April is Financial Literacy Month in the United States, and it’s a great time to focus on promoting smart money habits. While it’s important to understand the math and mechanics of personal finance, we also need to address the psychological side of money, including our beliefs and behaviors. Understanding our money scripts is key to gaining insight into our behavior and making positive changes.
Money scripts are our unconscious beliefs about money that shape our behavior and perspectives. As a Creighton University graduate, I was fortunate enough to meet and learn from Brad Klontz, a thought leader in the world of financial therapy. Klontz has identified four major types of money scripts: money avoidance, money worship, money status, and money vigilance. For example, people with a money avoidance script may believe that “money is the root of all evil,” while those with a money worship script may believe that “more stuff equals more happiness.”
Determining Your Money Script
- Start with your first memory of money: Ask yourself what your first memory of money is and how old you were when you formed this memory. This can help you understand how your early experiences with money may be impacting your current beliefs and behavior.
- Draw it out: If visuals help you, draw what you think of when you hear the word money. Don’t think too hard, just draw the first image that comes to you. Then, sit back and see if you notice anything about the image. This can help you identify unconscious beliefs and associations you have with money.
- Test the waters: Are your feelings towards money negative or positive? Are they empowering or self-defeating? Identifying the emotions you associate with money can help you understand the role money plays in your life.
- See what comes to mind: What phrases come to mind when you think of money? This can help you identify unconscious beliefs you may have about money.
- Write it down: Reflect on your responses, then talk to a financial consultant or your financial advisor about it. Discussing your findings with a professional can help you better understand your money scripts and how to address them.
The solution to increasing your financial literacy isn’t to become a technical master and understand all the inner workings of the finance industry. While these things are important to understand, it’s most important to reflect on your own behaviors and beliefs which drive action. To truly boost your own financial literacy, you need to master the emotional side of personal finance. Changing your attitude toward saving and spending can lead to building a better budget, not the other way around. Each of us needs to dig deep inside to find what brings us joy and prioritize that instead of getting caught up in numbers, terminology, and mechanics.
Examples: How Money Scripts Can Impact Behavior
- If you have a money avoidance script, you may avoid looking at your bank account or paying bills on time because you believe that money is evil.
- If you have a money worship script, you may feel compelled to buy expensive items you don’t need because you believe that possessions will make you happy.
- If you have a money status script, you may constantly compare yourself to others based on their net worth and feel inferior if you don’t measure up.
- If you have a money vigilance script, you may never allow yourself to enjoy the things your money can do for you because you’re too vigilant about your spending.
It’s important to remember that financial success isn’t determined by how smart we are with numbers, but how well we’re able to control our emotions – our wants and desires. To improve your financial literacy, start by understanding your money scripts and then take actionable steps to change your behavior. For example, if you have a money worship script, try setting a budget for discretionary spending and focus on experiences that bring you joy instead of material possessions. If you have a money status script, try shifting your focus to your own financial goals and values, rather than comparing yourself to others.
Deepening your understanding of financial literacy and the psychological side of money can be a lifelong process. Don’t be afraid to explore additional resources such as books, podcasts, and blogs. And don’t forget to pass on what you learn to others – sharing knowledge and empowering others is key to building a more financially literate society. Financial literacy is about more than just learning the mechanics of personal finance – we also need to address the psychological side of money and help people change their behavior to get the results they prioritize most.
Financial Fitness Consultant