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The significance of money scripts

It\’s fascinating to see how the world of financial planning is evolving. Today, more than ever, there\’s a growing acknowledgement of the role psychology plays in our financial lives. A prominent voice in this field is Dr. Brad Klontz, a clinical psychologist who\’s been shining a light on what he calls our \”money scripts\”.

Imagine you\’re at a social gathering, and the topic of money comes up. Do you jump in eagerly or shy away? Do you believe money is the ticket to happiness or do you associate it with greed and corruption? These beliefs, attitudes, and habits you exhibit towards money are embedded in your \”money scripts\”, and understanding them is key to fostering financial wellness.

Dr. Klontz has developed an assessment tool, the Klontz Money Script Inventory (KMSI), to gauge these deeply ingrained beliefs. The KMSI evaluates four core money beliefs: Money Avoidance, Money Worship, Money Status, and Money Vigilance. Everyone has a score in each category, and the higher the score, the stronger the belief.

Those with a Money Avoidance script often view money in a way that sabotages their financial well-being due to feelings of unworthiness or guilt about accumulating wealth. On the other hand, people who follow the Money Worship script see money as the ultimate problem solver, the key to happiness. Yet this belief often leaves them feeling empty and prone to overspending.

Then there\’s the Money Status script. For these folks, money equals self-esteem. They may flaunt their wealth and fall into a cycle of overspending to maintain their financial image. And finally, we have the Money Vigilance script. These individuals understand the importance of saving and keeping their financial affairs in perspective. Interestingly, Klontz says this is the script most likely to lead to financial wellness and prosperity.

Money, it\’s worth noting, has always been a leading stressor for individuals. In fact, a poll conducted on behalf of APA, Stress in America 2022, revealed that two-thirds of respondents identified money as a significant source of stress. This fact is a clear call to action. Professionals, particularly psychologists, can play a huge role in helping individuals navigate these financial stressors and reshape their relationship with money.

Now, it\’s essential to know that our problem with money isn\’t necessarily a lack of financial literacy or information. More often than not, it\’s about a lack of understanding of our own financial psychology. That\’s where your money scripts come in. By acknowledging and understanding your money scripts, you can recognise why you make confident financial decisions and learn to modify any harmful behaviours.

Your attitudes towards money aren\’t formed in a vacuum. They are influenced by early experiences, family teachings, societal norms, and more. Recognising these influences is the first step towards changing any negative patterns.

And here\’s the thing: this understanding isn\’t just beneficial for you. It\’s invaluable for your financial planner too. By comprehending your financial scripts, we can develop strategies that not only make fiscal sense but also align with your core beliefs about money. 

This integration of finance and psychology is an integral part of the future of financial planning.