposure to the power of wealth (or lack thereof) prompted her to study economics as an undergrad at The University of California, Berkeley. Outside of academia, the Governor of Indiana asked Teresa to serve as a trustee on the Public Employees Pension Board. Her work with pension recipients helped Teresa realize the benefits of a secure annuity over portfolio investments, and money management for those nearing retirement.

Teresa chats with Jamie about her experience on welfare and how it shaped her outlook on government subsidies, mistakes society makes when placing financial blame, and her thoughts on raising the minimum wage.

Join us for our Behavioral Finance Week – daily episodes about the connection between psychology and money. These concepts can help financial advisors plan more accurately and sustainably for their clients. Tune in every day this week for a new episode!

(44:57) “People behave in the ways we want them to when they’re in stable situations and they’re paid for their work. The best student of financial literacy is someone who is secure that they can keep their job.” ~ @tghilarducci

Main Takeaways

  • Situational context, such as a pension fund offered by an employer, can impact an individual’s retirement more than their behavior.
  • For many people, the security of knowing that they have enough money for the rest of their lives is more valuable than having money to manage.
  • There’s a stigma around financial shame and hardly any professionals offer services to help clients navigate money and its emotional impact.
  • Giving individuals the opportunity to earn a living wage can actually boost their financial literacy.

Links and Important Mentions

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