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The Impact of Money Scripts on Your Financial Decisions

Michael Reynolds | May 13, 2024

[Prefer to listen? You can find a podcast version of this article here: E222: The Impact of Money Scripts on Your Financial Decisions]

Personal finance is not just about numbers. It's also about behavior. All the elaborate planning and number-crunching in the world won't lead to success if the behavior element is missing.

Our behavior related to money is driven by many factors. One factor can be our unconscious beliefs about money. These beliefs are called "money scripts," and they can significantly influence our habits and results with money.

What Are Money Scripts?

Money scripts are our unconscious beliefs about money, profoundly shaping our financial behaviors and overall financial health. The concept was developed by Dr. Brad Klontz, a leading financial psychologist. These scripts are usually formed in childhood and can affect various aspects of our financial health, such as income, net worth, and debt levels.

Money scripts are often incomplete truths passed down through generations, subtly guiding our financial decisions. Understanding these can be a powerful tool in uncovering the reasons behind our financial behaviors.

The Four Types of Money Scripts

Dr. Klontz identifies four primary money scripts that people typically exhibit. Each script has unique characteristics and influences on financial behaviors:

  • Money Status: This script links self-worth to net worth. Those with a money status script may prioritize displaying wealth, potentially leading to overspending. They might view financial prosperity as a reward for living a virtuous life, a belief often rooted in growing up in socioeconomically lower environments.
  • Money Worship: Money worshipers believe that more money leads to happiness and that one can never have enough money. This script can lead to perpetual dissatisfaction, as the pursuit of money never truly satisfies. It often results in prioritizing work over personal relationships and a higher likelihood of accumulating debt.
  • Money Vigilance: Individuals with this script are highly attentive to their financial state. They value saving and are wary of financial complacency. While this can lead to healthier financial habits, it can also cause excessive anxiety about money, affecting the ability to enjoy life.
  • Money Avoidance: Those with a money avoidance script often view money negatively, associating wealth with greed or corruption. They might believe they do not deserve money, leading them to sabotage their financial success. This script can manifest in ignoring financial statements, overspending, or using money to enable others. It can also manifest as a reluctance to pursue career advancement and a resistance to making more money.

It should also be noted that most people exhibit a combination of money scripts. While we typically have one dominant script, we may also have some characteristics of other money scripts.

Money Scripts in Action

Some examples of money scripts in action illustrate how these beliefs manifest in everyday financial decisions.

Money Status: Keeping Up Appearances

Example: John drives a luxury car and wears designer clothes despite having considerable credit card debt. He believes that appearing successful is very important and equates his self-worth with his net worth. This need to display wealth often leads him to make poor financial choices, prioritizing status over financial security.

Money Worship: The Never-Ending Pursuit

Example: Maria believes that more money solves all her problems. She works excessive hours, aiming for higher pay and bonuses, but is never fully satisfied with her financial situation. This script drives her to neglect personal relationships and self-care in pursuit of happiness that always seems just out of reach.

Money Vigilance: The Saver

Example: Alex is meticulous about tracking every penny he spends and saves. He has a healthy retirement fund and emergency savings, but his constant worry about money prevents him from enjoying his money. He may pass up on vacations or eating out, even when these expenses are comfortably within his budget.

Money Avoidance: The Avoider

Example: Sarah feels uncomfortable discussing or handling money. She associates wealth with greed and unethical behavior and thus subconsciously sabotages her financial success. She often ignores bank statements and avoids financial planning, which sometimes leads to missed payments or financial opportunities. She also avoids any kind of career advancement that could help her make more money.

Managing Money Scripts

Recognizing your dominant money script is the first step toward healthier financial habits. For each script, there are strategies to manage its influence:

  • Money Status: Implement a cooling-off period for major purchases to assess the motives behind them. Discuss spending habits with trusted friends or advisors to gain objective insights.
  • Money Worship: Allocate specific times to focus on family and loved ones, which can help counteract the urge to prioritize money over relationships.
  • Money Vigilance: Allow yourself to enjoy spending by setting aside a budget for "fun money." This can help mitigate the anxiety associated with spending.
  • Money Avoidance: Engage in regular financial reviews to become comfortable with managing money. Automating savings and investments can also help maintain good financial habits without overthinking.

Reflection and Action

Understanding and adjusting our money scripts require introspection and, sometimes, external help. Consider taking quizzes or assessments to identify your dominant money scripts and reflect on how these influence your financial decisions.

Exploring and understanding money scripts can dramatically shift how we engage with our financial lives. By recognizing the underlying beliefs that drive our financial behaviors, we can tailor strategies that not only improve our financial health but also align with our personal values and life goals.

Whether it's rethinking our approach to wealth, redefining what success looks like, or simply learning to balance saving with enjoyment, acknowledging and addressing our money scripts is a step towards a more conscious and fulfilling life.