People inherit more from their parents and grandparents than big feet, eye color, self-discipline, a passion for sports, or an artistic bent. Most also assume their families’ ideas and attitudes toward money. Money beliefs are often passed down from generation to generation, along with great grandma’s quilts, ancestral photos, and family culture. (1) Understanding your money beliefs—your inherited family attitudes towards money—can be the first step in improving your financial decisions and reducing financial stress in your life.
Researchers call these inherited money mindsets “money scripts.” These are categories of beliefs associated with problematic financial decisions that create chronic stress. (1,2) The authors of Wired for Wealth explained: (3)
“A money script is not necessarily wrong, but neither is it necessarily right. Our scripts are often skewed, exaggerated, or one dimensional, consisting of incomplete or partial truths. They are usually highly contextual, true in one circumstance but false in many others. Since our money scripts are mostly unconscious, we don’t question their accuracy or examine the degree to which they are true and work for us, yet we continue to act on them as if they were entirely true.”
Understanding the scripts that underlie your financial choices may help improve decision making and reduce financial stress.
The Four Factors Behind Your Money Beliefs
In an interesting study, researchers at the University of Kansas examined four factors that encompass a variety of money scripts.
1. Money avoidance: Some money avoiders believe they don’t deserve to have money. Others think money is bad. Either way, money can be a source of fear, anxiety, or disgust. Money avoiders often sabotage their financial success. They may choose not to spend money on reasonable and essential items, or they may give money away, so they have as little as possible. (1,2)
2. Money worship: Money worshippers share a “belief that more money will solve all of life’s problems and bring happiness…” (2) The reward of more money becomes a carrot dangling just ahead that is never quite reached. These beliefs have been associated with compulsive hoarding, unreasonable risk-taking, gambling, overspending, compulsive buying, and other destructive financial behaviors. (1,2)
3. Money status: People whose beliefs register on this scale adhere to the idea that money confers status. They see a clear distinction between socio-economic classes, and their sense of self-worth is often linked to net worth. In addition, status scripters tend to equate success with money. Some may pretend to have more money than they do in order to appear successful. (2)
4. Money vigilance: The vigilant believe it is important to work and save. They are watchful, frugal, and concerned about finances. While these traits can support healthy financial decisions, the vigilant are often anxious about money matters and wary of financial risk. Consequently, their ability to enjoy the benefits and security of money may be limited. (2)
Of the four, which factor or factors do you think underlie your own money scripts? Simply taking the time to think about this can bring more awareness to your money behaviors.
Understanding Your Money Beliefs
Within the four categories, here are ten money scripts you could be telling yourself. (3)
1. More money will make things better. Generations of families with this script may spend their lives accumulating more in hopes of enhancing their lives or achieving an ideal status.
2. Money is bad. Grounded in the belief money makes people bad or unhappy, this script may lead to financial self-sabotage.
3. I don’t deserve money. This belief may accompany an inheritance or windfall. It may also lead to people earning below their potential.
4. I deserve to spend money. Everyone does; however, when this leads to overspending, it creates financial problems.
5. There will never be enough money. Fear and anxiety may cause people to work long hours, neglect relationships, and fail to enjoy the benefits of their labor.
6. There will always be enough money. A belief the universe will always provide, whether a person takes action or not.
7. Money is unimportant. This rationalization is used to excuse poor financial decisions.
8. Money will give my life meaning. People with this script often immediately and strongly reject it. Their actions may tell a different story.
9. It’s not nice (or necessary) to talk about money. This attitude may be formed by the idea it is not polite to talk about money, politics, or religion.
10. If you are good, the universe will supply all your needs. This belief is prevalent among people in helping professions and those from strong religious backgrounds.
Improve Your Relationship with Money
The way you think about money can affect the way you manage your finances. Once you’ve identified the factors behind how you think about money, and you’ve examined the inherited money scripts that influence your decisions and behavior, you can begin working on improving your relationship with money.
Many people who earn substantial incomes and make sound decisions in other areas of their lives compromise their financial security by making poor financial choices. In some cases, inherited money scripts are the issue.
The good news is it’s possible to change the way you think about money. First, it’s important to identify and understand the money beliefs that may be stunting your ability to grow wealth. The next step is adopting new ways of thinking, and that often means learning more about money. (2,3)
Financial knowledge can be a powerful tool, especially when you’ve done the work to improve the way you think about money.
The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual.