What Are Money Scripts?
Money scripts are general beliefs about money that are often unconscious and learned during childhood or early adolescence. Money scripts tend to be passed down through generations. These money beliefs tend to be partial truths about money or those who have (or do not have) money. Money scripts are related to different financial outcomes. Money scripts are often measured in financial planning or coaching to understand how financial beliefs might impact achieving goals.
We learn a lot about money from our parents and potentially even the generations before them. Sometimes these “lessons” we pick up aren’t always the most beneficial for our financial well-being down the road.
Financial psychologist Dr. Brad Klontz discusses four different types of money scripts — unconscious beliefs we all have about money — that influence our financial behaviors. We may be “taught” money beliefs by parents or caregivers. These beliefs may also be inherited from your parents or even previous generations. Unfortunately, they’re not always positive. Understanding the four basic money scripts described below may help you better understand (or rethink) your relationship with money. Here’s a breakdown of each belief and how they can impact you.
Four Money Scripts
People who fall into the money avoidance category tend to believe money is evil. People with money are evil, having too much money is terrible, and even the accumulation or desire for wealth is negative. While it may have started as a coping mechanism for people in lower socioeconomic environments to feel better about their situation, it can lead to self-destructive financial behaviors. After all, you need money to survive, whether you like it or not.
Money Worship or Money Focus
People who experience the money worship script put money on a pedestal. They believe that money, or the things money can buy, has the ability to solve all their problems. You can see these people all over social media, leaning on sports cars and showing off their mansion-side pools. People who fall into the money-worship script want to show that they have money (whether they really do or not), which is a slippery slope to overspending and poor wealth management.
People who experience the money-status script believe their self-worth is tied to their net worth. Even if they don’t necessarily have money, they want to flaunt their “wealth” to make themselves seem more important. This is related to the “keeping up with the Joneses” mentality and can lead to higher credit card debt and overspending.
Those experiencing the money vigilance script tend to be more anxious about spending money, perhaps even more than is necessary. They’re generally future-oriented and have a strong desire to maintain a financial safety net for emergencies. This tends to be a positive money script since it leads to healthy saving and investing behaviors that often lead to long-term financial success.
Can Scripts Change?
While you might not have been able to choose which money script you learned growing up, you can change the way you think about finances as an adult. For example, if you know you fall into the money-status script, you can focus on saving more money rather than spending it to show off your wealth. Knowing which script you fall into is the first step to helping you make healthier financial choices in the future.
Money Beliefs in Financial Planning
Measuring money scripts can offer valuable insight into a client’s financial psychology. The Klontz Money Scripts Inventory-Revised (KMSI-R) was developed to help people identify their Money Scripts®. The test has been researched extensively and scores from the test are related to financial outcomes such as income, net worth, credit card debt, financial behaviors, and other important aspects of financial wellness. For many people, discovering and exploring their Money Scripts is an important step toward improving their overall financial wellness and health. As part of an ongoing client engagement, financial planners can use the KMSI-R help their clients alter scripts in order to achieve goals.
Exploring Your Money Scripts
After you take the KMSI-R, ask yourself these questions to help explore your own money beliefs:
- When you spend money, what is it for? Is it for the bare essentials? Do you spend on “things” to make yourself feel fulfilled? Or do you want to show off for your friends and family?
- How do you feel about wealthy people? Do you feel like they are evil and corrupt? Or, do some rich people use money for good?
- Do you have a rainy-day fund for emergencies? If you don’t, why not? Do you feel like you need to spend and enjoy money today? Or, do you have a longer-term view?