The basics of money are simple: spend less than you earn, and invest for your future. The concepts are easy to grasp, but people are still prone to making bad financial decisions.
“If you are having money issues, it’s not because you are dumb or are unmotivated,” says Dr. Ted Klontz, a Nashville-based psychologist, Associate Professor and practice consultant at Klontz Consulting. In fact, according to his research, our bad money behaviors may not be our fault at all.
“Our belief systems are formed when we are very young and become part of our subconscious,” says Dr. Klontz, who with his son Dr. Bradley Klontz, has proven that mistakes don’t stem from a lack of financial literacy or willpower. These “money scripts, which are unconscious core beliefs about money, actually shape our decisions and may be standing in the way of financial freedom.
We spoke to Dr. Ted Klontz about how to recognize money scripts and determine the best ways to overcome them.
The 4 Basic Money Scripts
Money Script #1: Money Avoidance
Do you avoid looking at credit card statements or logging into your bank account? It’s possible that money avoidance has crept into your life.
“Money avoiders turn 180 degrees away,” says Dr. Klontz. They view money with disgust, fear or anxiety. They believe wealthy people are greedy or corrupt and don’t deserve their money.
For money avoiders, there may be virtue in living on less. Dr. Klontz says they often quote the Bible by saying, “Money is the root of all evil,” and they internalize that notion. It’s common for money avoiders to stifle their own financial success by perhaps giving money away or sacrificing their own financial well-being for the benefit of others. Money avoidance is common among mental health professionals and teachers.
Money Script #2: Money Worship
Money worship is the exact opposite of money avoidance. According to Dr. Klontz, money worshippers believe money is magical. They equate more money to happiness, freedom, protection and safety, and they view money as the answer to life’s problems.
“Money worshippers can never have enough,” says Dr. Klontz, and if they are unhappy, it’s because they don’t have enough money yet.
They may set a goal of $1 million in the bank and achieve it, but the goal post keeps moving. If you believe more money and more things will make you happy, you may be prone to overspending. Money worshippers, who often make less money and have a lower net worth, are easily trapped in the cycle of revolving credit card debt.
“More of what you don’t need isn’t going to make you happy,” Dr. Klontz adds.
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Money Script #3: Money Status
If your script is money status, it means that you think that your self-worth depends on your net worth. You appreciate people with nice things and often imagine what that person’s life may be like. In fact, you may take it a step further and try to replicate their lifestyle.
“You may be someone who can afford a Toyota Camry, but end up getting a Lexus,” Dr. Klontz points out. If you can’t buy it, you lease it.
Dr. Klontz says there are plenty of families who send children to private school but can’t afford it. “When your friends’ kids are going to the best private school in [town], you may feel pressure to do the same,” he explains.
The money status script tells you to overspend on status symbols, and you pretend to have a lot more money than you actually do. You may want others to see you as financially successful. Dr. Klontz explains that not belonging is one of our greatest fears, and it’s hardwired into our brains. “It’s all about belonging — our greatest human need,” says Dr. Klontz.
Money Script #4: Money Vigilance
If you’re money vigilant, you’re always worried about your financial well-being. You watch every penny and live in constant fear of losing everything you have saved. “You have a terrible sense of impending disaster,” Dr. Klontz says. Like money worshippers, there’s never enough. You believe in working hard, saving money and don’t like financial handouts.
You may be money vigilant if you avoid doctor check-ups or don’t pay for basic necessities. “You live a life you don’t have to because you are afraid of spending down your resources,” Dr. Klontz adds. If you’re money vigilant, you may have a higher net worth and less debt, but you aren’t enjoying the benefits and security money provides.
How to re-write your money scripts
If your money behaviors bother you, it may be time to take a step back. By looking into your past, it may be possible to remove yourself from the underlying money script. “Identify your earliest money experience and consider what you learned from it. That may be what is driving your decisions today,” recommends Dr. Klontz.
If you aren’t saving for retirement, ask yourself why. Dr. Klontz discovered his own scripts when he struggled to save for retirement. He avoided saving money because he hated the idea of doing nothing in his older years. But once he realized retirement could be working on things he loves, everything changed. By shifting that one script, his monthly savings tripled.
Where to learn more about the psychology of money
There is no shortage of books about the psychology of money. Dr. Klontz’s website features an entire library on the subject. If you’re looking for somewhere to begin, Dr. Klontz and his son’s Mind Over Money: Overcoming the Money Disorders That Threaten Our Financial Health is a great resource. If you prefer learning in bite-sized chunks, Dr. Bradley Klontz’s YouTube channel breaks down their research.
Money scripts are about basic human needs. It’s easy to feel ashamed by money mistakes, but Dr. Klontz says you shouldn’t. “Everything you are doing is an attempt to meet one of your six basic human needs,” he says. These are belonging, autonomy, security, self-expression, purpose and connection. Money is one of the ways we try to achieve these, and by re-writing your money scripts, it may be easier to meet your needs while also securing a healthier financial future.
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