Money scripts uncover your personal narrative, attitude, and beliefs about money.
These beliefs can powerfully impact your habits and behaviors and directly affect your financial health. By not understanding your money scripts, you unknowingly leave gaps in your financial journey that could lead to problems down the line.
What are your money scripts?
How have they impacted your relationship with your finances so far?
Do they need a rewrite?
Let’s talk about money.
What Are Money Scripts?
Money scripts represent your ideas, thoughts, and beliefs about your finances. In many ways, they are the unwritten rules that influence your financial behavior.
For example, are you a saver or a spender? Are you worried about money? Are you a conservative or a more risky investor? Do you like to budget, or do you find the process frustrating? Are you comfortable talking about money to family, friends, coworkers, professionals, etc.?
In 2011, psychologist and acclaimed author Dr. Brad Klontz and his team studied this phenomenon and uncovered that people tend to fall into one of four money script categories:
They further discovered that people learn money scripts in childhood and pass them down through generations—so you may have inherited your penny-pinching ways from your mom after all. Generally, we don’t even notice that they’re there; it’s like second nature.
The first step to understanding your money scripts is to look inward at where you might fall. Excellent financial planning and investing require a deep understanding of one’s self.
To continue on a successful financial path, you need to understand why you make your choices and how those choices and your money belief system affect your financial well-being.
Script 1: Money Avoidance
People in this category tend to find money a source of anxiety, fear, or stress—they may also be envious of those with more money and depict the wealthy as greedy. Klontz found an interesting moral connection with those in this category: many think that money is “bad” but also believe it will solve their problems—an intriguing dichotomy.
But wealth and money don’t have to be dirty words. Wealth can be an excellent source of good and a sign that hard work and value have been added to the world, like starting a business you love, helping your kids pay for school, saving to fund your future, etc.
Consider an example.
Say your goal is to sell your business in about five years. This goal supports your retirement plan and value system to spend more time with family, friends, and loved ones. If you don’t properly prepare for the sale, like upgrading your technology, investing in your people, or obtaining a business valuation, you aren’t taking concrete steps to reach your goals. That habit of avoidance can keep you from reaching the goal you set in the first place.
Money doesn’t solve all problems (and realistically, it can’t), but it’s not the root of all evil either. It’s essential to be a steward of your wealth so that it can grow to support your most important goals—personal, professional, philanthropic, or otherwise.
Reflect on your experiences and reacquaint yourself with your money, set intentional goals, and most notably, give yourself and others grace.
Script 2: Money Worship
Money Worship takes understanding the importance of money to the extreme.
It’s the idea that money is the end-all-be-all, the key to life, love, and happiness, and as such, money worshipers chase the “money-high” and always strive for more. This pursuit leads to a scarcity mindset, often resulting in emptiness and numbness.
If you feel yourself constantly striving for “what’s next,” remember that money is a tool, not a goal. It can help you along your financial journey, but it’s not the final destination.
Try an exercise. Take a close look at your goals and values and evaluate which habits take you away from those goals and which ones bring you closer.
Does spending too much each month keep you from maxing out your retirement accounts?
Does investing every penny keep you from living a whole life?
Does non-stop working take time away from your loved ones and leave less time for you to recharge?
Even these three simple questions illuminate that financially-driven choices have a larger impact outside of your money.
Instead of working yourself to the bone, ask yourself,
Can you buy happiness?
It’s the eternal question and one that’s fascinated researchers for decades. A study from Princeton University found that it is possible to achieve maximum day-to-day happiness with an annual household salary of just $75,000 per year—lower than you thought?
Of course, this study doesn’t account for every person on the planet, but it’s a friendly reminder that you may not need to bring in as much as you think to support yourself, your family, and your goals. Think through your “happiness number” and remember that it will be different for everyone.
No matter your unique goal, we can help you make a plan that sets you up to reach it.
Script 3: Money Status
Can someone say “Keeping Up With The Joneses”?
That’s what this script is all about.
People with money status scripts tend to tie their self-worth to their net worth. They prioritize displaying their wealth and put a tremendous amount of focus on luxury material goods. This mindset can lead to a dangerous path of overspending, wastefulness, and addiction—a compulsive need for constant spending.
Money status is a challenging script as there can be a lot of familial or societal pressures to live extravagantly. People from households that put the wealthy on a pedestal or grew up in lower socioeconomic areas tend to fall into these habits.
Focus on bringing intention back to your spending—make it purposeful and meaningful. Maybe donate to charitable causes or cut back on extraneous costs. After all, no matter how much money you accumulate, there will always be another level of “Joneses.”
Script 4: Money Vigilance
Those with this mindset tend to approach money logically and are hyper-aware of their financial health.
Many people here view money as a reward for hard work and make thoughtful financial choices. We all want to strive to emulate some of the core values in this script.
However, being so hyper-aware of finances can actually cause excessive stress and anxiety when it comes to money. Being too frugal can strain relationships and impact your physical and mental wellbeing. While we always encourage smart savings, it’s also important to enjoy the journey and have some fun with your money.
How can you strike the right balance?
Use your financial plan to determine how much you can spend without worry—and then spend it! Travel, renovate your home, invest in a personal trainer, or buy the best coffee maker in the world. Focus on what makes you happy. After all, you can always make more money, but you cannot make more time.
Where Do You Fit (And How Can You Make Changes)?
Take another look at each of these scripts and ask yourself where you fit. You may overlap in several categories, or perhaps one really stood out to you.
Remember, this exercise isn’t supposed to make you feel bad about money; instead, it brings attention to how you view, discuss, and use it. Knowing your current habits is the first step to creating healthier ones.
One thing is for sure: no matter your money script, always be sure to tip your waiters and waitresses!
Craig Toberman is the Founder of Toberman Wealth – a fee-only, fiduciary financial advisor based in St. Louis. He assists families and businesses with strategic financial planning and long-term wealth management. He has over a decade of experience in financial services and has crafted custom financial plans for hundreds of families and businesses.
Craig received a Bachelor of Science (B.S.) degree in Agricultural and Consumer Economics from the University of Illinois and a Master of Business Administration (M.B.A.) degree in Finance from Saint Louis University. He is a Certified Financial Planner (CFP), Chartered Financial Analyst (CFA) charterholder, and Certified Public Accountant (CPA).
Craig is a member of the National Association of Personal Financial Advisors (NAPFA), Fee-Only Network, and XY Planning Network.
Craig lives in the greater St. Louis area with his wife, Ally and son, Hank.