What is your money script? I bet you have never spared a moment to ever think about this; the values and beliefs we have about money. Some of these are actually subconscious; we do not even realise we have them until we take a step back and reevaluate our process of making financial decisions.
Believe it or not, these are beliefs you have internalised throughout your life, right from your childhood to your adulthood. You have been picking on small details from your parents, guardians, peers friends and mentors through the course of your life, and they are part of you now.
Let’s say you are walking through the aisles of your favourite supermarket. You come across an item you have had your eye on for a while. When you look at the price tag, what’s the first thought that runs through your mind? Do you say it is too expensive for you to afford, or do you just toss it in your shopping cart because, YOLO!
Understanding your money script is one of the keys to successful financial planning. You might take all the investment classes you can afford, but as long as you do not learn and understand more about your money personality and money scripts, you will have a more challenging time making any progress.
Your money script has a significant impact on your financial behaviours and the outcomes of your financial decisions. Understanding these helps you grasp the depth of your financial decisions, which enables you to make informed changes where necessary.
The 4 Money Scripts and How They Impact Your Financial Health
Brad Klontz, a financial psychologist, published a research study in 2011 with his team in the Journal of Financial Therapy. The research showed that individuals had a system of money beliefs, narrowed to 4 money beliefs. Of the 4, 3 of these beliefs correlate significantly with one’s net income and net worth.
Do you avoid thinking, talking or going through your finances? The very thought of it may lead to stress or even depression? Do you believe in living with less money is the best? Or you sometimes envy wealthy people? You could be a money avoider.
Individuals under this category have this belief that money is bad and they do not deserve having any. They believe that wealthy people are just corrupt or greedy.
The paradox in this is that some individuals in this category might also believe that having some money might solve their issues.
Money avoidance often leads to this belief that having less money makes you live a moral life. The problem with this is that one ends sabotaging their financial wellness, being unhappy with their wealth, and always being doubtful. It could lead to giving away as you try to reduce the amount of money you have and might end up giving more than you can afford, albeit unconsciously.
Also, as you stick to this script, you avoid going through your financial statements. Due to this, you will never know your financial health or learn how to budget.
Wanting to live a frugal life is not bad. But, you need to learn how to manage the situation. Instead of thinking of money as a bad thing, you can start by listing all the good things you can do with money, maybe donating to more charitable organisations or paying off your debt.
You can create a budget and keep track of your financial statements to ensure you are keeping up with your goals.
Learn about Best Budgeting Apps
Unlike money avoiders who believe money is evil, money worshippers believe money is the key to their happiness. They can solve all their problems with money if only they had more. You are a money worshipper if you believe money will never be enough.
The pursuit for money is a never-ending race for people in the money worship script. One will forgo anything, from family to friends, in an attempt to have more money. They also tend to get into debt as they spend more than they have to keep that status of having money or buying things to be happy and have meaning in their life.
While it is good to have money (we all want it), it is not always everything. It is a means or tool we use to achieve our goals. First, you start by curbing impulse purchases. After enjoying a shopping spree at the mall or getting the new fancy car, the excitement wears off.
You will be stuck with items you never needed in the first place, leading to buyers remorse. Before making a purchase, try to think about how that item fits into your financial goals and whether you need the item.
Second, let your goals be the real focus while money remains a tool that helps you achieve these goals. When you focus on chasing money, you sideline your goals, making them unattainable.
Third, give back to society, either by donating to charitable organisations or helping others in need. However, you need to be intentional with it. Donations should be part of your financial planning for better budgeting, not an end to cementing your ego and place in society. It could lead to giving more than you can actually afford.
Do you think your net worth characterises your self-worth? You are always trying to keep up with the Joneses to show you can also afford, even if it means overspending? If this is you, you are in the money status script.
Individuals in this script tend to get into debts as they try to attain a particular lifestyle that they can clearly not afford rather than save whatever little they have. The belief is that if one lives the good life they desire, they will be rewarded by the universe. People under this script might also fall deep into gambling or trying to hide their spending habits from their partners.
Money does not define one’s worth, despite what society is making us think. Just because your neighbour has bought the latest car model doesn’t mean you can afford the same lifestyle or they are worth more than you are. Maybe they are also trying to keep up with someone in their circle.
Be intentional with your expenses, and buy things because you need them. Ask yourself whether the item you want to procure aligns with your goals or adds value to your life and not just a symbol of your status.
Your saving strategies also need to be intentional. Are you saving for specific goals, like paying off your debts, building an emergency fund or buying an asset? It will give you purpose in your savings journey.
It also helps to have a balance between your emotions and your spending habits. When you try to prove your self-worth through money or keeping up with the Joneses, you are using emotions to make financial decisions rather than thinking logically and aligning your purchases with your goals.
People who fall under this script are more thoughtful and logical in their spending habits. You are always concerned about your financial wellness and try your best to be financially stable.
You save regularly, have investments and a budget that you follow religiously. You are stable enough to not rely on windfalls or spend your scratching lottery tickets expecting to hit the jackpot.
Money vigilant people are less likely to be debt as they spend on what they can afford. They are also more discrete about their money with others and do not like telling every person what they make. However, they are open about such information with their partners.
Well, you are already doing what needs to be done for financial wellness, you might worry too much about your financial security and forget important things like taking care of yourself.
Too much worry can lead to anxiety, which is not suitable for your health and overall well-being. Also, it doesn’t hurt to reward yourself. With the help of a financial advisor, you can develop a plan that allows you to meet your financial goals and enable you to enjoy your life with your hard-earned money. You can plan for vacation or keep saving to get yourself the gadgets you need. What’s the point of being vigilant with all your money if you can afford to have some fun?
You Can Change
While any of these money scripts might have affected your previous financial decisions, it doesn’t mean that is who you are. There is always room for change, as long as you understand your script and financial goals. This way, you can implement changes in your money management habits that ensure you are headed in the right direction – towards financial wellness.