Has it ever occurred to you that other people do not experience money in the same way that you do?
Ever wonder why we all keep making the same decisions around money over and over again?
A significant part of our ambient planning process is spent understanding the client outside of the numbers on their balance sheet. And we are not just talking about what their favorite vacation spot is or what they enjoy doing on the weekends. No, we dig much deeper.
Because at the end of the day, we have found that regardless of net worth, income, or employer benefit packages, a person’s financial future is made or broken based on their behavior.
It is our decision making, specifically in times of uncertainty or stress, that dictate our ability to build a healthy and stable financial future. “If you can keep your head when all about you are losing theirs…”
I remember someone telling me their secret to healthy relationships: “Everyone sees the color of paint differently.” The idea has come in handy several times. Concerning money, it would be prudent to say, “Everyone makes money decisions differently.” So, how does this develop awareness of our financial habits?
Brad and Ted Klontz are world renowned financial psychologists, particularly for their work on "Money Scripts." Money scripts are our core beliefs about money that fuel our financial behavior. They are...
Developed while we are children
Passed down through generations within families and cultures
Bound by a person’s context
Are typically only partial truths
Here are the 4 Money Scripts, as researched through the Klontz Money Script Inventory by individual scores in each script.
Money is something to be avoided. In fact, money is the root of much fear, anxiety, disgust, greed, and corruption. Money is what is wrong in the world. Those with a money avoidance script may believe that wealthy people are bad, and that living with the least amount of money possible is virtuous.
Money avoiders are dichotomously likely to believe that having more money could solve some of their biggest problems, including their own sense of self-worth. It is because of these contradictory thoughts that money avoiders oscillate back and forth between showing contempt towards money and people who have it, and putting too much value into the role of money in their own personal life.
Money avoidance can quickly lead to poor financial health because both extremes of thought (remove excess money immediately and try to solve non-monetary problems with money) can lead to a struggle for consistent means to live.
The duality continues. Those that worship money believe it to be the end all be all to a happy life. More money means more problems solved. However, if Notorious B.I.G.’s song “Mo Money Mo Problems” is any indicator, the more money a worshipper obtains, the more they think they do not have enough to solve every problem. Thus, Money Worshippers spend massive amounts of time trying to buy happiness through chronic overspending, hoarding, workaholism, and never ending price negotiation.
Self-Worth and Net-Worth are synonymous. People who hold a money status script believe that a person is only as good as what they earn. Thus, someone who earns $400,000 is better or more successful than someone who earns $40,000.
But what about people who hold a money status script, yet do not have a high income or high net worth? They pretend. A person may spend money as though they had it, but find themselves in unrelenting debt payments after trying to prove their status through spending.
Someone who holds a money status script may believe that familial and peer relationships are only as strong as the person’s wealth or earning power.
The only script that is associated with (some) positive financial health. People that hold a money vigilance script are “alert, watchful, and concerned about their financial welfare” (Klontz, Britt). If they cannot put down the cash to pay for something, they will not buy it. They believe that saving is important, and that everyone should work for their means, instead of expecting financial handouts.
Therefore, people who hold money vigilance scripts are more likely to have higher incomes and higher net worth. This is not to say that people who are money vigilant are easy to spot. In fact, they have a tendency to be anxious and secretive about their financial status with those who have not earned their trust.
Although money vigilance may appear as a protection, excessive caution or anxiety can keep someone from enjoying the money they do have. They find it difficult to spend money on things that they find the most valuable. They may have high hopes and means of philanthropy, but there is seldom any consistent action.
Scripts Can Change
The whole point of introducing a way to organize financial behavior, like a person’s money scripts, is to bring awareness in hopes that these scripts can be disrupted. Through financial life planning, a neutral advisor can help identify these scripts and the behaviors with which they are associated, thus opening a window to better direct these behaviors towards a person’s desired emotional outcome or desired external impact. By simply seeing how certain money behaviors may limit a person, or may destroy that which a person seeks, we can slowly redirect scripts accordingly.
In cases where money scripts are solidified through trauma, grief, or any other emotionally charged event, they can become resistant to change. When this is the case, a new class of advisor comes into play: A financial therapist. These professionals will not be helping you grow your investments or negotiate better benefits at work. Instead, they will be focusing on the core of your money decision making to help you discover where patterns occur and how they can be disrupted through psychological therapy.
Each money script contains language with which all of us can relate, for we do not develop from within a vacuum. To some extent, we are a product of our surroundings, and the timing of those surroundings. A money script is language that is to be helpful as we learn to use and enjoy money appropriately without it taking complete control. By debunking some of these myths, we can begin to see our money with new eyes. But be careful with self-diagnosing without the help of a neutral third-party advisor. Instead, reach out to your financial professional and ask about taking a money script inventory.