A bit of an oxy-moron isn’t it, an unconscious belief? How can one believe something, if one is unconscious? Unfortunately, every single one of us harbor unconscious beliefs about money – they’re called money scripts. According to Klontz, Kahler, and Klontz, money scripts are defined as “typically unconscious beliefs each of us have developed concerning money and life.” These beliefs can be extremely harmful to the way we decide to spend, save, and treat the money we’ve earned.
The depth of the origins, behaviors, identification, and ultimately the ability to overcome each individual money script is far too great to bring to light here, but what we can do is look into each of the four scripts and address how the specific money script you unconsciously believe in, is hurting your ability to save for your future, enjoy the money you’ve earned, or in some cases, both. Financial Psychologist Dr. Brad Klontz and his team of researchers have identified four categories of money scripts. Let’s take a quick dive:
- Money Avoidance: Money is bad, rich people are greedy, and I don’t deserve to ever enjoy large sums of money.
These are some of the thoughts and opinions that come along with money avoidance, and as you can understand, plague investors over the long-term. Research from Dr. Klontz & Dr. Britt has shown money avoiders “may sabotage financial success or give money away in an unconscious effort to have as little as possible, while at the same time may be working excessive hours in an effort to make money.” How can one achieve long-term goals of accumulation, if one is avoiding the ability to accumulate wealth?
- Money Worship: Money will solve all my problems.
Someone who suffers from money worship truly believes money is the key to happiness and the right amount of money will wash away their problems. Yet, when asked to point to the number that is the ‘right amount of money’ there’s never a number that can be identified. Dr. Klontz and Dr. Britt have found money worshipers also believe “that one can never have enough money and they will never really be able to afford the things they want in life.” You can see how these contrasting beliefs of – money will solve everything / I’ll never be able to truly achieve (fill in the blank). This can create a very unhealthy view of saving and investing over a lifetime.
- Money Status: My net worth = my self-worth
Often, this is a script that coincides with people spending more money than they have, to illustrate a lifestyle they feel is important. It’s interesting, most money worshipers have a lower net worth than individuals who suffer from other money scripts, due to their belief of living a lifestyle they haven’t earned. If you identify with money worship, ask yourself: If accumulation and assets are the prize, why haven’t I allowed myself to accumulate? Is the current status of my life more important than retirement? How will I be prepared for the day my earned income ends?
- Money Vigilance: I’ve got my eye on it – ALL OF IT!
While this sounds like a very positive money script – being vigilant, careful and watchful over money – it can also lead to some very stressful feelings which can keep the individual from truly enjoying their wealth and allowing it to grow as they’d like over time. According to Dr. Klontz and Dr. Britt, those who are vigilant “have a tendency to be anxious and secretive about their financial status with people outside of those closest to them.” The clients I work with that show a strong script towards money vigilance are certainly wealthy, but they have no idea how to enjoy their wealth, and often keep their loved ones from enjoying it too. They are too concerned about keeping their accumulated wealth in a constant state of neutrality; afraid to draw down too much, or afraid to risk their wealth in a growth-oriented manner. They don’t truly allow themselves to understand what they and their family are capable of enjoying.
Now, without a doubt, some of you reading this are saying: “Not me! I don’t suffer from any of these, and I have a very healthy relationship with money!” You may enjoy a healthy relationship with money, but like it or not, a money script lives somewhere inside of you. You have however learned to shape it, or re-script it over time, allowing yourself to reach the goal or goals you’ve targeted.
Nonetheless, if one of above scripts did speak to you, what’s next? First, you must identify which script(s) belongs to you and embrace it. To further understand and become educated on your formed beliefs is a very important first step. Second, sit down with someone you can trust and someone who is required to put your best interest first – a fiduciary advisor – to determine what is important to you. You must discuss and mutually understand, what is important about your money, what scares you about your money, and what you want to achieve. Advisors aren’t licensed psychologists and can’t truly diagnose a money script or a treatment. However, an advisor can coach you on the plan, educate you on the time-frame, and visually walk you through the potential outcomes in financial planning. Understanding which money script you harbor, how it plays into your life, and knowing what you want to achieve with your money, despite your unconscious beliefs, is all a part of the financial planning process. When it’s all said and done, it may just create an outlook you didn’t know was possible.
Klontz, B., Kahler, R., & Klontz, T. (2016). Facilitating Financial Health. Erlanger, KY:
National Underwriter Company.
Klontz, B. & Britt, S. (2012). How Clients’ Money Scripts Predict Their Financial Behaviors. Journal of Financial Planning, 33-43.
Thomas Pargett, CFP®
This commentary is provided for general information purposes only and should not be construed as investment, tax or legal advice. Past performance of any market results is no assurance of future performance. The information contained herein has been obtained from sources deemed reliable but is not guaranteed.