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There's More to Life Than Spreadsheets and Calculators


"You know, I don't understand math at all."

-"Calvin" in Calvin and Hobbes


I'm carefully looking over all the teams that are in the March Madness basketball tournament. It's 2006 and I've never filled out a bracket before. I work in an office of about 20 people and at least 18 of them are fascinated with office pools and March Madness is the grand poobah of office pools.

I don't watch basketball, but I also don't want to be the only person in the office who doesn't participate. So I do what anybody in my position would do; I pretend that I am a huge college basketball fan and I fill out a bracket. Since I don't know anything about basketball in general and college basketball specifically, I find a spreadsheet that I can use to randomly pick the winners, using the ranking and records as inputs (it will select a 1 seed more often than a 16 seed). It's designed to help people pick winners using algorithms - which is a fancy word for equation. There is no emotion involved. There is no picking based on team mascots or colors. There is no bias toward your alma mater. Just probability.

The thing is, I run the program several times until I find an output that I like. One of my coworkers went to Duke and another went to Florida. Naturally, I want the Blue Devils and the Gators to make it. Then I make some adjustments to some earlier games to reflect the fact that "I haven't heard of these colleges so I can't pick them."

I didn't win.

This spreadsheet was designed to take emotion out of decision-making. I added it back in. It turns out, making decisions based strictly on spreadsheets and calculators is near impossible.

Let me tell you something you already know; the same thing applies to money.

math only accounts for a small portion of financial health

Two Sides to Finance

Author Carl Richards coined the term "spreadsheets and calculators" as a way to highlight how most people think about money. Most of us think that the secret to getting ahead financially is to understand how money works, including all the products associated with money, like insurance policies and investments. With the right software, with the right algorithm, with the right investment - all of our money problems would be solved.

The problem with that point of view is that it's only one side of the coin. Admittedly, it's the side of the coin that is easier to see and talk about, but it's still only one side, nonetheless.

I'm actually being quite nice to this side of the coin, because a coin represents 50/50; but the spreadsheets and calculators side of money doesn't hold that much weight.

Exterior Finance

Spreadsheet and calculators, algorithms, and equations represent the exterior side of money. Exterior finance is the mechanics of money, or how it works and what all the rules are. It's logical and it's rules-based. It's what most people think about when they think about changing their financial lives.

Since it's rule-based, it's now far easier to find the help that we need as it relates to exterior finance. Software, apps, and algorithms are all starting to do this hard work for us, faster and cheaper than ever before.

That's the good news.

exterior finance - traditional financial planning

Interior Finance

The bad news is that exterior knowledge alone won't help you. You have access to all the exterior financial knowledge you could ever want right in your pocket. Unfortunately, if you can't get yourself to implement that knowledge, either because you can't or because you're unwilling to do the work, then it's not going to do you any good.

Interior finance is about our feelings, beliefs, emotions, values, and behaviors around money.

Fights about money, are usually about a difference in values.

If you have a belief that people with money are corrupt and evil, you are likely to struggle trying to build wealth.

If you feel like your neighbors are judging you about your purchases, you are more likely to spend more money than you otherwise would have.

interior finance - beliefs, feelings, and values

Solid Foundation

Obtaining a healthy relationship with money starts with understanding all these interior aspects of money. Your money beliefs, your traumatic money events, and your money history and attitudes all play a part in your financial health.

Books like Mind Over Money: Overcoming the Money Disorders That Threaten Our Financial Health and Loaded: Money Psychology, and How to Get Ahead Without Leaving Your Values Behind are great places to start (I have no financial stake in either of these books). Once you have spent some time to look inside at how you feel about money and addressed any troubled beliefs and behaviors, you can start looking at exterior finance.

exterior and interior finance are both important

Exterior finance is important, but it needs to sit on a solid foundation of interior finance.

Read More:


Brad Klontz, Ted Klontz: Mind Over Money

Brad Klontz, Rick Kahler, Ted Klontz: Facilitating Financial Health

Sarah Newcomb: Loaded

Carl Richards: The Behavior Gap

Thomas Smith, Victoria Shelton, Kristin Richards: More Than Numbers


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© 2019 Money Health Solutions, LLC



About the Author

Derek Hagen, CFA, CFP, FBS, CFT-I, CIPM is a speaker, writer, and coach specializing in financial psychology, meaning and valued living, resilience, and mindfulness.


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