Interview with Farnoosh Torabi, Author of Psych Yourself Rich

A few weeks ago, I wrote a book review for Psych Yourself Rich, written by Farnoosh Torabi. I was pleasantly surprised by her point of view on how emotions control so much of how we spend our money. We easily fall into unreasonable spending habits because of our emotional baggage and connections we have created with money. I had the wonderful opportunity to interview her and share her answers with my readers.

Little House: As someone who has worked in both the financial industry and media, how do you think the media affects our conceptions of being rich and what rich looks like?

Torabi: I think the media tend to focus on the superficial aspects of “rich.”  It portrays “rich” as accumulation – having a lot of nice things.  This is not only inaccurate; it has a dangerous impact on the way consumers perceive and seek wealth.

Little House:  Do you think a time is coming where the media will begin presenting a more realistic view of the average American’s finances? Or is the public not interested in that depiction?

Torabi: The media is focused on providing programming that both educates and entertains (with emphasis on the latter). To that end I think it’s easier to create shows and programs that stress an escapist lifestyle with a focus, again, on a materialistic rich – a la New Jersey Housewives or Gossip Girl. To show a more realistic view of the average American’s lifestyle takes guts on behalf of network executives. But that’s not to say that the public doesn’t want to see a grittier, more realistic look at the way our culture spends money. My previous show The Bank of Mom and Dad portrayed young women buried in debt and the audience was quite receptive.

Little House: In your book, Psych Yourself Rich, you mention developing a personal money philosophy. How can this help people realize their goals and become more responsible with their money?

Torabi: Our financial philosophies reemphasize and nourish our goals, in addition to keeping your financial obligations in check.  Altogether our philosophies serve as one neat little compass to help guide us through the myriad of money-related obstacles life presents, though we are not in the habit of formulating any, at least not consciously. But they really do come in handy. Next time you find yourself wondering “why”, “when”, or “what now”, regarding a financial shift in your life, your philosophy, in addition to your goals, may help lead you to the most fitting of solutions and strategies.

Little House: History tends to repeat itself. Once our economy finally pulls out of this recession and into a more productive period, do you think people will fall back into their bad money habits and begin spending more than what they earn? Or is this recession different from some of the more recent recessions creating a more financially responsible public?

Torabi: I think bad habits are hard to break so I suspect many of us will return to the ways of old. But I also believe that this recession – because it lasted as long as it did and even though it’s officially over, it doesn’t feel like it is – the lessons learned will be harder to forget. Our national savings rate is around 6% right now, compared to 0% before the recession. That may not hold up as well once the economy turns around, but for many households I do believe the recession – for its longevity and gravity – was a permanent wake-up call.

Little House: Our culture is built on lofty dreams and a “can do” attitude. As American’s do you think we suffer from too much optimism? Is this outlook blurring our vision of what financial responsibility looks like making it difficult for us to live within our means?

Torabi:  I think too much optimism can blind us from facing the risks of certain decisions. In a 2002 interview with Forbes magazine, Nobel laureate Daniel Khaneman, around the time he was awarded his prize for his work on irrationality, discussed his thinking about optimism, saying that it was a wonderful thing. “There are contexts where optimism helps. Generally where it helps is in executing plans. It keeps you on track. It gives you energy to overcome obstacles. It keeps you healthy and it keeps you resilient.” But personally, he said, he would not want his financial advisor to be optimistic. “I’d like him to be as realistic as possible.”[1][1] His reasoning was that there’s no harm in understanding the odds of a particular decision. In our own lives, too much optimism can sometimes lead to overconfidence and a false sense of security when taking on real risks.

Little House:  As a financial expert, host, and author, what’s next on your horizon?

Torabi: Honestly, I just hope to continue delivering my message and helping all those struggling in their financial lives to turn the corner. I hope to do this in as many ways and avenues as possible – through print, television, online and face to face.

Thanks for inviting me to your blog. I hope your readers enjoy my book!

Check out Farnoosh’s book on Amazon.