0

Money Scripts - How we Feel About Money

PUBLISHED Oct 18, 2022, 7:23:23 PM        SHARE

img
imgFreeman Capital Blog

Key Takeaways

  • Money scripts are your belief system around money
  • There are four different beliefs systems about money, all bad in the extreme
  • An accountability partner, like Freeman Capital, can help you improve how you think and feel about money, which can have positive effects on your financial system and mental health
  • Measuring your financial health is very important so long as it doesn't consume you
  • Meditation can help you refocus how you think about money and help your financial health

An intro to Money Scripts

an intro to money scripts

Source: CapWay

Ever thought about how you feel about money?

Believe it or not, the way you think about money has a significant effect on your ability to grow and build wealth.

Ready for some harsh truths? Most of us were taught very little about money growing up, and we weren’t raised to have healthy money habits. You may have grown up hearing that “money is the root of all evil.” Maybe you witnessed your parents struggling to pay the bills.

Research conducted by financial psychologist and researcher Brad Klontz showed that people have four different belief systems about money. Aka, money scripts:

  • Money avoidance: Money anxiety. Avoidance of thinking or talking about money.
  • Money worship: Money solves all problems. More money you have, the better.
  • Money status: Self-worth=net worth
  • Money vigilance: Disciplined approach to finances and frugal with their money.

Many of these money scripts can lead to unproductive or even destructive financial behaviors. It can be a real challenge to reach financial goals if you fall into any of these scripts at an extreme-level.

Can you identify with any of the money scripts? Are you wondering how you can shift some of your unproductive thoughts and improve your financial habits?

We will discuss how you can develop more positive financial behaviors no matter which money script you identify with.

Accountability Partners

no excuses

Source: Inc.com

We’re going to take things a step further and discuss how having an accountability partner can improve the way you think about money. Regardless of what money script you fall under.

If you’re a money avoider, an accountability partner can nudge you to regularly review your financial situation. An accountability partner can also help you achieve a greater awareness of your personal finances while highlighting the positives.

If you’re a money worshipper, an accountability partner can help you focus on giving and strengthening your relationships. They can remind you that relationships are far more important than money.

For the status seekers, an accountability partner can help separate your self-worth from your net worth. An accountability partner can also help you align your spending with your goals and values. Plus, an accountability partner can help you strive to be healthy in all areas of your life (physical, mental, spiritual).

Lastly, an accountability partner can help the money vigilant feel more comfortable discussing money. They can encourage you to set up a financial plan and remind you that it’s okay to enjoy the fruits of your labor!

If you are looking for an affordable accountability partner, check out Freeman Capital.

Money Scripts and Measurement

Goodhart's law

Source: Medium

Measuring your progress in key financial areas is vital to building wealth. Your financial health can be measured using factors such as credit score, debt-to-income ratio, net worth, and retirement savings. But what happens when we look at these financial measures through the lens of our money script?

Money avoiders might not be aware of where they stand regarding these variables (although they should be).

The money vigilant probably pursues these factors down to the very last penny- and maybe borderline obsessively.

If you’re a money worshipper or status seeker, check out Goodhart’s Law. Briefly, Goodhart’s Law, developed by British economist Charles Goodhart, states that “when a measure becomes a target, it ceases to be a good measure.”

What does this mean? Measurement is only useful when it guides you and adds context to the big picture- not when it consumes you. In other words, if you’re a money worshipper or status seeker, watch out for losing sight of what’s most important in life.

To sum it all up, being aware of your key financial measurements is an essential component of building wealth. However, it’s equally important to have the proper perspective when assessing what these measurements mean and how they fit into your overall well-being.

Why to avoid “Mental Accounting"

Source: TheDrum

Overspending and a lack of a budget can be the top reasons you can't get your finances in order.

But what about Mental Accounting?

Mental Accounting could be one of the most destructive financial behaviors we have and can lead to spending money we don't actually have yet.

For example, you may have a stimulus payment on the way. But no stimulus bill is official yet. Will your spending behavior change, based on the news reports? Will you purchase something that wasn't quite in your budget yesterday?

This potential stimulus check is just one example of this. Mental Accounting can also occur when you hear news about a raise, a bonus, tax refunds, or even when you have higher investment gains than you expected. Overspending on credit cards can cause poor Mental Accounting behaviors too. You're spending more money than you actually have in your budget.

So how can we solve this? For one, treat unexpected income in the same manner as your regular income. If the money isn't physically in your account yet, then that is money you simply don't have.

You can also set-up an emergency fund or reserves savings account at a different institution from your checking account.

Separating accounts for your goals can work in your favor. If the money you save for your emergency fund shows in your everyday spending account, for example, it's more likely that it will be spent than if it was in its own account.

We are less likely to touch this money when it's elsewhere because we encounter additional decision points - a psychological hurdle encouraging us to stop and think.

Meditating on your personal finances.

Meditating

Source: NPR

What is meditation? It may mean different things to different people. We'll describe it as a time to check-in with yourself, focus on your breath, and practice compassion. Meditation is a great new habit to adopt in your personal life. However, it won't be perfect. Like anything, there are hurdles in establishing a new routine. It is challenging to dedicate the time, consistently add it to your life, and give yourself permission to learn and improve.

If you ever attempted to meditate, you likely found your mind wandering. Within the first few minutes or less, you may have become distracted, checked your smartphone, or went back to doing whatever you were doing before. It is not that you are "bad" at meditating. It is just that it is new and takes practice. Nothing comes easy, and meditation is no exception. Distractions consume our lives, and we are continually moving from one time-consuming demand to another. Therefore, sitting in silence and letting your breath guide, you can take multiple tries and consistent effort. Quieting a racing mind doesn't happen by simply turning on a switch.

These same hurdles can occur for people that claim that they plan to work on their personal finances. You sit down to review your monthly income and expenses, and then a text message leads you astray. You may be interested in learning more about investing or your 401(K) structure and then get overwhelmed when you begin to research or navigate the landscape.

Working on yourself is the most challenging part when adopting any new hobby, habit, or interest. Acknowledging this is crucial and can help your focus. Tell yourself that it is ok to be where you are right now. Be accepting and compassionate of yourself and your situation. If you remain focused, consistent, and resilient, you will improve. Allow yourself to be aware first and keep taking baby steps towards the direction you want to go.



Sound investments
don't happen alone

Find your crew, build teams, compete in VS MODE, and identify investment trends in our evergrowing investment ecosystem. You aren't on an island anymore, and our community is here to help you make informed decisions in a complex world.

More Reads
9 Quick Cash Advance Apps To Get You Money Now
Image

A cash advance app is a type of financial application that allows users to request and receive money, typically within 24 hours. Many cash advance apps are available on the market, each with its unique features and benefits. Some popular cash advance apps include Brigit, Dave, Earnin, Chime, and Moneylion.

These Are The 5 Best Retirement Gifts For Women
Image

When a person retires, giving them a gift to celebrate the occasion is a common practice. However, choosing an appropriate present isn’t always easy. If you aren’t sure where to begin, here are five of the best retirement gifts for women.

How long should you keep financial records after a death?
Image

There is a copious amount of paperwork involved in organizing your finances. Tax season every year gives us an opportune time to go through the endless paperwork. We decide what to keep and what to toss- decluttering at its finest.

What Credit Score Is Needed For Care Credit?
Image

When a person has high out-of-pocket medical expenses, figuring out what to do can be a challenge. Fortunately, there are potential solutions. In some cases, Care Credit may give you a simple way to handle the costs, settling your balance with your provider right away. Plus, Care Credit often runs promotional programs that may allow you to avoid interest while you pay off what you owe.

My Company Offers A Standard 401(K)-What Does That Mean?
Image

When you’re starting with a new employer, you typically get access to a range of benefits. When it comes to retirement plans, many companies offer employees a standard 401k. If you haven’t had a 401k before, you may be wondering what a typical one involves. Here’s a look at the standard 401k, including what it is, how it works, and the benefits it can provide.

Fulfillment in Retirement
Image

Fulfillment in retirement is my new goal. As part of my post-honeymoon period of retirement wanderings, I had a sort-of-crisis of success. After all, my career was successful! What more does one need in life? Once you have enough money, we know that more money does not make you happier or more fulfilled. What about success? Is enough success enough? Not if your goal is fulfillment in retirement.

Using RMDs to Assess Asset Allocation
Image

Can you use RMDs to help determine your asset allocation in the retirement drawdown phase? Imagine you are living off your assets (taking an income from your nest egg). What might your asset allocation be to minimize the sequence of returns risk due to RMDs?

Am I investing for me or my kids?
Image

Investing in retirement is all about tradeoffs. Of course, all decisions are tradeoffs—when you choose one path, you can’t go down the other—but let’s focus on retirement investing! What are the major tradeoffs you face when investing during retirement? Remember, this blog is for those who have oversaved for retirement. This is a safe space to discuss first-world problems! If you have oversaved for retirement, you need to decide on your asset allocation: how well do I sleep at night vs. how rich do I want the kids to be?

My Strategies For Dealing With a Down Stock Market
Image

How do I handle my stock portfolio during a market downturn? How do I cope with seeing my stocks drop in value? Should I sell? Should I keep investing? These questions came up recently in the Simply Investing Forum. This blog post will answer these questions.

Market Musing 10-16-2022, Fed Fiasco 2022, Keep your hedges on
Image

The SPX hit a 27.5% market correction last week. Why? Because Fed Chair Powell is forecasting another 100 to 125 basis points higher rate before the end of 2022.

Market Musing 10-10-2022, shots-fired-are-new-lows-on-deck
Image

So good jobs data caused another market selloff. Why? Because Fed Chair Powell is forecasting another 100 to 125 basis points higher rate before the end of 2022.

Market Musing 10-04-2022, Is the Fed backed into a corner?
Image

The Markets are bouncing off the hope that the Fed will slow down rate hikes. Fed Chair Powell is forecasting another 100 to 125 basis points higher rate before the end of 2022.

Still Within a Down Trend
Image

stock market commentary

Cash Management for your Personal Finances
Image

We often think about cash flow by looking in the rear-view mirror. What came in and went out last month or last year. Remember, the importance of building awareness

Goal Setting is About Process and Habits
Image

Start reaching your financial goals by setting habits and processes

How Are NFTs Worth Money?
Image

NFTs have been touted to just be pictures and nothing more. Find out in the article how NFTs are worth money.

Top Stocks for Beginners to try Right Now
Image

Beginner stocks are investments a consumer will recognize that has a straightforward business model and proven stability

The Top Lifestyle Stocks to Buy Now
Image

These are top lifestyle stocks to check out. These ideas come straight from the community

4 Estate Planning Actions You Should Stop Putting Off
Image

Estate planning may seem like something to do later, but these 4 actions are easy to do and very important

Bottoming Or Lower ?
Image

Stock Market Commentary

Resources for Publishers
Resources for New Investors
Boosted with BossCoin