Have you thought about your relationship with money? As with any relationship, you are bound to have good times and not so good times, but just like our interpersonal relationships, what we learned as children about money affects the decisions we make as adults.

What are money scripts?

Financial psychologist, Dr. Brad Klontz, coined the term money script to describe the core beliefs developed in childhood that guide our financial behaviors as adults. According to Klontz, there are four money scripts, three of which are connected to poor financial health. No wonder we have so much trouble managing our money!

To explain the four scripts, I am going to use examples from my time in retail banking.

In the bank, we used to always joke that there was no hiding from a banker. When a person sat at your desk, it was like seeing them naked. 0.We saw how much money they made, what they spent their money on, how much debt they had incurred, and how much money they had saved.

And you could almost never tell by looking at the person in front of you, what type of spender they were. Until you started to look at their accounts and the naked truth stared at you.

And trust me, many people’s naked financial self is not a pretty sight!

Money avoidance

Sherry was a 40-something woman who worked as an administrative assistant in a law firm and was a classic money avoider. She came to the bank often to deposit checks and cash for the firm.

Sherry loved to complain. Mostly about how greedy lawyers were and how they only thought about money, not people.

Although she was at the bank several times a week to make deposits for work, she hated reviewing her own finances. She admitted that she threw away her bank statements without looking at them and that she never knew how much money she had in her account. The answer was always the same – not much!

Money worship

Jeremy was a 24-year-old recent college graduate who was obsessed with money. He was a money worshipper.  Jeremy was convinced that more money would make him happier and he was a compulsive spender.

In a few years, Jeremy had wracked up more than $20,000 in credit card debt and had borrowed money from his girlfriend and mother without ever paying them back.

Jeremy was always convinced that as soon as he made more money, everything would be okay. In the three years that I knew him, he got a few raises at work but his financial situation never changed.

Money status 

“Stan the man” was probably the most obnoxious customer we had. His over-gelled hair didn’t quite cover his bald spot and he let me know that his shoes cost more than my entire wardrobe.

Stan made a lot of money – about $250,000 a year – but spent it faster than he made it. By the end of the quarter, he was borrowing against his line of credit to pay his bills and lying to his wife about how much money was in the bank.

Stan believed that money = status and if you’ve got it, you’ve got to flaunt it.

Money vigilance

Colleen was in her late 20s and worked for the federal government.  She came to my office one day asking about what she should do with the money in her savings account.  When I looked up her accounts, I was shocked.

I didn’t see many 20-somethings with more than $50,000 in savings, no debt, and a padded retirement account.  Colleen was money vigilant.  She saved nearly everything she earned and was now in a position to take charge of her future.

Changing the script 

The truth is that while three of the four scripts are associated with poor financial health, even money vigilant people can have an unhealthy relationship with money if their saving is rooted in a fear of losing everything.

So, what should you do if you want to have a healthy relationship with money? Here are the four steps to a better money script and, ultimately, better spending habits:

1. Identify your money script

Being aware of your money script is the first step to being able to change your script. Think about your core beliefs about money.  Be really honest with yourself.

Do you dread thinking about your finances? Or do you think that if you can just make more money, everything will be alright? Are you the type of person that needs to buy the newest and best stuff to show that you have worth?  Maybe you can save well but have a constant fear that spending anything will cause you to go broke?

Take time to think about your money script and write down some of your core beliefs, whether you like them or not.

2. Determine where your money script came from

What did you learn about money as a child? I learned early that saving my money would help me to buy things that I wanted, but that it was hard work.  So, for a long time, I didn’t want to spend anything.  I wouldn’t enjoy time spent with friends at the mall or a restaurant because I’d be worried about how much I was going to spend.

What did your parents and others teach you, both in words and in actions, about spending.  Do you remember a specific situation where there was a conflict about money in your home? Did you have an older sibling who was constantly reprimanded for his unwise spending? Maybe your mom said, “Don’t tell dad that I bought a new shirt today.”  What did you learn from this?

3. Decide what you want your new script to be

If you want to be money vigilant, then re-write your script.  I know, you’re thinking, it isn’t that easy.  And you’re right.  It will take work to change years of believing the same thing, but you can do it.  Write down what you want your money beliefs to be.

Go ahead, I’ll wait.  Now, read your new money script aloud.

4. Fake it til you make it

The power of the mind is incredible. Keep saying your new money script to yourself.  Every day.  Do it until you believe it and you live it.  And then tell me about it!

Comment below with your new money script!