What Others Know About You and Your Money

Do you remember when Target learned about a teenager’s pregnancy – before her father did?! About five years ago, there was a lot of press about how Target uncovered this teenager’s secret using something that impacts your daily life, too: Data analytics.

Just like other major retailers, Target collects data about you and your buying behavior. They have in-house statisticians who analyze and interpret the patterns they’ve identified, and who then work with marketing departments to ensure the right product promotions and coupons are put in front of you.

This is how Target came to send that untimely, yet accurate, email with coupons for baby clothes and cribs to the family with the pregnant teenager.

Marketers use your behavior to provide personalized answers to your questions and solutions to challenges they presume you’re experiencing. Much like when you Google something, and you start to see related ads in your social media streams like Facebook and Twitter.

Financial institutions do the same. (And you wonder why I’m such an enthusiast for behavioral finance.)

I bring this up because the same client who sparked the last post, where I talked about the pitfalls of taking shortcuts, is the same one who said, “It feels like a lot to do,” in response to an exercise I ask of most coaching clients.

She’s not the first person to say this in some form or another. Heck, at times, I’ve responded in a similar fashion when my business coach, Tara Gentile, has challenged me. There were times when I just wanted her to give me the answer. When, instead, what she was aiming to do is help me discover the answer on my own.

Like I was doing with the exercise I had given my client.

Whether it’s with regards to money or business or another area of your life, perhaps you can relate to wanting someone else to do for you what really only you can (or should) do for yourself.

So, when my client said, “It feels like a lot to do,” I didn’t pass judgment.

But I did try to get her to see the benefit of pushing through the initial resistance and moving through (instead of around) whatever caused her to tighten up and not want to do something that would benefit her.

And here’s why…

One of the biggest things that blocks your financial success is a lack of financial self-awareness.

She thought she was telling me “no.”

When what she was really saying is, “I don’t want to know about my money what others know about me and my money.”

When you think about how you approach money, are you, in essence, saying the same thing?

Financial Profiling

The exercise I asked my client to do is something I call roll-call. It’s where you go through your banking and credit card statements and annotate each expense as (H) happy; (M) mandatory; or (R) regret. (Give it a try.)

“Roll-call” helps you discover a lot about your habits and the triggers for the choices you make. In other words, you glean data that YOU can use to adjust your financial behavior. And how do you adjust your behavior? By adjusting your habits, intentionally.

Duke University conducted a study about habits, something I talk about all the time here, in workshops and with coaching clients. What their study revealed is that 40% of the choices you and I make on a daily basis stem from habits – not conscious decision-making.

This is what makes the “roll-call” exercise so powerful. It’s simplicity helps to reveal, via highligthers or checkmarks and with objectivity, how many of your financial decisions and choices are done with little to no thought. And, how you feel about them.

The data you track from the roll-call exercise is, in part, the same information the retailers you shop with and the financial institutions with which you do business use to create a profile about your routines, preferences, needs, and potential wants.

This is why I get aggravated when clients want to take shortcuts. Because it usually hurts them and they don’t even realize it.

For example…

You check your banking balance daily, which makes you feel like you’re engaged with your money.

But you don’t review your statements in detail checking for patterns, leaks and opportunities.

You utilize a debt reduction strategy that treats all your debt equally, which makes you feel like you’re making progress.

When a more effective approach, at least psychologically, would be to use a two-prong approach for your “good” and “bad” debt.

You invest in index-funds across all asset classes…in every account you have. Why not, right? It’s simple, easy to keep track of, and makes you feel like your overall portfolio is diversified.

When, for true diversification, you need a combination of index and actively-managed funds and probably fewer number of funds, to boot.

In each, the former example represents the easier way; it’s the shortcut that doesn’t typically prompt you to do any deep feeling or self-evaluation.

So, take shortcuts when it makes sense because it saves you time and money. But not because you don’t want to do the messy and uncomfortable work that managing your relationship with money sometimes requires.

To benefit from data analytics, you don’t need to become a statistician like the guy mentioned in all the Target articles about the pregnant teenager. But, you’d be better served if you became aware of the same things others know about you and your money – than perhaps you do at present.

Happy Passover and Happy Easter, if you celebrate!

 

p.s. Speaking of behavior, habits and perhaps secrets, talking about money with aging parents is the theme for the next dinner in our series, The Comfort Circle™. We’ll tackle how to navigate the tricky terrain when the caregiver and family leader dynamic begins to shift due to age, health issues, or both. It’s Wednesday, April 26th at 6:30pm. You can RSVP by clicking here.

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