Rewrite Your Money Story

Brad Klontz and Shankar Vedantam explore "money scripts," the subconscious beliefs and patterns of thinking about money that are often inherited and have a profound effect on an individual's financial behaviors and outcomes.

People carry deep-rooted money scripts, which are like uncredited scripts in a play, affecting their financial decisions and experiences. Brad Klontz, a psychologist specializing in financial beliefs, terms these as "money scripts" and underscores their significance, especially for those facing financial challenges.

Deep-rooted beliefs influence financial outcomes

Money scripts, often passed down through generations, can dictate financial outcomes such as income, net worth, and behaviors like accumulating credit card debt. These inherited beliefs about money stem from an individual's upbringing and are typically subconscious. These scripts significantly impact how people engage with money, shaping decisions and behaviors, even if the person is not fully aware of them.

The scarcity mindset and generational influences

Klontz notes that a scarcity mindset about money can be established from growing up in lower-income environments and persist even after achieving wealth. He shares personal anecdotes, like how his mother's anxiety around being less affluent than her peers translated into his own money anxiety. Furthermore, his grandfather's response to losing money during the Great Depression—a profound distrust in banks—trickled down and influenced his family's investment behaviors.

The impact on relationships and self-perception

Klontz addresses how unconscious money scripts can strain couples' relationships unless they are addressed and altered. He points out that grappling with these inherited scripts requires individuals to reflect on what they were taught about money by their parents and to recall early emo ...

Money avoidance scripts involve negative associations with money, such as beliefs that money is inherently corrupt or that there is virtue in living with less.

The concept of money avoidance scripts was introduced without detailed examples, but it is implied that such scripts often stem from negative past experiences. These could include childhood financial hardship or instability, leading to self-destructive financial behaviors in adulthood.

Money worship scripts involve the belief that more money and material possessions will lead to greater happiness and fulfillment.

Brad Klontz remarks that happiness is a state and not a trait, implying that material possessions do not create lasting happiness. He also points out that a partner’s irrational spending habits could be a result of growing up with very little, illustrating an example of how past financial scarcity could lead someone to overvalue wealth in the present.

Money status scripts cause people to prioritize outward displays of wealth to gain social status and approval.

The "Keeping Up with the Joneses" effect exemplifies a money status script, where people inflate their income and only buy new items in an effort to demonstrate status through outward displays of wealth. Despite cultural portrayals suggesting that rich people frequently exhibit outward displays of wealth, the majority of millionaires in the US are actually self-made and typically do not spend lavishly. A study found that even ultra-wealthy individuals only spent twice as much on material indicators of wealth compared to the mi ...

Psychologists like Brad Klontz suggest different strategies for improving financial behaviors by changing one’s underlying "money scripts"—the unconscious beliefs about money rooted in one's childhood and influenced by family history.

Connecting financial goals to personal values and important sentimental objects can help reframe money in a more positive light for those with money avoidance scripts.

Understanding one's personal values and connecting these to financial goals can instill a sense of excitement and emotional investment in money management. Klontz emphasizes the importance of acknowledging patterns passed down through generations and consciously deciding to prioritize values beyond work, such as family and health. He suggests reinforcing the belief that personal well-being is more important than earning money, which can inspire intentional saving and spending.

Educating people about the true sources of happiness and the spending habits of the truly wealthy can challenge the beliefs underlying money worship and money status scripts.

By becoming aware that material possessions bring only temporary satisfaction, and that true wealth often entails modest living and prudent investing, people can shift away from the misconceptions of what it means to be wealthy. "The Millionaire Next Door" illustrates that many millionaires actually avoid conspicuous consumption and focus on growing their net worth. Understanding the realistic spending habits of the wealthy can help individuals build and maintain true wealth.

Automating savings and reg ...