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.

The Trouble With More

December 13, 2017

If you just picked up on the concept of hygge, you’re behind. The new design trend in homes this year is called Lagom. It’s the Scandinavian concept of having just enough, as in a sufficient, perfect amount. And I think it applies just as much to money as it does to designing a trendy home. As a society we have an obsession with more, but many are starting to realize that more is not always better.

More stuff does not equal more happiness

As I contemplated this trend (which would be a struggle for me to personally embrace, as I love a cozy home), I was reminded of an interview I watched several years ago with Tom Shadyac, the filmmaker behind the documentary “I AM,” but also the director of films like “Liar, Liar” and “Bruce Almighty.” He said something that really struck me about the excess he had accumulated during those successful years.

He said, “I was standing in the house that my culture had taught me was a measure of the good life, and I was struck with one very clear, very strange feeling: I was no happier.”

He went on, “I had a full-time housekeeper, I had a full-time gardener, I had a landscape architect, … I had a house manager, a business manager, a money manager, a career manager. I needed a manager for my managers.” He had tapped out on the more equals happier scale.

The trouble with always wanting more is that eventually it gets to be too much.

The Universe says that great joy leads to great abundance but that this is not true in reverse. I fully believe that — we can get so caught up in making sure we have an abundance of stuff or money, but that doesn’t lead to joy. However, when we pursue joy for the sake of pure joy, we often find that the things we really need are there in abundance anyway.

Lagom = more joy?

How much of our focus in life is about accumulating more? More money, more clothes, more toys, more square footage, more car. But do we ever stop to consider whether the moremoremore is bringing more happiness? Often it just brings more obligations that cancel out any added enjoyment.

Breaking the cycle

The next time you find yourself caught up in the cycle of wishing for more and therefore not enjoying the current enough, stop to consider whether the added responsibility of more will be worth it. You may just find that enough is enough. And that wouldn’t be such a bad thing now, would it?

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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The Science Behind Spending Habits & How To Break Them

November 07, 2017

I crave ice cream before bedtime. I know the high, empty calories are not good for me, but it’s still like a WWE fight in my brain every night – the good guy (don’t eat it) is on his back while the bad guy (go for it) has him in a figure 4 toe hold trying to convince him to surrender. The good guy is throwing counters at him – “this stuff is going to make you fat!” “you’re going to regret it tomorrow!” — while the bad guy keeps the pressure on – “you deserve it!” “it will make you sleep better!” Sometimes the good guy wins, but most nights I eat the ice cream and regret it in the morning.

What’s happening in your brain when you make a decision

What’s going on in my mind is called an intertemporal choice or decision. This part of our brain weighs the immediate versus delayed gratification, or how current decisions affect future opportunities. Marketers use our intertemporal utility function against us when they advertise. Being aware of what’s going on during this decision process can help us make better decisions, especially financially.

Here’s another example:

The case of the shopaholic

My daughter is a self-admitted shopaholic. I bet she has over 100 pairs of shoes. (don’t worry, she knows I’m writing this) She and I discussed what goes on in her mind when she makes the decision to purchase yet another pair.

What’s going on in her mind

She tells me that she sees herself wearing them with a particular outfit and getting compliments on how she looks. She has created an image around her shoes where her peers identify her as the “shoe princess.” When I asked her how she feels later about owning so many pairs, she says she has mixed emotions – she loves her title of the Shoe Girl, but she laments the amount of money she has wasted.

Conflicting priorities

At 23, she is starting to think about bigger financial decisions like getting her own apartment and purchasing a new car. With these new obligations, it will be very difficult to keep her title.

How she got to this point

The problem is that she has actually created a habit out of shopping, the same way other people pick up habits like smoking, checking their phone, or eating ice cream. Her brain has built in a craving for the next purchase. If she continues to let this habit control part of her financial life, she will struggle to accomplish her long-term goals.

Reversing the habit

So, what actions can she take to curb this craving and reverse the habit? The first thing she can do is recognize it as a habit. The awareness that her current behavior has negative consequences on her future is a good place to start. And understanding that seemingly small amounts of money spent or saved today, can have big impacts in the future.

Here are some concrete things you can do when facing an intertemporal choice around spending:

Create a budget line item for purchases. Some people go as far as opening a separate checking account and giving themselves an allowance every paycheck they can spend on discretionary items. If they have their eye on an expensive item, they wait until their allowance accumulates.
Have someone to run your purchases by. If you have a spouse, parent or friend whose opinion would be helpful in analyzing a purchase, make it a rule to call them before you pull the trigger.
Set some rules for yourself. Set a dollar amount for purchases that need to have a 24-hour waiting period before you can buy it. Many times, a day removed can make the impulse less favorable.

It’s working!

I have already seen progress in my daughter’s positive financial habits — these days she calls me when she wants to make a large purchase and plans out every paycheck. Now I need to take my own advice and start changing my own habits, like cutting out the bedtime ice cream snacks.

BTW – This blog is really about whiskey, not ice cream.

How My Money Attitude Was Keeping Me Poor

August 23, 2017

I’m a huge believer in the power that examining our own money beliefs can have in changing financial situations. Several years ago, I had an epiphany about how my own deep-seated assumptions and issues with money were literally keeping me from getting ahead financially.

When I stopped to think about how I’d watched my annual income more than double over the first ten years of my career and yet I was still living the same paycheck-to-paycheck lifestyle, it was like a lightning bolt of understanding struck me. I wasn’t struggling to save more money because I didn’t make enough, it was something else. And as I dug deeper into my money “rules” and assumptions, I was embarrassed and ashamed to realize the real issue.

I resented people who were better off than me.

Americans have a fascination with wealthy people (case in point: the Kardashians) and I’ve only met a few people who didn’t think that striking it rich wouldn’t be nice. Yet many of us harbor disdain and judgement for people who we perceive to be better off than us in our daily lives.

It’s one thing to envy Paris Hilton, but I was looking at people who were like me in many ways, just more financially comfortable, and placing them in a different class than I saw myself. This “me versus them” attitude was holding me back from ever actually allowing myself to get to a point of financial comfort, regardless of how much money I made.

I was literally sabotaging any chance I had at getting ahead because deep down inside, I didn’t want to be perceived as greedy, selfish, privileged, having it easy, etc. When I was super honest with myself, I admitted that I was harboring those judgments about people who seemed to have their financial act together. And I realized that not only were those judgments not true, they were actually hurting my own financial situation.

By challenging these assumptions and realizing that the real difference between those better off than me was more due to a difference in little financial decisions like driving a car beyond the loan payoff date or not buying as much house as they could afford, than them making more money or being greedy and selfish, my situation slowly began to change.

A tiny shift

As I started to release my negative feelings about people with money and instead practice an attitude of abundance, gratitude and “we’re all in this together”-ness, my money situation started to change.

My checking account started having more than $100 in it on pay day because I wasn’t buying my way out of guilt.
My savings account reached $1,000 and I let it continue to grow – something about hitting 4 digits and staying there turned out to be a HUGE shift for me.
I paid off my debt for good and never turned to credit cards again to plug a gap for something I should be saving for.
Most importantly, I started thinking of myself as someone who made smart decisions with money in order to give myself financial freedom, instead of someone who never had enough.

And I stopped looking at others who seemed to have more money than me as greedy and selfish and instead saw them as people who value financial security as much as I do. A nice side effect was that I was a happier person in general as well.

Test your own attitude

Here’s a quick test to see if perhaps you’re suffering from a similar subconscious reaction: If you find yourself living paycheck to paycheck no matter how much you make, ask yourself how you feel when you see someone driving a luxury car like a Mercedes or a Lexus. If you automatically assume the driver must be some rich jerk who thinks he’s better than you, you could be suffering from the same money mindset that was holding me back. (assuming the driver didn’t just cut you off in traffic, then I don’t care what kind of car they’re driving, they’re a jerk!)

Make the shift

To overcome it, start to become more mindful of your internal dialogue when it comes to financial security, then start to change it. Rather than, “Oh, I could never afford that,” start asking, “How can I afford that?” The next time you catch yourself saying, “That would never be me,” ask yourself, “Why not?”

As you start to answer those follow-up questions and take the time to be really honest with yourself, you’ll start to see a subtle shift in the way you handle money. Let your savings account cross that $1,000 mark and get used to it. Don’t be surprised if eventually you start to realize that a thousand bucks isn’t really that much, while also honoring the work it takes to get there. Question your assumptions about carrying debt — there’s no rule that says we always have to have a car payment or credit card balance.

That’s all it takes — a one degree shift that gets you further and further on a new course will eventually take you to an entirely new place financially.