Are you a spender? A saver? Do you love money or do you see it as the root of all evil?
Have you ever wondered why you are the way you are with money and where your beliefs and behaviors around money come from?
Enter money scripts.
What is a money script?
A money script describes our beliefs about money. Money scripts are developed in childhood and we are largely unconscious of them. Our money scripts tend to be passed down from generation to generation (thanks mom and dad).
Financial psychologists Bradley Klontz and Ted Klontz coined the term “money scripts” and identified four major money script categories:
“Money is the root of all evil.” “People with a lot of money are greedy.” “I don’t think I deserve to have money.”
Money avoiders often hold conflicting beliefs. On the one hand, they believe that having more money could solve their problems and increase their status in life. On the other hand, they hold many negative beliefs about money and see money and those who have it as corrupt.
When it comes to their behaviors they often give away most of their money which can leave them in a tough financial spot. At the same time, they might be working overtime in an effort to make money. It’s confusing!
“If I had more money all of my problems would be solved.”
Money worshipers believe that the only way to be happy is to acquire more and more wealth. At the same time, they also believe that they will never have enough money.
Money worshipers are often chronic overspenders because they are constantly trying to buy their own happiness. They are likely to spend compulsively and often put work ahead of their relationships in an effort to make more and more money.
“My net worth is my self-worth.” “I only buy name brands.”
People who identify with the money status script believe that success is defined by the amount of money you have in your bank.
The money status script can get people into financial trouble because these individuals tend to spend above their means to appear more “well-off.” They are also more likely to become involved in behaviors like gambling in an effort to win big and prove their self-worth.
“I need to save my money in case of an emergency.”
Those who identify as money vigilant are concerned about their financial well-being. They pay their bills on time, only make purchases they can afford. They work hard for their money and they don’t believe in financial handouts.
People who identify as money vigilant can become overly anxious about money and don’t like to discuss money with others. Often people who are money vigilant find it difficult to spend money on things that are fun or would make their lives better.
Of the four money scripts, the first three are associated with poorer financial health (lower net worth, lower income). Money vigilance is the only script that is associated with better saving and frugally and in general it’s the best of the four money scripts to have.
Why does your money script matter?
Identifying your money script can give you some insight into your beliefs about money. There’s a strong association between your beliefs and your behaviors. So, if you’re interested in changing some of your undesirable money behaviors (overspending, not savings, compulsive shopping, gambling) you can start by getting to the bottom of your money beliefs.
Money scripts are also useful because they can be used to predict disordered money behaviors like compulsive shopping, gambling, or financial dependence. For instance, those who identify with the first three money scripts (avoidance, worship, and status) are significantly more likely to exhibit compulsive buying.
Money scripts are also predictive of financial health. Research has found money scripts to be associated with income levels, net worth, financial behaviors, and debt. Those who are categorized as money vigilant tend to have higher income levels and net worths, and they are less likely to carry debt.
Can I improve my money behaviors?
If you identify with a money script that you’re not happy about, or you have a few undesirable money behaviors that you’d like to change, no problem! The good news is that change is possible, it can be difficult, but it’s possible.
Here’s one small thing you can do for each money script to improve your money behavior.
Money avoider: work on becoming more financially literate. You know the saying, “knowledge is power?” Well, it’s true. The more you know about your money and how it all works the less likely you will be to try and avoid it.
Money worshipper: focus on people over things. Instead of heading out shopping, invite a friend over for coffee, or go for a walk with someone you love. Refocus your attention on your relationships instead of brand names.
Money status: try to slow down. Life isn’t just about working and making money. Take time to enjoy your relationships and work on maximizing your physical, mental, and emotional health.
Money vigilance: have some fun! Each month, assign yourself some “fun money” and make sure you use it. Yes, it’s important to save for a rainy day but you also don’t want to wait your whole life to enjoy some of the money you’ve worked so hard for.
How will you rewrite your money script?
Now that you’ve identified your money script, do you want to make some changes? Do you have a few money behaviors that you’d like to eliminate? Or, are you the perfect balance of money vigilance (you like to save and you know how to have a little bit of fun here and there)?
The great news is, now that you’ve identified any problems, you can go ahead and start making positive changes! You get to decide how you will rewrite your money script!