S2 E18:🪞 Do I look rich to you? Let's talk wealth identity with Hanna Horvath CFP
EPISODE SUMMARY
Ever feel shame discussing your money when you're worried about being judged for having too much or too little? We all do this mental gymnastics, and we're here to explore WHY we do it. I'm join by Hanna Horvath, CFP a certified financial planner and money psychology expert, about the complex relationship between money and identity. We talk about class perception, wealth signaling, lifestyle inflation, and the psychological gymnastics you (and we all) perform when discussing financial status with others.
💬 "For most people, money is a part of their identity, and it's a part of how they see the world and their values—an expression of their values. So when you start to unpack that, you really do see how money and wealth can be a way in which people present themselves to the world and want to be perceived." - Hanna Horvath CFP
Key takeaways from the episode:
Your financial behaviors are often driven by unconscious emotional factors rather than rational decision-making
People make remarkably accurate snap judgments about others' income based solely on a neutral photo of their face!
Social media has exacerbated lifestyle inflation and distorted your perception of "normal" financial status
Generational differences in financial experiences create significant communication gaps
Wealth is relative—your perception of your own financial status is heavily influenced by those around you
Guest info: Hanna Horvath is a certified financial planner and money psychology expert who explores how money shapes our identity, behaviors, and relationships through her Substack newsletter "Your Brain On Money" and social media channels.
https://yourbrainonmoney.substack.com/ https://www.instagram.com/yourbrain_onmoney/ https://www.hannahorvath.com/ https://www.tiktok.com/@yourbrainonmoney https://www.youtube.com/@yourbrainonmoney
⏰ EPISODE BREAKDOWN
Money as Identity [00:02:00 - 00:08:00] Rachel and Hanna discuss how your financial decisions become wrapped up in your identity and how you code-switch depending on who you're talking to about money.
The Psychology of Wealth Perception [00:08:00 - 00:15:00] Research shows people can judge others' income level from photographs with a 68% accuracy, and how you subconsciously use "status signalers" to communicate your financial position.
Social Media and Lifestyle Inflation [00:15:00 - 00:25:00] How social media has accelerated lifestyle inflation by constantly exposing you to curated displays of wealth and consumption.
Generational Money Perspectives [00:25:00 - 00:36:00] Let's contrast the financial realities of different generations, particularly between Baby Boomers and Millennials, and how these differences shape your money narrative.
📚 Resources Mentioned
Do I Look Rich to You? - Hanna's article that started it all!
Instagram: https://www.instagram.com/yourbrain_onmoney/
The Next Millionaire Next Door: Enduring Strategies for Building Wealth by Thomas J. Stanley & Sarah Stanley Fallaw & Sarah Stanley Fallaw
Wall Street Journal article: "What Happens When a Generation Never Grows Up?"
💬 Join the Conversation
What kind of "mental gymnastics" have you done to look either more wealthy or less wealthy? We've all been there and we'd love to hear your story for a future episode of the podcast. Leave us a private voicemail! Click on the big orange button on our site right from your phone or browser https://www.moneyhealingclub.com/podcast
🎧 Your next listen:
S2 E4: 🔄 When budget culture meets diet culture w/ anti-diet dietician Lean Kern
💫 Use code PODCAST for 50% off your first month and start your money healing process! [H3]
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[00:00:00]
Welcome to the Money Healing Club podcast. I'm your host Rachel Duncan. I'm a financial therapist and art therapist, and I founded the Money Healing Club. You've come to the softest place to land in personal finance where we talk about all the things we don't usually say when we talk about money. This podcast is for education and entertainment purposes only.
For help with your particular situation, please seek help from a licensed mental health, tax, legal, or finance professional.
My guest today is Hannah Horvath. Hannah is a certified financial planner and money psychology expert who explores how money shapes our identity, behaviors, and relationships. She has a wonderful Substack newsletter called Your Brain On Money. She examines the psychological forces driving our financial decisions within broader social and cultural contexts. Hannah's background in financial journalism gives her unique [00:01:00] insights into both the technical and emotional aspects of money. You can find her newsletter on Substack and I will link to everything in the show notes.
You can follow her psychology content on Instagram and TikTok at your brain underscore on money. I love this conversation with Hannah, where we really unpacked how money shapes our identity from class perception to wealth, to lifestyle inflation, and so much in between. Enjoy my conversation with Hannah Horvath.
Rachel: Just so everyone knows, like Hanna and I have been like lurking on each other for a while and we've been emailing about like, oh, we should do a collab. Yeah, we should do a collab. And then what happened this week is I am on Hanna's Substack in her most recent article. I was like, I wrote back, I was like, this is it. This is our collab. We have to talk about this. because it's on the big juicy topic of class and perception of wealth, which is a topic I've wanted to cover on the podcast. So I'm just so [00:02:00] happy that Hanna is here so we can really unpack this. So let's just back up a second.
Rachel: Hanna, why do you think we generally feel so uncomfortable about like our money decisions and wrapped in identity and how sometimes I think there's a lot of code switching that goes on about how we're perceived in class and wealth and things like that. Like what got you started in writing this particular article?
Rachel: I.
Hanna Horvath: so I'll kind of take it back a little bit to sort of the beginning, which is, you know, I think a lot of people think, you know, money is numbers, right? So it feels very quantifiable and it feels, you know. Super rational, and I think we assume that a lot of our financial behavior is rational and built on a set of money rules that we follow, or just financial education that we kind of gain over time, when in reality money is so emotional.
Hanna Horvath: A lot of times our financial behavior is driven by things we are not even aware is happening in the background. And [00:03:00] for most people, it is a part of their identity and it's a part of. How they see the world and their values, you know, an expression of their values. So I think when you start to unpack that, you really do see how money and wealth can be a way in which people present themselves to the world and wanna be perceived, um, and, you know, try to fit in and all of that.
Hanna Horvath: And that was kind of the impetus behind me deciding to write this article. I've been kind of thinking about it for a while and I really felt like I kept coming out to the idea of, you know, wealth is so. Relative. Right. You know, if I'm a millionaire and I'm hanging out with people that are making $10 million, I'm not gonna feel very wealthy because I, my community, you know, the people that are around me are significantly wealthier than me.
Hanna Horvath: So what is wealth? What is being rich? And everybody has their own definition of it. And, you know, the way that we behave with money really reveals a lot about our inner most selves and how we relate to the world and what we care about.
Rachel: It's so
Hanna Horvath: Yeah.
Rachel: And like we all [00:04:00] know that we make Snap Judge snap judgments about other people, so then it's like, oh, I know they're gonna make snap judgements about me.
Hanna Horvath: yeah,
Rachel: I was wondering, could I quote you back to
Hanna Horvath: please.
Rachel: Would you mind if. I could read the story that you start this off
Hanna Horvath: Yeah.
Rachel: personal story of yours.
Rachel: 'cause I really related to it. You said this week I caught myself doing something embarrassing. I hesitated before telling someone where I lived because I was worried about how they perceive my financial status. It wasn't that I thought they'd think I was poor. It was the opposite.
Rachel: I was worried they'd make assumptions about my income that would create an awkward social dynamic. So I found myself doing the strange verbal dance, speaking in flowery humble language that no one asked for. Like, why is there all this padding? I couldn't stop thinking about it. Why did I care so much about a stranger's perception of my financial status?
Rachel: And why do any of us.
Hanna Horvath: Yeah, it's so real. I mean, I, I, and it's comes into these very, it, it brings a lot of emotion into conversations that you wouldn't normally think. [00:05:00] Would be emotional, like someone asking you what you do, you might reframe your job differently depending on who you're talking to because you want them to perceive you as financially successful.
Hanna Horvath: Same goes with, you know, your neighborhood, um, you know, types of hobbies you're into, I mean, really anything. Um, and it's very interesting how we kind of become a little bit like a chameleon. We're constantly kind of. Shape-shifting and trying to repackage what we're saying and who we are in the lens of money to make ourselves more palatable to the people that we're around.
Hanna Horvath: And I, a lot of us do this. I mean, in this scenario, I did this kind of absolutely without thinking. And then of course, you know. A little bit later I was like, why was I being so weird? Why was I behaving that way? And you know, I'm someone that thinks constantly about money. You know, my life and my career is really rooted around that.
Hanna Horvath: So I think I think about these things a lot more. But you know, to the average person, they might not even realize like, oh, you know, why did I do that? You know?
Rachel: It's so true. We're so desperate to be like,
Hanna Horvath: Yep.
Rachel: you know, oh, I'm just like
Hanna Horvath: [00:06:00] Yep.
Rachel: like you. And we can convert that, you know. Towards looking like we have less money or looking like we have more money depending on who we're talking with. And you linked a couple really interesting, um, other articles and research about how we make pretty accurate snap judgements of how people's
Hanna Horvath: Yeah.
Rachel: solely on a photograph of their face.
Hanna Horvath: Yes.
Rachel: a little bit about That was really fun for me to read. I wasn't surprised, but like, wow. 68% accuracy is not accidental.
Hanna Horvath: Isn't that wild? You know, it just really goes to show that how quickly we can assess, you know, things about people and our brains are constantly trying to sort things into categories. I mean, we would just be overwhelmed if we were really taking everything in all at once to What our brain does is it takes things and just tries to categorize them to kind of make sense of the world around you.
Hanna Horvath: That's how we get. Stereotypes, right? So what happens with, you know, financial and financial status is we'll just kind of put people into buckets based on certain [00:07:00] indicators, and those indicators really can change depending on your community, your culture, et cetera. Um, I talked about this a little bit in another issue about how your built environment can shape your money behavior, but, you know, in an urban environment.
Hanna Horvath: It could be the clothes that you're wearing, the watch that you have on, maybe in a more suburban environment. It's the car you're driving, the house you have. I mean, all of these are, um, what I'm, what I call and what a lot of psychologists call, you know, status signalers, you know, things that kind of signal to other people what your status in place are in the world.
Hanna Horvath: And, you know, you and I can both agree that, um, you know, just because you have certain status signals does not mean you are financially healthy or wealthy in any way, but you know. For a lot of people it's tangible, you know, owning that watch, owning that car, that's a tangible item. And, you know, I think that's why people clinging to things like net worth.
Hanna Horvath: Um, because it's a quantifiable way to, to, for someone to make that snap judgment. You know, are you wealthy? Are you not?[00:08:00]
Rachel: And I think, and part of it is so interesting because poverty is true.
Hanna Horvath: Oh, yeah.
Rachel: it shows in our faces.
Hanna Horvath: Yep.
Rachel: So, you know, a person who's had a lifetime of stress, upheaval, disenfranchisement, it actually shows on their face and we feel
Hanna Horvath: Yeah.
Rachel: you know? And so it goes that way too. And then there's also, yeah, he smells rich.
Hanna Horvath: Yep.
Rachel: And, and then it's also I think a not conscious. Not conscious, and sometimes maybe unconscious in others of how we signal that we're making choices about the, those signals that we're putting out to the world. You know, you made a choice to buy that watch.
Hanna Horvath: Yep.
Rachel: You made a choice to post about that vacation.
Rachel: And a financial therapist also, you know, a lot of the um. The hard feelings come with folks when what's on the outside doesn't match what's on the inside. that brings into this like other layer of complexity where like I do a lot of work to look like everything's fine and oh my God, I'm up to my eyeballs in
Hanna Horvath: debt.
Hanna Horvath: Yep.
Hanna Horvath: Yep.
Rachel: so a lot of times I, I do share, I mean obviously I'm not sure actual stories with my [00:09:00] clients, but I'm like, I have looked under a lot of hoods. really, you also can't know what's going on in someone's financial picture just by looking at what they spend. 'cause spending is one financial behavior.
Rachel: So you don't know their income, their borrowing, their inherited
Hanna Horvath: Yeah.
Rachel: you know, all of that stuff. I mean, you could be making a pretty good guess, you know, as like the study showed that, like, we pretty much have a good guess of like who has, you know, had the padding of some extra of an emergency fund and who hasn't. Um, but. Also sometimes it be lies what's actually going on. And I love that you brought up the Millionaire next door because man, that is an oldie but a
Hanna Horvath: I know.
Rachel: I read it years ago. They need to update it. Have they updated it?
Hanna Horvath: don't think so. You know, and, and I think a lot of the numbers like feel a little bit outdated, but I think a reissue would be, especially, you know, the, the thing that I definitely wanna touch on in this whole conversation is how social media has exacerbated this, you know?
Rachel: Really[00:10:00]
Hanna Horvath: Exactly. And, you know, before you were looking, what was around you, your neighbors, I don't know, people at school, people at work to kind of understand you know what consumption habits I should engage in to fit in, et cetera. Now you are being inundated day in and day out with photos of consumption of people living these lives and they're just snapshots. I mean, like you just said, I. We're not, we're not even seeing their spending habits, let alone, you know, their assets, investments, et cetera.
Hanna Horvath: And I think people would be very shocked once kind of to, to steal your metaphor, look under the hood of how much credit card debt is propping up a lot of these certain types of lifestyles. Um, I, I think I talked about in this newsletter, but, you know, you, you. Have something like, you know, you can rent a private jet, the interior of a private jet for a day to take Instagram photos or you know, people, you know, Photoshopping things to make it seem like they have more than they do.
Hanna Horvath: Or leasing out a Lamborghini to take pictures in. I mean, all of those are really good examples of what happens when you are more preoccupied [00:11:00] by how you want people to perceive you and your wealth versus your actual wealth. And that's what I think the Millionaire Store really captures is that idea of, there is a huge disconnect between, for a lot of people, between what you want to do with your money versus what you're actually doing with your money. And I think that really comes from a misalignment in your values and your financial habits. Um, I think a lot of people, or many people struggle with not spending or saving in a way that is true to them and what is actually really important to them.
Hanna Horvath: And so what will happen is, you know, that will drive those really negative. Emotions around money, you know, like shame, anxiety, et cetera. Um, and so something that I really champion in my newsletter and my content is, you know, take a step back. What is actually important to you? You know, for some people it is reaching that net worth number. Um, for other people it's just having enough money to, um, travel, you know, so finding that, what is that? What is enough number for you? And making sure it's aligning with your [00:12:00] values is where you can actually find joy out of money. And then you kind of can exist beyond other people's opinions of you and you worry less about that.
Rachel: Right, and I talk about this a lot in my club and with my clients, that actually getting good with money is an act of rebellion
Hanna Horvath: Yeah.
Rachel: you may be faced with the, I could take a trip to Europe this summer, like. Technically, maybe you've made some good money moves, you've got some money in the bank. But actually, like I, I, that's the last thing I wanna do,
Hanna Horvath: Yeah.
Rachel: even though it looks like you should be able to, or, you know, certain decisions like
Hanna Horvath: Yeah.
Rachel: or, you know, for me, no matter what my, my income or my wealth situation is, I am a lifelong thrifter.
Rachel: 'cause that's a
Hanna Horvath: Yeah.
Rachel: Like I'll never give up buying secondhand because it's so values aligned for me and I just love it 'cause it's the thrill of the hunt. But I think about things like that. Like it's the lifestyle creep that has just had rocket fuel with social media. It's always been there to a certain extent, but I do think, oh, I, my life should look like this.
Rachel: I should have the open concept kitchen. [00:13:00] You know, I should have the Pinterest party. And I, I think there's a quiet but powerful counter argument to this like, can you, I don't know if you can afford that life, and actually, do you really want it like it's. You know, you have some choices here and I think when so exposed to this beauty and this look, oh, this one thing is going to make your life easier or beautiful, or look how you'll be received and perceived as an, you know, someone who wants to, uh, who other people wanna be
Hanna Horvath: Yeah.
Rachel: be with.
Rachel: Well, it's so enticing 'cause we're so social,
Hanna Horvath: Yeah.
Rachel: like, we're the same. Right?
Hanna Horvath: Yeah.
Rachel: And, and it's. Uh, yeah, it's, it's so tough. Also, here's another deeper layer is the class you grew up in
Hanna Horvath: Yeah.
Rachel: family's
Hanna Horvath: Oh yeah.
Rachel: And, you know, one of the surprisingly most difficult situations for someone is to go from like a working class, a paycheck to paycheck, upbringing and, and, uh, grow a lot of wealth in [00:14:00] like half a
Hanna Horvath: lifetime
Hanna Horvath: Yes,
Rachel: a really, really psychologically tough thing to experience because then. people feel like they have to look rich, but they don't know. They don't know that that lifestyle actually isn't inherent to
Hanna Horvath: them
Hanna Horvath: yes,
Hanna Horvath: yes.
Rachel: Uh, I mean, it's kind of a different topic, but
Hanna Horvath: yes. I actually,
Rachel: your experience
Hanna Horvath: is gonna be the topic of the second issue, which is all about, you know, um, the sudden wealth syndrome. You know, how sudden wealth changes and reshapes our identity. Both, you know, gaining a lot of money and losing a lot of money. Um,
Rachel: I mean, lotteries. Right. Case in
Hanna Horvath: oh my gosh, yeah.
Rachel: the, the stat, the stats on lottery is really sad. Yeah,
Hanna Horvath: sad. Um, going back really quickly to consumption, 'cause there's something that I wanted to mention, which is, you know, we're, you know, currently we're in an environment that has lots of inflation, right? We're all kind of feeling it, but there also is a lifestyle inflation that has been creeping up over the past couple years, I think, driven by social media, which, which you really touched on.
Hanna Horvath: And if you don't stop it, the goalpost is always gonna move and.[00:15:00]
Rachel: Yeah.
Hanna Horvath: It is exhausting to kind of be on that hamster wheel. So I think a lot of what this kind of anti consumerist movement, you know, hopefully like money psychology, just having more awareness of your money, you know, will free you. Like, oh, how amazing would it be to not have to worry about what people are thinking about you and your money.
Hanna Horvath: Like that is just, that sounds, you know, just so relaxing to me. So I'm excited for this sort of movement and more people that are kind of hungry to sort of step off the, the wheel, so to speak, and really kind of. Live a life financially that's kind of meaningful to them. Um, but jumping back into, you know, sudden wealth syndrome, it is so interesting.
Hanna Horvath: Um, and, you know, I'll give you a little preview of the newsletter that will be out next week, but, you know, financial transitions, like I said, both getting a ton of money or losing a ton of money, it. Is an identity shift. I mean, for a lot of times you are basically having to rewrite your entire identity because so much of your identity is wrapped up in your financial [00:16:00] status.
Hanna Horvath: And most people are very unprepared for the psychological side of, you know, financial windfalls or, or losses. And, you know, some research that I was really looking into is it's, it's depends on how much money you get, of course, but it also depends on how you got that money. So someone who. Uh, had a startup and, you know, maybe they sold the startup, made a lot of money versus someone that won the lottery, they're gonna perceive that money differently.
Hanna Horvath: Someone who felt like they earned that money, um, feels very differently about their wealth and how they came into their wealth and typically can psychologically manage it a little bit better than someone who kind of came into the money through a windfall, whether it be the lottery or something else.
Hanna Horvath: So, just so interesting how, you know, at the end of the day, you know, money is money, but the way we come into it, the way you know, it leaves us or come, or kind of enters our bank account. All of that is just completely can shape how we perceive ourselves and the world, and it can be so jarring for people, which, which you just touched on.
Rachel: There's a, are you familiar with the book, strangers in [00:17:00] Paradise? That describes it. You might wanna pick that
Hanna Horvath: Okay.
Rachel: it's, it, I think it's written by a planner, but yeah. This, it's more like the cultural shift of going from not having disposable income to having quite a bit
Hanna Horvath: Yeah.
Rachel: And that it's really like entering into a new land, right?
Rachel: Where you've got two forks and, and I know it sounds like silly, like, oh,
Hanna Horvath: Yeah.
Rachel: Um, but, but there is something that's very weird and awkward about
Hanna Horvath: Yeah.
Rachel: why intergenerational wealth is so rare. wealth tends to only last one generation. Like, um, inherited wealth tends to get overspent and not last generation to generation.
Rachel: So, you know, because of sort of the stepping in and out of these different lands and expectations and social expectations of wealth, um, kind of brings up like a little pet peeve I have. Well, I have a problem with the word abundance. People use it, it's fine. I need to shut up about it. But I, of the reasons why I think when I hear people, oh, I just, I just wanna think of abundance. I want my money to be abundant and I'm all for it, [00:18:00] but part of it's like I wanna have so much money, I don't have to think about it. It's sort of like what I hear in there. And what's really interesting and the Millionaire Next Door brings up is like, actually people with stable wealth, I. Have to deal with their money all the time. Now granted, yes, they know there's gonna be enough there. They know that there's their housing and their food is gonna be cared for, but actually, the more wealth you have, the more time you actually have to spend with your money. You can't ignore it. So it's, you know, I do think it's kind of interesting.
Rachel: I mean, yes, maybe without the worry and having a healthier lifestyle. Absolutely money does provide you that, but after that point, you actually have to be even more into it
Hanna Horvath: Yeah,
Rachel: before you had wealth in order to preserve it, in order to grow it, in order to understand it because it is so easy to phew
Hanna Horvath: yeah. You know, and I've talked to very wealthy people who have financial anxiety, who think constantly and you know, penny pinch and you know, and then there's others who just kind of spend frivolously. And, you know, something interesting [00:19:00] about the, the inherited wealth and how it often lasts a generation or two is typically the characteristics or the personality traits that led for one generation to accumulate that wealth is typically not carried on by future generations.
Hanna Horvath: 'cause they're growing up in completely different nexus. You know, they're, they maybe don't have that, um, extrinsic motivator of poverty to kind of push them to work harder. So I, I think that's a really interesting effect of how wealth can, um, affect people's, you know, personality in terms of how they, you know, what's motivating them to work or pursue different, um, passions.
Rachel: Well, I'm so glad you put photos of succession on. this blog because I just finished succession,
Hanna Horvath: my gosh. So good.
Rachel: difference between the adult children and their
Hanna Horvath: Yeah.
Rachel: because of their class experiences could not have been more
Hanna Horvath: Yeah.
Rachel: right? He created the wealth. He truly came with like this like horrible immigrant story
Hanna Horvath: Mm-hmm.
Rachel: stuff, and extreme trauma.
Rachel: And he created this thing and he could not stop working. [00:20:00] And then he's got these three adult children who are so dysfunctional with a really different relationship to money. And work
Hanna Horvath: Yeah.
Rachel: of that stuff. I mean, that was really the heart of that whole show is how could one family be so disjointed and so much of it was because of their experience of money, right?
Rachel: All of these kids grew up with
Hanna Horvath: Yeah,
Rachel: and also told, oh, you never have to, never have to worry about it and what that did to them. And then they could never connect with their dad. Their dad can never connect, could connect with
Hanna Horvath: yeah, yeah. Oh, this is what I wanted to touch on, you know, for people that are living in poverty, you know, something I don't think is talked about enough is your sense of time becomes constrained. You know, you are living, I. Day to day, hour to hour, you know, you are thinking, how am I gonna afford my next meal?
Hanna Horvath: You're not thinking about what you're gonna do in a week, let alone saving up for an emergency. So one of the big benefits of growing your wealth is your perception of time shifts, you're able to think more about the future. You have more freedom in that way. You know, I always say that [00:21:00] money doesn't buy happiness, but it can buy the conditions for happiness, right?
Hanna Horvath: It can give you the, the tools for the freedom and, and all of that. But for people that are super wealthy, you know, they have more time and freedom, but a lot of times they have to decide how to fill that time. And, you know, in the case of succession, like you were saying, you know, they never. Knew what it was like to not have money.
Hanna Horvath: So for them, you know, what, what's really their motivation behind what they're doing? Well, I would argue that for them, a lot of it was power. But you know, for some people they have to define that for themselves, which can be super difficult for some people. Like I always say, you know, at a certain point I could, you know, lay in bed for a couple days, but at a certain point I have to get outta bed because I have to work. 'cause I have to pay my bills. But for people that are ultra, ultra wealthy, I mean, you know, you could just stay in bed forever there, that you don't have those extrinsic motivators to kind of push you to act.
Hanna Horvath: And I, I think we see that play out really well in, in that show.
Rachel: Totally. And I'm glad you brought up like the perception of
Hanna Horvath: Yeah.
Rachel: um, 'cause there's, yeah. Interesting research on this and [00:22:00] also like poverty is
Hanna Horvath: Yeah.
Rachel: so going day by day you actually make very good decisions in the moment. And really it's very difficult to think long-term.
Rachel: It's
Hanna Horvath: Yeah.
Rachel: impossible because all your brain's resources are going to present day safety. I mean, money always points to
Hanna Horvath: Yeah.
Rachel: always what we're talking about. And so that's why having basic needs
Hanna Horvath: Mm-hmm.
Rachel: Needs to happen before we can start thinking any time into the
Hanna Horvath: Yeah.
Rachel: length of nuance or anything like that.
Rachel: Um, and that's why it's so important that we meet basic
Hanna Horvath: Yeah.
Rachel: I also want to, you know, talk about lifestyle inflation, is that sometimes the lifestyle needs to be inflated, right? I have like a graph that I show in the club, like where. Hey, maybe your lifestyle needs to be inflated where you're buying nutritious food and you have healthcare
Hanna Horvath: Yeah.
Rachel: have some vacations, right?
Rachel: Or you know the things that you love doing and, and, but what's tricky is if you don't watch it, and let's say your income grows over
Hanna Horvath: Mm-hmm.
Rachel: um, it's really hard to build wealth if you are coupling your lifestyle with your income all the
Hanna Horvath: [00:23:00] Definitely.
Rachel: point, these two things need to break apart. Where here's my lifestyle, and it's a good lifestyle,
Hanna Horvath: Mm-hmm.
Rachel: Like. maybe not penny pinching, but being pretty aware and, and mindful of my money. And then I, I kind of cap
Hanna Horvath: Yeah.
Rachel: then my income and my lifestyle have, irrelated
Hanna Horvath: Yeah.
Rachel: And I think that's something I kinda learned in the Millionaire next Door, that that tends to be how these like more quiet millionaires who have more stable wealth, tend to think of their life. Like they really sh like, I mean this is obviously research from the nineties, so it'd be, again, we need that update
Hanna Horvath: Yep.
Rachel: Um, you know, like that. people with very stable and very quiet
Hanna Horvath: Yeah.
Rachel: tend to like really shop around for cars, even though yes, they could afford like to just go in and buy a car, they won't.
Rachel: They will negotiate cars and you know, they, the researchers found all these surprising ways that the quietly wealthy handle their money. They're very protective over it. They're
Hanna Horvath: Yeah.
Rachel: around, you know, and all of that. Then the folks have a different kind of relationship with, with money. Like, like, like [00:24:00] you described, you know, want the status car, they wanna be able to walk into a dealership and pay cash and walk out. And their net worth tends to suffer because of those behaviors. And it's because of how we perceive wealth. And I think it's gotta be even more now with social
Hanna Horvath: Hundred percent.
Rachel: is what wealth looks
Hanna Horvath: Yeah, a hundred percent. It reminds me of that really famous, uh, 2010 Daniel Kahneman study that basically said, you know, happiness kind of increases with wealth up to a certain point. Um, it was 75,000 then I think now it's probably around a hundred and thousand. But it, but it is, you know, that number where it's like there is gonna get to a point where.
Hanna Horvath: M spending more money is not going to make you happier and you kind of need to decide what that, you know, enough point is for you. And, you know, going back to social media, I mean, you know, I, I see on, on my channels even, you know, people think it's normal to be making $500,000 a year. They think it's normal to have a five bedroom home, to have multiple cars.
Hanna Horvath: And, [00:25:00] you know, it's just really, really skewed our perception of what is normal. Um, you know, I, I would argue that there really is not a middle class in America anymore. Um, you know, it's, there's just so much wealth inequality and the middle class is so, um, striated and huge that it's kinda impossible to describe kind of a centralized cohort, but I think there is a huge perception problem in what people think is normal.
Hanna Horvath: Um, I'm, I'm not gonna remember the statistics accurately, but I, there was some survey done on like recent college grads, or soon to be college grads, and they were asking, you know, what do you expect to make? After graduation, and they were all saying a hundred thousand, $150,000, you know, just coming out of college and that discrepancy because you know, I mean some college grad might make that out of college, but for the average college grad, that probably is not gonna be the reality.
Hanna Horvath: You know, that gap between what you think should be happening versus what is happening, that can definitely lead to discontent. And again, it all comes back to if you are not thinking about: [00:26:00] what do I want my money to do for me? Like what kinda life do I wanna live and how can money support that? You're just gonna be fixated on the numbers.
Hanna Horvath: I mean, I've been there, right? You're just gonna fixate on my income, my net worth, and if you're not, at that point, it's gonna lead to discontent, to anxiety.
Rachel: It's interesting. I feel like, um, well, I'm, I don't know how old you are. I'm 45, so. I'm like an elder millennial. And when I graduated, I mean it was 2002,
Hanna Horvath: Mm-hmm.
Rachel: like, you know, there had been the.com
Hanna Horvath: Mm-hmm.
Rachel: 11 had just happened that year. So like, stuff was like not great, but it was definitely like, go save the world and make minimum wage. And I was literally told many times in college, don't worry about what you major in, just do what you love. And I kind of like, okay. I paid my own way. I was self-sufficient. I didn't have family money, but like I really just, I, I was sort of just taught to be this, like, I don't know, this activist struggling from paycheck to paycheck, that that was normal and that that was virtuous and it's taken me a long [00:27:00] time to get out of that.
Rachel: So I like, I. There could be just some real generational cultural differences
Hanna Horvath: Yeah.
Rachel: But it's funny, like where I went also, I went to like a very liberal, liberal arts school. That was definitely the bias and it was like, don't pursue money. That's gross. And there's, know, maybe this is a sprinkle idea for, for your part three I, what I see come up a lot is the fetishization of poverty.
Hanna Horvath: Yeah.
Rachel: Especially for folks who are act solidly in middle
Hanna Horvath: Oh yeah.
Rachel: but like can't look like
Hanna Horvath: Yeah.
Rachel: And I see this a lot in the helping professions as a
Hanna Horvath: Mm-hmm.
Rachel: Um, I'm wondering like, has, has any of your reading or research led into that, like noble poverty kind of
Hanna Horvath: Yeah, that would be such a great thing to explore. Um, I haven't written about it yet, but I'm definitely gonna put it down as something to research. Yeah, I love it. I live in Brooklyn, and Brooklyn is a borough that is getting rapidly gentrified. And so we're kind of seeing that fetishization of poverty like play out in kind of real time.
Hanna Horvath: [00:28:00] And, you know, I, I think it really does kind of fit into that whole idea of, you know, I work in the creative field and I need to be perceived a different way. And you know, especially in New York actually, there's been kind of this growing trend of, you know, do your parents pay your rent?
Hanna Horvath: It was New York.
Rachel: how people
Hanna Horvath: was New York magazine, I think, and I, and it was all about how most of the down payments on homes were by the parents. You know, like a lot of, most first time home buyers were getting parental support and I. That doesn't get talked about enough. Um, and that is also really fascinating to me because that too brings a sense of, you know, someone whose financial needs are being met by somebody else.
Hanna Horvath: They're like ashamed almost to admit like, oh, you know, my parents are paying my rent. Um, and again, it kind of goes back to this what we're talking about at the beginning of the conversation of like trying to humble yourself and try to make yourself feel, seem like, you know, oh no, no, I'm not. It's kind of when rich people are like, oh, I'm not rich.
Hanna Horvath: I'm comfortable. You know, it's that, [00:29:00] it's, it's that phrase where it's, you know, you wanna feel like you're fitting in and I think you're worried that if you concede in any way that you are wealthier than the person you're talking to or the people you're interacting with, you're not gonna fit in. So I think that's kinda where that shape shifting sort of comes in.
Hanna Horvath: But it is so interesting. I mean, New York is a city of vast wealth inequality, so, you know, I see these interactions play out constantly, you know, on my day to day.
Rachel: sorry I'm like dropping all these resources. It's just something that I'm so interested in and I catch on. There was a wonderful podcast, short series called Classy by Benjamin Menjivar from NPR. It
Hanna Horvath: this down.
Rachel: a year, year and a half ago. I want him to do a season due 'cause it was so. Flipping good
Hanna Horvath: Okay?
Rachel: It's about, yeah, like where we come from also like the immigrant
Hanna Horvath: Mm-hmm.
Rachel: Um, and what kind of like what you were talking about earlier, like what do we consider as normal adult life? My husband is from Ukraine and grew up in like USSR times and like. On there are just a couple [00:30:00] houses, like everyone lives in apartment buildings.
Rachel: It's not like
Hanna Horvath: Yeah,
Rachel: or even an ability to live in a
Hanna Horvath: yeah.
Rachel: Whereas I'm growing up the states where like that's the, that's the
Hanna Horvath: Yeah.
Rachel: quote normal, right? You have a house with a white picket fence and you know, like just what we consider normal life to be is incredibly subjective. It's often really culturally prescribed. And then yes, this gymnastics that folks with privilege do, and I've experienced myself with it when I, I love that opening story
Hanna Horvath: Yeah.
Rachel: because I've felt that too. Like we were in a position where we could buy a new car, we could buy it in cash, I'll just admit here. And, and that was in, it just worked out for us.
Rachel: We had
Hanna Horvath: yeah.
Rachel: We had saved for it, and we didn't wanna finance it. um, I found myself wanting to hide that fact.
Hanna Horvath: Yeah.
Rachel: You know, isn't that interesting when like. Well, we did the thing we wanted to do. Why are we feeling so weird
Hanna Horvath: Yeah, and I'm someone too where I am like the biggest champion of talk about money. Like be honest about everything, be radically [00:31:00] honest about your finances. And I even find myself feeling that, you know, resistance, um, when talking about my own financial situation because I, you know, part of it is either I.
Hanna Horvath: I'm not sure if I measure up to other people. A part of it too is like that wanting to, you know, humble yourself a little bit and you, you don't wanna come off as too proud, I guess. And something you touched on about owning a home, um, you know, that's something that I think a lot about, uh, you know, the idea of like the American dream and how this kind of wrapped up in your finances.
Hanna Horvath: And, um, there was actually a really, really interesting, um, wall Street Journal article called What Happens When a Generation Never Grows Up? And I'm, I'm on the younger end of the millennials, and you know, it, it's kind of about the millennial generation and how a pretty good cohort are kind of missing these traditional markers of adulthood, like buying a home, getting married, having children, and a lot of it is wrapped up in the personal finance of it all.
Hanna Horvath: You know, millennials I think carry the most student loan debt. [00:32:00] Um, you know, obviously. And then there's those macroeconomic factors like it's impossible to buy a home. Homes are so expensive and there's no inventory. Um, just general inflation. You know, I, I think a lot of people feel like they can't start a family because of how expensive it is.
Hanna Horvath: Expensive cost of childcare. So, um, you know, all of that's been written about. But what really fascinated me and what I've been thinking a lot about is, you know, when the pre-described path kind of disappears. Uh, and you know, the definition of what makes a good financial life, you know, the American dream disappears.
Hanna Horvath: You know, that's a loss of identity for a lot of people. You know, when they feel like they can't reach those goals, they may never reach those goals. What happens then? Um, and you know, the article described as like, you know, this sort of permanent state of arrested development. Um, and it was a little tongue in cheek, but it is interesting to think about how I think a lot of us clinging to these financial milestones because it's, it's a way for us to let us ourselves know, like, okay, we're okay. We're on the right path, we're doing the right thing. Um, it's the same as, you know, [00:33:00] um, reaching a certain income threshold or reaching a certain net worth threshold. It's a very quantifiable way of saying, I'm doing the right thing, you know?
Rachel: I don't know if there's been a more stark difference between generations than the boomers and the millennials.
Hanna Horvath: Yeah.
Rachel: Of what their lived reality financially has been. And a lot of my clients are in the more millennial bracket and they like, you know, they come to me because their parents tell them that they're spending addicts.
Rachel: I'm like, okay, we'll talk about that. And it's, this is an income situation. This is your rent is half of your
Hanna Horvath: Yeah.
Rachel: Because for the boomers, all they had to do was cut back on the, on the lattes or going out, and they were fine because their schooling was subsidized and because their housing was so inexpensive. So there's these, the generational divide is really real, but there's a lot of conflict and, um. Really inability to understand each other, like within one family is such a rapid shift. Although I would say that like we know what we call the American dream only must have lasted 50 years. Like this is not like how it's always
Hanna Horvath: Yep.
Rachel: You know, [00:34:00] like it's, you know, probably popped up in like World War II and pretty much ended, you know, 20 years ago. So it's not like that's how it's always been. It just kind of was for one generation and just like wealth, it kind of just went away. And we have a whole different reality now that we've gotta play in
Hanna Horvath: Yeah. Yeah. This is actually something I wrote about too, about, you know, why we love to hate how other generations are handling their money. Um, you know, as a millennial, I love,
Rachel: boomers.
Hanna Horvath: love to poke fun at them. You know, uh, I, I like all the memes, but I.
Rachel: Me too.
Hanna Horvath: But it, it, it is, you know, and writing that, that newsletter, I did kind of get a little bit more empathy of like, you know, so much of our financial behavior, you know, the emotions and values we assigned to money is just so heavily shaped by the context that we grew up in.
Hanna Horvath: So, you know, you talked about, you know, graduating college, you know, around the.com bubble and, and 9 11, you know, for a lot of millennials it was graduating in 2008, you know, into a [00:35:00] recession. Um,
Rachel: I had a job like that didn't, I mean, it affected me somewhat, but I wasn't looking for a
Hanna Horvath: yeah.
Rachel: I was kind of already Okay. Yeah.
Hanna Horvath: Yeah. And for a lot of baby boomers, you know, a lot of them were coming of age during a time of a lot of economic growth and they were able to get jobs, like you said, where, you know, they had pensions. Um, you know, homes were kind of more affordable. I also think, kind of circling back to that idea of lifestyle inflation, I think too younger generations.
Hanna Horvath: Experience lifestyle inflation a little bit more than older generations because we're just so much more exposed to what's going on around us. I mean,
Rachel: Yeah.
Hanna Horvath: when my parents were, um, you know, buying their first home. Everyone had a modest single family starter home. They called it a starter home. Now there's kind of the expectation, it's you go from renting to owning this like mega mansion, you know, in, in the suburbs there's kind of like no,
Rachel: Yeah.
Hanna Horvath: stepping stone.
Hanna Horvath: So it's, it's very interesting, you know, to see kind of how all these different factors can just kind of combine themselves to shape how our financial [00:36:00] behavior is. And again, it's so interesting how this is just so unconscious. Like half the time we're not even thinking about how all of this is affecting what we're doing with our money.
Rachel: Yeah, it's so true. And how we're picking up all of this cultural information. We're expressing it, we're doing all these
Hanna Horvath: gymnastics
Hanna Horvath: Yeah.
Rachel: and it's, it's tiring and it's why then yes, money is emotional. Like if you notice, like Hannah and I have like pretty much not talked about a number this whole time, right?
Rachel: It's all about like this lived
Hanna Horvath: Yeah.
Rachel: relating with money and relating. Really to each other. Not so much with money, but like really relating to each other. Okay. Hannah, I have a personal question for you that I like to ask all my guests, which is I want you to take a quiet moment and I'm gonna ask you to think of your money as a
Hanna Horvath: creature
Hanna Horvath: Mm-hmm.
Rachel: real or imagined, and let the very first intuitive hit come to you. Don't over think it. It's always right. What comes to you?
Hanna Horvath: Okay. I would say that I would describe my [00:37:00] money as a magpie. One. I think they're really beautiful, but
Rachel: Love mag
Hanna Horvath: they are super smart, they're very curious and they're attracted to shiny objects, but they are, you know, resourceful and. Something when I think about my money, you know, and something that I've just struggled with over my career even some of that is, you know, I'm A CFP.
Hanna Horvath: I write about money all, all day long, is I find myself in this state of, I just need more and then I'll feel secure. And I think that is often that magpie behavior of just wanting to kind of keep collecting and keep building that nest. And, you know, so much of the work that I've had to do on myself is.
Hanna Horvath: What is enough for me and, and what am I actually trying to do with my money? Um, and for me it was really creating more calm, you know, maybe I'm not gonna check my bank account three times a day. [00:38:00] Maybe I'm gonna set up time at the end of the week, a 30 minute period to kind of go through my money. Um, and if I start feeling stressed, I'm just gonna tell myself, okay, you can deal with it.
Hanna Horvath: On Friday, you know, and creating those boundaries for myself. Um, and
Rachel: Kind of right size, the amount of attention and stress you're gonna put on something. Yeah.
Hanna Horvath: absolutely, because, you know, money is a huge part of our lives. It's a huge part of everyone's lives, but, you know, we can't let it become our entire identity. Um, because that's when all those unhealthy emotions and then later behaviors kind of come out and, you know.
Hanna Horvath: That was really important to me to create boundaries for myself and, and also just bring awareness to everything I'm doing. So I hope that answered the question.
Rachel: That's beautiful it's such a strong image. I love mag pies
Hanna Horvath: Yeah.
Rachel: I've always loved them. They're so beautiful. And yeah. And I think also like, oh, it can be so many things. It can be really cunning and, and intelligent and crafty, you know, as well as shiny object. Like it can be all of[00:39:00]
Hanna Horvath: Yeah. Yeah. And that, and that's who we are as people. I mean, we're very complicated and multifaceted and nobody is one thing, right. So I think that that is a really app metaphor for maybe even myself, but definitely my money.
Rachel: For sure. Well, I've loved finally being able to talk to you in real life. I really look forward to the next two installments of this series. I think it's vitally important. I think it's something we're all wondering how do they afford it or am I doing this
Hanna Horvath: Yeah.
Rachel: all of this class signaling. So I think it's a very cool series that you're bringing up and I'm so glad we could bring it onto the podcast to talk
Hanna Horvath: Thank you. I had so much fun and anytime I love this conversation I'd love to chat anytime. But yeah, everybody look out for the next two issues and I'm excited to keep writing about this stuff and you gave me some great ideas for future issues, so thank you for that.
Rachel: Oh, you guys, I contributed. That's so good. All right, so everyone look out for your brain on money. Uh, it's a substack. Hanna's a great substack and I'll link to it. Everything in the show notes.
[00:40:00]
Thanks for listening to the Money Healing Club podcast. You can find resources, links, everything from this episode in the show notes below, or at moneyhealingclub.com/podcast. If you enjoyed this episode, you probably really love my free email course on curbing impulse spending with compassion and mindfulness, you can check it out moneyhealingclub.com/challenge.
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