Money Scripts and You
Most of the students in the personal financial planning class that I’m teaching at St. John Fisher University are sick of hearing me say it by now, but your emotions permeate EVERY decision in your life that has to do with money. I would even go as far as to say that failing to understand your emotional relationship with money would be the number one mistake that someone can make when it comes to their finances. Why is that?
The answer is as simple as it is unfortunate: emotions are often stronger than logic. One can have a clear and explicit understanding of the best course of action to help them meet their needs and then choose to not carry out that action because of some emotional hang-up. We’ve all been there before, right? I know I have.
A few key concepts are important to understand when it comes to our relationship with money. Just like with most of our behaviors, we start to learn about money at an early age even if we are not explicitly taught about money. The sad reality of a capitalist society is that every day we interact with money. As children we see our parents buying things, potentially going to work, talking to other adults about money, or talking with each other about money.
As we grow older, we start to have our own interests and desires that pertain to money. But guess what? All of our experiences with money to that point have been from the interactions we’ve seen from the adults in our lives. So we use those interactions as the stairs we climb while we paint the walls of the stairwell that is our financial journey.
Thus, our money scripts are born. Bradley Klontz is a pioneer in the area of financial therapy (yes, that really is a thing) and he defines money scripts as unconscious, transgenerational beliefs about money which are developed in childhood and drive financial behaviors. As such, our money scripts are very busy as they:
1. Are formed by our previous experiences with money
2. Influence the choices we make with money
3. Allow those choices to become new data points which then inform our future decisions
So you can see that if we are making decisions based on unhealthy money experiences, these decisions can compound and create a snowball effect.
Well then, what is the solution here? The only answer is to put in the work to identify disordered money behaviors or thoughts. Can you do this alone? Possibly. But there are tons of qualified financial professionals like myself who are integrating financial therapy techniques into their practice, so you don’t need to do it alone. In fact, the CFP Board (the body which governs my CFP® designation) recently added a psychology of financial planning exam requirement to the exam that everyone who wants to be a CERTIFIED FINANCIAL PLANNER™ professional must take.
So if any of this sounds interesting to you, let’s talk. You can always email me at jhowe@gencapmgmt.com to set up some time to go over your concerns.
Until we connect, stay safe and be kind to yourself!
John Howe-Wemett, CFP®, M.S.
