Are Your Money Beliefs Holding You Back?

March 12, 2018

If you are looking to improve your financial wellness, it is important that you are aware of the role your financial attitudes and beliefs have in shaping your future. These beliefs help explain key differences between savers, spenders, and people who try to avoid money matters completely. They can be extremely stubborn and are difficult to change since they can become a part of our ongoing “money script” or life story that follows our financial behaviors.

Financial wellness starts early in life

Drs. Brad and Ted Klontz used the term “money scripts” to describe financial beliefs that are often developed early in life and are frequently passed from one generation to the next. No matter where you are on the journey to reach your financial life goals, it’s always helpful to be aware of your past experiences with money whether they were positive or negative. Take a moment to answer these simple questions:

What are some of your earliest money-related memories and experiences?

Was money a frequent source of arguments or was the topic often avoided?

What are your current “money scripts” or financial belief patterns?

Four types of money beliefs

According to research performed by Dr. Brad Klontz and Dr. Sonya Britt, professors at Kansas State University, three out of four primary money beliefs (money avoidance, money status, and money worship) are linked to potentially destructive financial behaviors. For example, these patterns of money beliefs have been associated with having lower levels of net worth, lower income, and higher amounts of revolving credit. The other money belief, money vigilance, was not linked to problematic financial behaviors.

Do you identify with any of these money beliefs?

In general, money avoiders tend to view money as negative and a source of fear, anxiety, or disgust and often have beliefs that wealthy individuals are greedy. Money avoiders think that they don’t deserve money or that money is bad and the root of all evil. In addition, they also tend to believe that it’s not okay to accumulate more wealth during your lifetime than you will actually need.

Money avoiders may experience conflicting beliefs that having more money and wealth could improve their life satisfaction, self-worth, and social status. This belief system can create a tug-of-war between feelings of contempt toward money and wealthy individuals to placing too much emphasis and value on the role of money during their life journey.

Money worshipers believe that having more money will solve all of their problems and money is the key to happiness. An associated money script is that “things will get better in life if I just had more money.” Another common belief is that the accumulation of more money will lead to increased happiness and overall life satisfaction. For the money worshiper, money is viewed as a scarce resource and there will never be enough of it. Money worshipers may prioritize work over family and social relationships.

People with money status belief systems tend to define their self-worth by their financial net worth. They also place a great deal of emphasis on buying the hottest new items with leading brand names and quality. Money is a sign of success for those with strong money status beliefs. As a result, these individuals may pretend to possess more wealth than they actually have and may overspend to provide others with an impression they have achieved financial success.

Money vigilance is typically associated with themes of frugality and people with these money beliefs tend to focus on the importance of saving, use discretion when discussing financial matters and express anxiety about not saving enough for emergencies. Money vigilant people are most likely to pay attention to their financial well-being. A common belief for the money vigilant is that people should work hard for their money and not expect financial handouts. They also tend to be more anxious and guarded when discussing money matters with people outside of their closest network of friends and family.

Do your money beliefs support your life goals or are they creating a roadblock?

Some of these money beliefs are not problematic. In many situations, they may even be encouraged. It’s at the extremes where these money beliefs can cause problems.

Money worship beliefs can lead to compulsive spending, work-life imbalances, and hoarding behaviors. These beliefs can also be associated with financial dependence, giving money to others they cannot afford to part with, and ignoring or not paying attention to one’s own financial situation.

Money status beliefs are associated with compulsive spending problems and being financially dependent on others. Money status beliefs may also lead to secret spending or financial infidelity.

Money avoiders have trouble setting financial life goals and struggle sticking to a personal spending plan or budget. This money belief is also linked with overspending and compulsive buying. Not surprisingly, money avoiders have difficulty organizing financial statements and frequently struggle discussing money matters.

Money vigilant beliefs can help provide wealth protection. But this watchful approach can also prevent you from enjoying the benefits of achieving a positive state of financial wellness.

Are your money beliefs helping support your financial behaviors or are they creating roadblocks for your financial life plan? If you are having trouble following a budget, eliminating debt, or saving, your money scripts may be holding you back. You can take this quiz, which is the Klontz Money Script Inventory (KMSI) if you want to complete your own self-assessment to examine your own money beliefs.

It’s never too late to rewrite your script

The good news is that you have the opportunity to rewrite these money scripts. While money beliefs can be passed on from one generation to another, they do not have to be permanent. Once you’ve identified your patterns of thinking about money, you can begin to examine how changing those beliefs can fundamentally improve your financial situation. Then you will truly be ready to take mindful, deliberate steps to turning resolutions of change into reality.

This post was originally published on Forbes.

Are Your Money Beliefs Holding You Back?

December 11, 2017

Have you ever stopped to take inventory of how you arrived at your current financial state of affairs? I don’t mean simply thinking about how you ended up in your career, what your net worth is or how much money you make. I’m referring to your early lessons about money that you picked up either through observation or activities during childhood and adolescence.

It starts early in life

These life experiences are often passed on from our parents or extended family and may represent overall cultural events. Money beliefs can be extremely stubborn and are difficult to change since they can become a part of our ongoing “money script” or life story that follows our financial behaviors. No matter where you are on the journey to reach your financial life goals, it’s always helpful to be aware of your past experiences with money whether they were positive or negative.

Four types of money beliefs

Money beliefs play a major role in guiding your current and future financial behaviors. These beliefs help explain key differences between savers, spenders, and people who try to avoid money matters completely. According to research performed by Dr. Brad Klontz and Dr. Sonya Britt, professors at Kansas State University, three out of four primary money beliefs (money avoidance, money status, and money worship) are linked to destructive financial behaviors. The other money belief, money vigilance, was not linked to problematic financial behaviors.

Which are you?

Generally speaking money avoiders tend to view money as negative, think the wealthy are greedy, and that they don’t deserve money.

Money worshipers believe that having more money will solve all of their problems, money leads to power and life satisfaction, and money is a scarce resource and there will never be enough of it.

People with money status belief systems tend to define their self-worth by net worth and place a great deal of emphasis on buying the hottest new items with leading brand names and quality.

Money vigilance is typically associated with themes of frugality and people with these money beliefs tend to focus on importance of saving, use discretion when discussing financial matters and express anxiety about saving for emergencies.

Are your beliefs a support or roadblock?

It’s never too late to rewrite your script

The good news is that you have the opportunity to rewrite these money scripts. By learning what your belief system is, you can begin to examine how that may translate into your financial situation, then take mindful, deliberate steps to change.

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10 Steps to Jump Start Your Earning Power

June 13, 2016

Are you consistently earning less money than you are capable of, given your education and experience, in a way that negatively impacts your financial health? If you took the Quiz: Are You Underearning? from my recent blog post and it raised questions for you, don’t despair. Underearning is a behavior, not a character trait. You can change it. In this post, I offer ten steps people can take to begin to challenge limiting financial beliefs and earn an income that corresponds to their capabilities:

Step 1: Measure the problem. Set aside some time when you won’t be interrupted and do this exercise by hand. Fold a sheet of paper in two lengthwise. On one half, make a list of all your income that you earn during a typical month: salary (use the net take home, not the gross salary), consulting fees, investment income, etc. Add it up.

Next, on the flip side, list all your mandatory monthly expenses: mortgage/rent, utilities, transportation, insurance, taxes (if self employed), student loans/credit card payments, groceries, etc. Don’t forget to add 15% for retirement savings, even if you’re not currently doing that. Download this Easy Spending Plan as a guideline. Now add another 10% for wiggle room, things like vacations, gifts and donations. Add that all up too.

Open the paper and compare both sides. Is there a gap? How wide is it?

Step 2: Unmask hidden beliefs. Review your income and expenses from Step 1. What’s your money story? Fee-Only CERTIFIED FINANCIAL PLANNER™ Michael Kay writes in his new book, The Feel Rich Project, that in order to overcome money misery and “feel rich,” you have to examine “your beliefs around money and values, that in most cases stem from your childhood and how you see yourself in the world.” Spend some time writing your money story in a journal.

Kay offers several writing exercises with powerful questions to help you uncover your beliefs, fears and attitudes about money. If money is a source of struggle for you, it’s particularly important to uncover your hidden belief system, which is guiding your actions now. This is likely to bring up uncomfortable feelings, so treat yourself gently.

Step 3: Write your new money story. Now that you have uncovered your money mindset, it’s time to write a new money story. For thought-provoking exercises, I like Kay’s chapter on “Stoking Your Money Mojo.” Take your money story from Step 2 and craft a new message for each of the beliefs which are limiting you and contributing to your underearning. For example, the old message might be, “people who earn money are greedy,” and the new message could be, “I am well compensated for my talents and abilities.”

Kay also suggests developing a Money Code. This is “a statement of who you are and what you believe when it comes to your financial life.” Summarize the key points and post them somewhere where you can read them several times per day.

Step 4: List 100 ways you can earn money. This simple exercise comes from Jerold Mundis’ Earn What You Deserve: How to Stop Underearning and Start Thriving, which brought the phrase, “underearning,” into the modern financial vocabulary. Make a list of 100 ways you could earn money: full-time jobs that fit your education, experience or skills, part-time work or side-gigs (e.g., coffee barista, drive for Uber), asking for a raise, freelancing, selling investments, holding a garage sale, etc. Don’t stop until you get to 100. This will be a more powerful exercise if you do it by hand.

When you’ve finished, review your list. Are there any surprises or “ah ha” moments? Pick something on the list that you can take action on this week.

Step 5: Sell something you no longer need. People who underearn often have a poverty consciousness and doubt that money they spend to take care of themselves can ever be replaced with future earnings. (It’s the opposite of the overspender, who doesn’t see any connection between what they spend today and their future earnings.)

Pick an item/items from your home or garage that you no longer need and that’s worth at least $20 and sell it. Perhaps you have books you can bring to a secondhand book shop, designer clothes you’ve never worn that you can consign, or unused exercise equipment. Here’s the kicker. After you’ve sold your items, take $20 and spend it on yourself doing something fun you wouldn’t normally do.

Step 6: Identify a financial role model. When I was working through my own financial issues, one of the things that helped me navigate the rough terrain was identifying a financial role model. As inspiration, I chose a friend who worked in the same field, always earned a good salary, managed her money wisely, and bought her first home at a young age as a single woman. Although I didn’t tell her she was my role model, every time I faced a tricky financial issue, I would ask myself what my friend would do in the same situation. If I wasn’t sure, I’d ask her directly.

Later on, after I had made financial progress and had more surplus income to invest, I studied clients in my financial planning practice. What financial habits and behaviors did they show that would teach me something I could use in my own life? In part because of inspiration from clients, I became a successful real estate investor. Now I look to our CEO, entrepreneur Liz Davidson, so I can learn to think even bigger!

Step 7: Read a book about investing. Remember the famous line from the film Field of Dreams, “If you build it they will come.” Act as if you will earn a comfortable income that offers you the opportunity to save and invest a generous percentage. What would you need to do to prepare to manage that money wisely? Start building your financial infrastructure by learning more about investing fundamentals. Beginners can start with The Wall Street Journal Complete Money and Investing Guidebook. Those who already know basic concepts can move on to the Forbes/CFA Institute Investment Course.

Step 8: Track your income and expenses daily. Creativity coach Julia Cameron, author of The Prosperous Heart, calls this practice of tracking your daily income and expenses, “counting.” Whatever you want to call it, it’s a way to be mindful of the constant flow of money in and out of your life.

If you’re kinesthetic, you may prefer to keep a notebook or ledger on your kitchen counter to track your money. Smartphone and computer users may prefer an application like Mint or Yodlee. I saw from decades of personal experience that tracking income and expenses is a powerful way to gain awareness of financial imbalance and align your spending with your values and goals.

Step 9: Say thank you. Are you thankful for the financial resources you already have in your life? If you focus on lack, you are likely to get less than you need. If you focus on gratitude, you are likely to get more experiences for which to be grateful.

Watch the short video, If the World Were 100 People, whenever you are feeling like you don’t have enough. Whenever you earn money or receive it as a gift, take a moment to feel grateful. This will help you keep your eye on the goal of increasing your earnings.

Step 10: Start a Financial Independence Day Group. Can your friends help you become financially independent? As I wrote in a previous blog post about my own experiences with peer-to-peer learning, having the support of a group of like-minded seekers of financial balance is like having a personal cheer-leading squad. The structure of the group learning experience creates confidence, and many of us are more successful when we are accountable to others. Visit our Financial Independence Day website to download an FID community guide on how to use our book What Your Financial Advisor Isn’t Telling You to create a powerful group learning experience.

Is there a topic or a question you’d like to see addressed on the blog? Send me your thoughts or questions at [email protected]. You can also follow me on Twitter @cynthiameyer_FF.

Are Money Beliefs Holding You Back?

September 16, 2013

A few weeks ago, I had the privilege of working with a young mother who had overcome countless obstacles to become the first college graduate in her entire family. During our discussion, it was revealed that she was trying to overcome a seemingly insurmountable pile of debt created by student loans. Her primary financial goal was to create a plan to stop living paycheck to paycheck and to start taking control of her financial future. Continue reading “Are Money Beliefs Holding You Back?”