Posts

You May Know Your Love Language, but What’s Your Money Script?

Quality Time. Acts of Service. Words of Affirmation. Physical touch. You may know your primary love language, an unofficial classification of the different ways people express and receive love. But have you heard of Money Scripts®?

Money scripts®, a term first coined by financial psychologist Brad Klotz, are the often-unconscious ideas and attitudes we have about money. They are:

  • Learned in childhood
  • Passed down through generations 
  • Only partial truths
  • Responsible for many financial outcomes 

For many people, discovering and exploring their money script® is a valuable step toward improving their financial well-being. Plus, the more you understand your own attitude toward money, the better you are able to explore how your beliefs and assumptions impact your relationships with others. No one money script® is good or bad; the important thing is to understand your primary script and manage it in a healthy way. 

Read on to discover your primary money script® and explore some ideas for how you can work with it to develop a healthy approach to managing your finances. 

#1: Money Avoidance

People with this money script may view money as inherently evil or negative, and they may go to great lengths to avoid discussions about finances. You might be a money avoider if you’ve thought things like:

  • Rich people are greedy.
  • I feel guilty about having money.
  • People with less money usually have better character than wealthy people.
  • Money stresses me out, and I’d rather just not think about it.

Unhealthy Money Avoidance:

When not addressed, people with this money script may ignore financial statements, overspend, or enable others financially. 

Healthy Money Avoidance:

Work to pay attention to money at least at a high-level; you don’t have to monitor every penny, but general budgeting and having a financial plan can go a long way in helping you reach your future goals. 

#2: Money Focus/Worship

Is money on your mind 24/7? Does money seem like the ultimate key to happiness? If so, you may be “worshiping” money without even realizing it. This might be your money script if you’ve had thoughts like:

  • I could never have enough money.
  • If I buy this, I will be happy (i.e, “retail therapy”).
  • My problems would all go away if I just made a little more money. 
  • My family will understand if I put in extra hours so I can bring home more money.

Unhealthy Money Focus:

The higher people score on Money Focus, the more likely they are to have low net worth or credit card debt. If you find yourself constantly spending in search of happiness, it might be time to make some changes. 

Healthy Money Focus:

Our society puts money on a pedestal. Still, it’s important to recognize that money does not equal happiness. Work on flexing your gratitude muscle, perhaps by keeping a gratitude journal. Make time for activities and people you love. And when you feel the impulse to make a purchase, ask yourself, do I really need this item, or am I just buying it for the sake of buying something?

#3: Money Status

This money script is similar to #2, but instead of equating money to happiness, a Money Status mentality links money and self-worth. People with this money script view themselves as more “worthy” when they have a lot of money. They may be at risk of overspending and buying flashy, expensive items to prove their status. 

You might have a “Money Status” money script if you’ve thought things like:

  • This shirt/Apple Watch/car/purse is worth the splurge, because it’s “on brand” for me.
  • I like gambling – it helps me make more money to support my lifestyle.
  • It’s acceptable to hide purchases from my partner; they wouldn’t understand why I need these things.

Unhealthy Money Status:

In an unhealthy state, people with this money script are at risk for excessive spending, gambling, and financial dependency on others. They may have been raised in a socioeconomic class that prioritized appearances, and might carry that unconscious mindset into their adult lives.

Healthy Money Status:

The key is balance. If you want to treat yourself sometimes, that’s acceptable, but not at the expense of hiding things from your partner or spending money you don’t have. Work on addressing the reasons behind your need to spend, and talk about your spending strategies with your partner.

#4: Money Vigilance

On paper, these are the “gold star” money script students. Still, too much of an extreme is never healthy, and it’s possible to be too vigilant. You might have a “Money Vigilance” money script if you’ve thought things like:

  • If you can’t buy it in cash, don’t buy it.
  • Hard work equals financial reward.
  • You can never save enough for a rainy day.
  • I’d rather save for a rainy day and my future than spend money on experiences now.

Unhealthy Money Vigilance:

When people are too focused and anxious about their finances, it can keep them from enjoying their present lives. While this money script can emphasize frugality and saving, it can also lead to excessive stress and anxiety that could have been alleviated by financial planning and management.

Healthy Money Vigilance:

Set aside a piece of your budget that is for using now on fun purchases. It’s great to save for the future, but spending on some things you can enjoy now will go a long way in helping you feel a sense of enjoyment and gratitude. Work with a trusted advisor or partner to set a specific time to think about and discuss finances, and focus on living in the moment.

By now, you probably have a sense for your own money script. Discuss it with your partner, and talk about what’s similar or different to the way you view money. You might be making assumptions about the other person’s viewpoint without even realizing it, and understanding each other can go a long way in helping you make decisions about money together in the future. Plus, it can be a fun bonding experience over a date night if you approach it with a lighthearted attitude! Let us know your results.

WSWA

Warren Street Wealth Advisors

Warren Street Wealth Advisors, LLC., a Registered Investment Advisor

The information presented here represents opinions and is not meant as personal or actionable advice to any individual, corporation, or other entity. Any investments discussed carry unique risks and should be carefully considered and reviewed by you and your financial professional. Nothing in this document is a solicitation to buy or sell any securities, or an attempt to furnish personal investment advice. Warren Street Wealth Advisors may own securities referenced in this document. Due to the static nature of content, securities held may change over time and current trades may be contrary to outdated publications. Form ADV available upon request 714-876-6200.

Healing What Hurts: The Essential Role of a Financial Therapist

As financial advisors, we help people attain financial independence. Usually our personalized planning conversations are enough to help them establish a healthy, happy relationship with their money. But sometimes we uncover bigger pain points we need to address before we can move forward.

There is no shame in that! Almost all of us have picked up at least some emotional baggage related to money. When standard financial advice isn’t enough, we may recommend engaging a financial therapist to assist. In the right circumstances, they can be an invaluable addition to your wealth management team.

When Can a Financial Therapist Help?

When is financial therapy warranted? As financial advisor Rick Kahler said in a 2019 article, “A person can benefit from financial therapy when their behaviors are not in line with their values.” Put another way, if it feels as if no amount of financial planning will resolve a greater discontent, this can be a sign that deeper forces are at work, such as one or more of the following:

  • You often spend to excess or are frugal beyond the point of reason, but you’re still unhappy, feeling as if there is an emotional hole you can never quite fill.
  • You tell yourself and others half-truths or outright lies about your money management. For example, your spouse doesn’t know about that extra account you’ve stashed at another bank, or you hide just how deep in debt you’ve become. You convince yourself your secrets won’t hurt anyone and that it will all just work itself out somehow.
  • Whether as a recipient or a provider, you’re trapped in a financial exchange with little joy in the giving or gratitude in the receiving. You long to get out from under the relationship but you feel helpless to change it.
  •  You have important financial issues to discuss with your aging parents, with your adult children, or as a couple. But you’re so used to not talking about money, you don’t know how to break the silence.
  • Your financial interests are in disarray, with important changes you’d like to make. But even with an advisor to assist, you can’t bring yourself to take action. You remain mired in indecision.
  •  You yearn to have a sensible strategy guiding your financial journey, but you find yourself continually overhauling your investments, your advisors, and your overall approach. Nothing ever seems right for very long.
  •  You reach a point where you feel there is no point. You stop even opening incoming bills. You shut out those offering to assist. Rather than bringing you any happiness, your money has become a source of misery and shame.

How Does a Financial Therapist Help?

Following are a few of the types of issues a financial therapist can help you reconcile: 

  • As a child: Was money a taboo subject when you were growing up? Even once you’re an adult, these early influences can weigh on your financial autonomy, and make it difficult to engage with your aging parents about their own challenges.
  • As a parent: You may have justifiably developed a strong sense of financial duty to your children. This can leave you struggling to establish practical boundaries once your beloved babies become adults.
  • As a couple: You and your spouse may each come into your relationship with very different saving, spending, investing, and borrowing behaviors. If entrenched differences go unaddressed, they can wreak havoc on an otherwise loving relationship.
  • As an individual: You may feel anxious and ill-prepared to take care of your own or your family’s financial logistics. Or, on the flip side, you might believe you—and only you—must manage your entire household wealth. Either extreme can detract from reaching a healthy balance between your emotional confidence and your financial well-being.

Working With a Financial Therapist

Financial management can be difficult for anyone, and struggling at times does not necessarily mean you have a chronic issue in your relationship with money. But if your financial behaviors feel like they are crippling your financial future or causing you consistent distress, it may be time to bring in a financial therapist to help you move past the pain.

Some individuals or families also find it meaningful to consult with a financial therapist as an “ounce of prevention”.. This approach to financial therapy can be particularly empowering for major life transitions such as changing family structure, during a business succession, as you prepare for retirement, or when a wealth transfer occurs.  

How do you get started? As one financial therapist said: “For your money, you want a fiduciary. … For your emotional health, you want a licensed psychologist or therapist who knows how to treat the diagnoses you have and respects confidentiality.” Ideal matches also may depend on a therapist’s areas of expertise (such as family conflict, childhood trauma, or grief and anger management), and/or occupational niches (such as business owners, academics, or attorneys).

Here at Warren Street, we can make appropriate introductions for our clients. You can also use the Financial Therapy Association’s “Find a Financial Therapist to search for qualified professionals in your region. However, note that financial therapy is a relatively new profession. With its roots dating back to 2009, the Financial Therapy Association was the first group to offer financial therapist certification in 2019. As such, it’s worth ensuring your would-be therapist possesses a solid tripod of professional credentials, academic qualifications, and seasoned experience before you entrust yourself to their care.

As financial professionals, we pride ourselves on helping individuals and families maximize their financial and emotional independence through a well-managed relationship with their wealth. That said, we don’t pretend we can be all things to everyone. When it’s time to focus on the nexus between mental health and household wealth, a qualified financial therapist can be an integral part of your Warren Street team. Ask us today how we can help.

Kirsten C. Cadden, CFP®

Associate Advisor, Warren Street Wealth Advisors

Investment Advisor Representative, Warren Street Wealth Advisors, LLC., a Registered Investment Advisor

The information presented here represents opinions and is not meant as personal or actionable advice to any individual, corporation, or other entity. Any investments discussed carry unique risks and should be carefully considered and reviewed by you and your financial professional. Nothing in this document is a solicitation to buy or sell any securities, or an attempt to furnish personal investment advice. Warren Street Wealth Advisors may own securities referenced in this document. Due to the static nature of content, securities held may change over time and current trades may be contrary to outdated publications. Form ADV available upon request 714-876-6200.