smart spending

3 money maxims that hurt your finances

By identifying their goals and values first, she then shows them how to change their money scripts so that they're in line with what's important to them. Simply telling people they need to save money because otherwise they'll run out makes them feel like the situation is out of control, says Baker. Most people know that saving money is a good idea, but some still don't do it. People need emotional motivations to change money scripts, Baker says.

How to identify your money scripts

The first step to changing any of your money scripts is to identify them. One way to do that is to meet with a financial therapist. There's a directory of financial therapists on the Financial Therapy Association website. You could also do a few exercises on your own to identify your money scripts.

Kahler recommends doing some word association. Think up a variety of words, ask yourself how you associate those words with money and write down the first thoughts that come to mind. Your answers are your money scripts.

For example:

  • What do you think about money and government?
  • What do you think about money and budgets?
  • What do you think about money and the stock market?
  • What do you think about money and insurance?
  • What do you think about money and fathers?

Klontz recommends asking yourself the following questions to help you identify your money scripts:

  • What three messages did I get from my parents about money?
  • What's my most painful memory as it relates to money?
  • What's my most joyful memory as it relates to money?
  • What did I learn from those experiences?

Make rigid money scripts more flexible

Once you identify your money scripts, target the ones that are rigid and inflexible.

"People with rigid money scripts tend to have tumultuous relationships with money, while people with more flexible money scripts tend to be more successful," Kahler says.

Rigid money scripts might work well for you in certain situations. When circumstances change however, those same money scripts become very flawed.

For instance, distrusting the stock market would have made a lot of sense after the economy collapsed. Since the stock market has rebounded in the past few years, it no longer makes as much sense to distrust the stock market.

That's why you want flexible money scripts that make sense in a variety of situations, so you can avoid financial trouble, says Kahler.

You can build wiggle room into your money scripts simply by switching out a few words, he adds. For instance, if your money script says that you can't trust banks or insurance companies with your money, change that to: "There are some banks and insurance companies that you can trust, and others that you can't."

If you think you deserve to buy things for yourself because you work hard, change that to: "I deserve to buy things for myself, but I'm not going into debt to do it."

Another way to change your money scripts is to talk to people who are more financially successful. If you know or work with someone who is higher up the corporate ladder or has the type of job you want, Klontz recommends talking to them or taking them out to lunch to find out what they think about money. They might have a set of beliefs that you should adopt to help yourself be successful, says Klontz.

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