knowledge topics
Values, Attitudes, Emotions and Disorders Related to Money
KNOWLEDGE EXPECTED OF: Both CFP® Professionals and QAFPTM Professionals
- Identify the levels of Maslow’s Hierarchy of Needs.†
- Physiological
- Safety
- Belongingness / Social / Love
- Esteem
- Cognitive
- Aesthetic
- Self-actualization
- Transcendence
- Explain how Maslow’s Hierarchy of Needs may impact financial decisions.
- Explain the importance of safety (financial security) to overall well-being.
- Identify beliefs about money,†† such as:
- Money is good
- Money is bad
- Money represents achievement
- Money is power
- Money is unimportant
- Money provides security
- Money should be retained/conserved
- Money will give meaning or bring happiness
- Money is not to be spoken about
- There will never be enough money
- There will always be enough money
- I do not deserve money
- I deserve to spend money
- Identify factors that may impact an individual’s association with money, such as:
- Previous learned experience
- Observations of friends / family / parents’ use of money
- Identify associations with money that may impact an individual’s decision making and behaviour.
- Emotional association with money
- Financial literacy with money
- Level of knowledge about financial matters
- Sophistication in using money
- Define practices associated with money, such as:
- Workaholism
- Compulsive buying disorder
- Pathological gambling
- Compulsive hoarding
- Inability to budget
- Excessive need for instant gratification
- Financial paralysis
- Underspending
- Overspending
- Financial enabling
- Financial dependency
- Vow of poverty
- Financial incest (overexposing children to money problems)
- Financial infidelity (hiding financial matters from spouse)
- Sudden wealth syndrome (unexpected windfalls)
- Poor investment decisions
- Excessive risk taking
- Excessive risk aversion
- Define grief.1
- Identify that each individual’s approach to grief may be different.
- Identify events when grief may be experienced, such as:
- Death of an important person
- Death of a pet
- Loss of relationship
- Loss of job
- Diagnosis of illness or health problem
- Experiencing catastrophic loss
- Explain the stages of the Kübler-Ross (five-stages) model of grief.
- Denial
- Anger
- Bargaining
- Depression
- Acceptance
- Explain how the Kübler-Ross (Five-Stages) model of grief may impact decision-making.
- Identify circumstances when a medical practitioner may be beneficial, such as:
- Debilitating anxiety
- Depression
- Significant relationship dysfunction
- History of painful or traumatic experiences around money
- Addictive or compulsive behaviours
- Chronic inability to change destructive financial behaviours or follow through on financial plans
- Identify areas where mental energy may be spent, such as:
- Managing pain and stress
- Directing attention
- Making decisions
- Resisting temptations
- Controlling emotional displays
- Forming new habits
- Completing every day chores
- Learning new things
- Identify that when greater amounts of mental energy are spent on one area to the detriment of other areas, mental depletion may occur.
- Identify potential signs of mental depletion, such as:
- Amplified emotional reactions
- Physical fatigue
- Mental fatigue
- Difficulty making decisions
- Confusion
- Hyper focusing
- Rigidity in thinking
- Cessation of good habits / increase of bad habits
- Identify potential risks of mental depletion, such as:
- Diminished learning capacity
- Flawed decision making
- Vulnerability to temptation
- Non-adherence to change / recommendations
- Identify potential aids to reducing mental depletion, such as:
- Sleep
- Nutrition
- Exercise
- Mental relaxation techniques
- Identify effective strategies when engaging with an individual who may be suffering from mental depletion, such as:
- Affirm the individual
- Remove stressors
- Simplify decision making
- Prioritize decisions
- Identify what a financial planner may recommend when an individual may be suffering from mental depletion, such as:
- Postpone decision making
- Postpone providing information to client
- Postpone educating client
- Reschedule meeting
† Maslow, A. H. (1970). Religions, values, and peak experiences. New York: Penguin. (Original work published 1964)
†† Klontz, B., Britt, S. L., Mentzer, J., & Klontz, T. (2011). Money Beliefs and Financial Behaviors: Development of the Klontz Money Script Inventory. Journal of Financial Therapy, 2 (1) 1.
Glossary of Verbs (mouse over to see definition)
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Define
To state exactly the meaning of
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Identify
To be aware of / to recognize and correctly name / to locate an appropriate resource
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Explain
To make clear the meaning of / to describe something in more detail or reveal relevant facts or ideas related to it
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Compare
To note the similarities and differences between two or more things
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Estimate
To determine an approximate value for
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Calculate
To find the value using mathematics
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Convert
To change from one form or purpose to another
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Evaluate
To reach a conclusion or make a judgement through careful study
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Interpret
To give the meaning of / to construe or understand / to translate orally
Read more about the Taxonomy used in the FP-BoK
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