Think You’re ‘Not Good With Money?’ How To Change Your Outlook

December 20, 2017

One of the most impactful personal finance books I’ve ever read is Brent Kessel’s It’s Not About the Money. In it, he shares eight different financial archetypes — most of us embody a couple of them, but one that I see a lot in my work is the Innocent.

Innocents, whether they have money or not, have the common thread of being unable to master money. Either they weren’t taught the skills, are confused by money or their natural gifts are not economically valued in our society. Innocents aren’t necessarily against money, they just have a hard time hanging onto it and dealing with it. We probably all know someone who is an Innocent, if we aren’t one ourselves.

“Not good with money”

Many of the other financial archetypes develop their relationship to money in response to fear, anxiety or frustration. Innocents don’t have a coping strategy, so the pain they feel about their financial situation is often deeper and less obvious for others to see. They might feel like they should have the ability to be better with money, but when it comes down to trying, the response has historically been to shrug and say, “I guess I’m just not good with money.”

Living paycheck to paycheck even on a high income

Even if they earn a high income, Innocents don’t have the know-how to secure their financial futures, so at the end of the day they find themselves living paycheck to paycheck. Innocents are far more likely to be regular lottery players and fall prey to get-rich-quick schemes, looking for a quick fix. When these endeavors fail, it just adds to their lack of confidence and feelings of inadequacy when dealing with money.

Being innocent doesn’t mean you’re not guilty of hiding from the truth.

Innocents usually spend everything they have and sometimes more, without any idea where the money is going. They are often people with no earnings of their own and depend on a spouse, family members or the government for support, which further adds to their financial distress. The first step of getting their financial house in order is to look at the numbers.

Moving from innocent to empowered

If you’re an Innocent and you don’t know how to look at the numbers, get help. If you have a workplace financial wellness benefit or EAP, use it to talk to a financial coach. You may also want to start by talking with a financially savvy friend. Work on these steps to get a better grasp on your money:

Find out where your money is going, then start living within your means immediately.

Find ways to simplify your lifestyle so that you can become self-sufficient.

Prepare a debt pay-off plan and stick with it.

It won’t be easy at first, but ignoring your financial situation won’t make it go away. By paying attention and gaining the skills necessary to be financially independent, you’ll experience a great amount of relief and empowerment. Get after it!

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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?

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. 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.