We’re going to think a little outside the box today and talk about the idea of money scripts. In this article, we will touch on what money scripts are, how they shape our financial outlook and how they can affect our overall financial health.
First, let’s review what money scripts are because it’s kind of an abstract concept in a financial world that is often so cut and dry. A money script is an unconscious belief that is generally formed when we are young. It’s a distorted perspective on money that we grow up with and it affects the way we view money in our adult lives, whether we realize it or not. Sometimes, they are passed down from one generation to the next. Other times, they are formed through personal experience. In most cases, they are built through a number of things we experience while growing up.
More and more financial advisors are looking at money scripts as a way to help clients understand their own views of money, along with the corresponding behaviors that come naturally. Research has found that money scripts can affect numerous financial tendencies relating to total net worth, debt, income and other aspects of financial health.
The experts on money scripts have boiled it down to four categories that almost everyone falls into on a sliding scale, according to exhibited behaviors and tangible financial results:
This is an inherit believe that you don’t deserve to have money. You make negative associations with money and distrust wealthy people for fear of greed and corruption. Money avoidance means you try not to think about money because it provides more anxiety than joy. Sometimes, it can lead to sabotaging your own financial well-being in an effort to get by with as little as possible. Managing a budget may be difficult and you might struggle when it comes time to ask for a raise or make a big career move.
On the opposite end of the money scripts spectrum is money worship. You view money as the solution to everything. You work hard to earn more, and you are likely to put your job ahead of other important things in life (family, friends, fun, etc.). At the same time, it’s a never-ending uphill climb because you know there is always more money out there. Ironically, individuals who score high on the money worship scale are most likely to have a lower net worth and build up big personal debts.
Though similar to money worship, money status is a different and more aggressive money script. You not only worship the almighty dollar, but you measure your self worth by your net worth. You like big homes, cars and other status symbols. You want to keep up with the Joneses. You keep buying more stuff to keep up appearances, often resulting in a lot of unnecessary debt along the way.
If you play it extra safe with your money, then you will likely fall into the money vigilance category of money scripts. You are anxious and supremely cautious when it comes to spending your money. You are frugal and try to live only with what you need. You work hard to stay debt-free and save as much as you can. Of the four money scripts, money vigilance is certainly the least self-destructive, but it is not easy living with constant financial anxiety and playing it safe isn’t necessarily the best way to achieve financial independence.
Which of these money scripts describes you and your spending habits? Can you see how your naturally ingrained outlook on money affects your financial health—and ultimately, your net worth?
Taking a look within is a big part of creating a successful financial plan that provides the life balance we want along with the financial well-being we need. Identifying money scripts we live by might be a somewhat unpleasant process, but it really can make a difference.
For help with all your financial planning and wealth management needs, working with a financial advisor from Illumination Wealth can also make a major difference. With objective financial advice and personalized service, our team can help you refine your monetary outlook and achieve the financial independence you desire. Contact us today to schedule an initial private consultation.