smart spending

3 money maxims that hurt your finances

We get all kinds of messages about money from the people in our lives. These messages come from what teachers, parents, peers, caregivers and society say or don't say about money. We also get messages about money by going through traumatic financial experiences, such as losing a lot of money in a market crash.

These messages can come together to form beliefs about money, such as "money will make me happy," or "financial problems will just work themselves out."

These unconscious thoughts and feelings about money, or money scripts, are one of the primary causes of financial behavior, according to a 2012 study by CFP professionals Brad Klontz, a financial psychologist and associate professor of personal financial planning at Kansas State University, and Sonya L. Britt, an assistant professor and program director of personal financial planning at KSU.

Their online survey of 422 people, in which participants rated how much they agreed or disagreed with various statements designed to gauge their beliefs about money and financial behaviors, showed that having certain money scripts could predict destructive financial behaviors. Those behaviors included compulsive buying, financial infidelity (lying to your spouse about spending), financial dependence on others, pathological gambling and financial enabling with one's children.

Klontz and Britt found three categories of money scripts that put people at greater risk of engaging in negative financial behaviors, such as overspending and getting into credit card debt.

Money scripts and financial behaviors

Money script categoriesMoney scriptsFinancial habits
Money avoidanceMoney scripts:
  • Rich people are greedy.
  • Rich people acquire their wealth by taking advantage of other people.
  • It's wrong to have more money than you need.
  • I don't deserve to have a lot of money because other people have less.
Financial habits:
  • Compulsive buying.
  • Pathological gambling.
  • Compulsive hoarding.
  • Being a workaholic.
  • Financial enabling.
  • Financial denial.
  • Not looking at bank account statements.
  • Struggling to stick to a budget.
  • Spending more than you make.
Money worshipMoney scripts:
  • More money makes you happier.
  • You can never have enough money.
  • Money will solve your problems.
Financial habits:
  • Compulsive buying.
  • Pathological gambling.
  • Compulsive hoarding.
  • Financial dependence.
  • Financial enabling.
  • Financial denial.
  • Being a workaholic.

Money worship scripts were associated with being in credit card debt.

Money statusMoney scripts:
  • My self-worth is equal to my net worth.
  • I will not buy something unless it's new.
  • If it's not considered the best, I won't buy it.
  • Poor people are lazy.
Financial habits:
  • Compulsive buying.
  • Financial dependence.
  • Pathological gambling.
  • Financial infidelity.
  • Telling people you make more money than you actually do.
  • Overspending.

Changing money scripts can change behavior

If you're struggling with any of the behaviors mentioned in the table, or if you have other financial problems, changing your money scripts could help change your financial behavior. Rich Kahler, a Certified Financial Planner and president of Kahler Financial Group, a financial planning firm in South Dakota, discovered this through his experiences working with clients.

For example, one of Kahler's clients followed this money script: When you retire, you die. The client believed that because a lot of people in his family died one or two years after they retired, funding his retirement was essentially funding his own death.

Kahler worked with the client to create a more flexible definition of retirement. Instead of retirement being synonymous with death, they decided that retirement can mean that you can do what you want, when you want and with whom you want. After that, the client began making monthly contributions to his retirement fund at seven times the amount that his accountant had asked him to contribute.

Psychologist Maggie Baker, author of "Crazy About Money: How Emotions Confuse Our Money Choices and What to Do About It," also helps her clients with money scripts.

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