This is the first part of a series titled: ‘User Stories: Human Insights & Our Relationship with Money’ that seeks to understand the underlying drivers of people’s emotional relationship with money that allow us to explore how the financial industry can adapt to those changing needs of people today.
Summary
- There is a significant generational shift in financial stability, with older generations having benefited from certain economic conditions
- Early financial instability can lead to long-term worry and stress, making proactive and personalized financial advice essential for financial well-being
- Transparency, accountability, and emotional attachment to financial institutions are essential to restoring trust
The name of the subject of this story has been changed. However, the events and perspectives shared are the subject’s lived experience.
In the backdrop of Lawrence, Massachusetts, Eddie is a divorced 45-year-old high-school teacher. The son of working-class Baby Boomers, he is now an individual wrestling with the complexities of modern financial stability. “I grew up in a house with a stay-at-home mom, 3 siblings…my father sold lumber. In the ’80s, one parent selling lumber could afford all our expenses. It’s kind of unbelievable…my parents were able to buy their first home at 18 because they were baby boomers, and they had that advantage over my generation. The generational shift is so egregiously juxtaposed that I can’t imagine what it would be like to be 18 or 20 and afford a house and kids on one salary without a college degree and college loans.”
When Eddie’s father left the family, however, it introduced an era of financial instability that would deeply influence his outlook on money and a mistrust in both financial and family systems. He vividly remembers the impact, “My father left the family when I was eight…money very much became front and center…I just learned and was very conscious of, oh, we might lose our house. My childhood as a result was very imbued with fear and trepidation.” At the same time, he was witnessing his grandmother’s Great-Depression-era caution, “She kept her money under the mattress for her whole life. She had no debt, didn’t trust the banks. So, yeah, money was very much an area of tension and stress. ” These experiences in his childhood instilled a fear of financial insecurity that he carries with him today.
As Eddie matured, his relationship with money evolved. He began to see that wealth could not be attained by a paycheck alone but had to be supplemented with investment and strategic decisions that led to passive income to afford him the chance to positively impact the community he teaches.
“ Only recently, in the last 10 years I realized my belief about how to thrive in this economy might not be true…the poorest people are those with money and no time. ”
When Eddie was in his first year of teaching at the age of 30, a colleague inquired about his retirement strategy. “She said, ‘What are you doing for retirement? Have you prepared for retirement?’ My answer was ‘I haven’t thought about it’. And she was like ‘Oh, no, no, no, sit down let’s talk.’ She was so assertive…telling me why I should be making the maximum contribution.” But as a teacher making $30,000 a year, this was a challenge, to say the least. However, this advice, coupled with insights from a colleague with a background in finance, guided Eddie towards a more aggressive saving and investing approach. “She inspired and scared me at the same time.”
The sacrifices Eddie made for future security were massive, “I’ve always lived well beneath my means, in an extreme way. I lived in tiny houses – 160 square feet (about half the area of a parking space). The only way I could purchase a home and save for retirement was through foregoing a toilet, running water, and electricity for a whole year.” These sacrifices illustrate the discomfort and frustrations that often accompany financial trade-offs made by individuals like Eddie.
“ I’m of the mind I’d rather give up even what some people consider necessities. I’d rather sacrifice now to benefit later and delay instant gratification to be more stable in the future. ”
Eddie’s apprehensions about the broader financial system crystallize in his recounting of obtaining a mortgage with his ex-husband. The desire for a loan that would “stay within a local bank and not be sold to investors” speaks volumes about his mistrust in the impersonal, and often fraught, nature of the larger financial industry. This sentiment is deeply rooted in the aftermath of the 2008 financial crisis. For Eddie, ensuring that his mortgage remained with a small, local bank where he could have direct interactions and build personal relationships represents the desire for a true financial partner and a fundamental need for trust and stability. In his view, our system prioritizes profits over people and lacks the transparency and accountability found in community banking.
This is when Eddie ventured into the volatile world of cryptocurrency: guided by a former student and driven by the limitations of traditional financial avenues and a system that seemed stacked against him. “The only reason I am where I am right now is because I gambled on cryptocurrency” he admits, disillusioned by traditional financial paths and the risks he felt compelled to take. Eddie started with $60,000 in student loan debt after getting his master’s degree in public health and has been living on a teacher’s salary for a decade. “I haven’t situated myself salary-wise to be remunerated in a way that would allow me to live anything like the American dream.” However, the sale of his condo after his divorce and the investments he made in cryptocurrency enabled Eddie to be debt free and buy a home in cash post-divorce. “We’ve got an economic system that is horribly broken… the fact that I could do better gambling than I could teaching in high school with a master’s degree… I’m angry about that.”
Amidst these challenges and triumphs, Eddie’s philosophy on wealth is clear. To him, it’s not a number, but rather a ratio. “The definition of wealth for me is it’s a ratio from burn to earn. So, I want my burn rate to be slower than my earn rate… I’ll feel like a multi-millionaire because I’ll always be earning more than I’m spending. Even if I’m only earning $100,000. If I’m spending $60,000 every year, I’ll be very wealthy as a result of that ratio.”
“ Financial wellbeing is the result of wealth — by my definition — the satisfied emotional response and security of knowing I am earning more than I am spending. ”
Eddie’s narrative reveals a critical gap in the financial advisory sector—many advisors focus on clients with substantial wealth, leaving average Americans like Eddie underserved. He has been told this a few times, in fact: that he doesn’t earn enough to have the privilege of a wealth advisor. He comments that he does need this service, “I just had an offer accepted on a condo, I could use a professional to advise me, literally… like now.” But he also remarks that he prefers to take advice from people who have his best interest at heart, “My friends might not be the most astute, like it’s not their job…I don’t have any friends who are financial planners. I am highly suspect of strangers… I put a lot of faith in my friends. I’ll go to a less good restaurant owned by friends than a better restaurant owned by strangers because I trust friends more.” And when it comes to his everyday banking, it remains, “The bank that I use is a local bank, I have to drive an hour to go to my bank. And it’s still worth it for me.” To Eddie, personal relationships and trust override convenience, rewards, and incentives every time.
There is an oversight within the financial sectors that not only perpetuates knowledge gaps and biases learned through one’s life about money management, but also forces individuals into extreme sacrifices that could be mitigated with proper guidance. Eddie’s journey underscores the necessity of empathetic, personalized financial advice that meets individuals where they are.
As we consider Eddie’s path, it’s evident that the opportunity for financial institutions and advisors lies in supporting the average American’s financial journey and in educating them on the economic landscape of today. So much of what is witnessed and felt in childhood shapes the beliefs and behaviors of adults now, and, while innovation has created immense conveniences, we have lost a personal touch that is so desired by many. Such support could not only prepare individuals for future uncertainties but also enhance their financial well-being today, reducing the need for extreme sacrifices made through real and perceived attitudes around money.
Eddie’s story highlights the urgent need for financial institutions to shift towards a financial well-being view of customer experience strategy. Our work at Cortico-X involves guiding these institutions in developing personalized, empathetic solutions that help customers navigate real-life challenges through experiences with them at the center. By integrating innovative financial tools and data with a deep understanding of human behavior and emotional attachment, Cortico-X partners with financial institutions to create trust-based relationships and support their clients’ financial journeys, fostering long-term stability and well-being. Please reach out if you’re interested in learning more or discussing how you can help your organization be more customer-centric.
Adde Morgan
is an Associate Principal at Cortico-X with over 6 years of consulting experience focusing on human-centered design and digital products.
