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Being “good” with money is easy in theory. Most of us know that we need to spend less, save more and plan our finances better. The real question is: How are we going to do it? actually to force yourself to do these things, and what makes it so difficult?
Enter “money scripts,” also known as “money stories,” a concept he’s been tossing around psychologists and educators years and recently entered the mainstream financial planning. Broadly defined, money scripts are “what you learned about money growing up, how you reacted or rebelled, and what your current money dynamics and patterns are,” says Bari Tessler, financial therapist and author of The art of money. According to some researchersmoney scripts can be divided into certain categories, such as “money vigilance” (excessive caution and paranoia about money), “money status” (equating self-worth with money), “money worship” (the belief that money will solve all your problems) and “money avoidance” (the feeling that money is bad). Of course, there is even diagnostic quiz.
Maybe you’re not aware of your own money story – or maybe it doesn’t fit into a neat category – and that’s normal. Ramit Sethi, author I will teach you to be rich, says these “invisible scripts” are “so deeply embedded in us that we don’t even realize that they guide our attitude or behavior.” Left to lurk in your subconscious, he adds, “they can become psychological traps that hold us back.”
To be clear, identifying your money scenario won’t magically solve your financial problems, especially those that are out of your control. But the process of self-examination will help you spot your behaviors, look at what’s behind them, and—theoretically—identify and change what isn’t working. As Tessler says, “Awareness leads to understanding, and this allows us to dismantle and replace habits we don’t like.”
There is also much research showing that certain early life experiences are associated with destructive financial choices in adulthood and can be overcome with specific therapeutic techniques. IN one British studysubjects who grew up in households that were secretive about their spending were more likely to have compulsive money habits, such as hoarding, when they grew up. Another study showed that childhood trauma (financial or otherwise) often had a detrimental effect on respondents’ financial decision-making later in life.
On the upper side, psychologists have also established that certain types of therapy can help people overcome negative financial habits ranging from the very serious (such as compulsive overspending, gambling or hoarding) to the more mundane (avoiding bills). And those therapeutic techniques they are very similar to the process of exploring your money scenario: you look at the foundations of your negative patterns, break them with mindfulness and practice, and then replace them with new and better coping mechanisms. In short, putting some fat into understanding your money story will likely help you improve your finances at least a little, if not a lot.
To do this, you’ll need writing materials, a willingness to analyze your personal history and finances, and some patience with yourself. Eugenié George, financial educator and book author Our money storieslikes to address her clients’ beliefs about money in three stages. “The first part is about your emotions,” she says. “Dive deep into your memories of money—how it has shaped your life, what frustrates you, what causes you stress, and what you want to change. Keep a stream of consciousness journal. It pays off. Talk to a therapist if you need more help.” (Tessler has a list of journaling instructions(such as “What did your parents, grandparents, siblings, church, or community teach you about money?” which can be helpful during this initial period.)
Once you’ve gotten better at dealing with your financial demons, it’s time to look at your numbers. “It’s all very well to understand your feelings about money, but if you can’t ground them in your reality, they won’t amount to much,” says George. She recommends printing out your bank statements and going over each line, as tedious as it sounds. “Look at what you’re spending on and make sure it matches what you value,” she says. “This is usually when you’re like, Oh, I regularly spend $150 at Rite Aid and I don’t even know why. But I wish I had that money to spend on the things I really want.” This is also the part where you have to be honest with yourself. You may come to the painful realization that, say, your compulsive lying about money is rooted in your parents’ multiple bankruptcies; the bad news is that you are still a compulsive liar, but the good news is that you are one step closer to facing it.
The third and final step is about making a bigger plan for organizing your money in the future now that you know exactly what you want to change. This includes a comprehensive overview of what you own (including your savings, investments and other assets, such as a car or house), what you owe (any debt) and what your credit score is. You’ll also establish a regular practice—perhaps weekly or twice a month—of checking all your numbers to gauge your progress, either alone or with someone you trust. Both Tessler and George call these “money dates” and recommend dressing them up to make them as attractive as possible: light candles, play nice music, etc. (I usually do this on Friday afternoons when I’m sick of it). real work, but it’s not the weekend yet. It’s amazing how a boring task becomes more attractive when you use it to delay something else.)
In the meantime, look for some kind financial mentor or a responsible partner who will understand your money story and keep you honest in your efforts to move forward. Depending on the type of help you need, it could be real financial advisorfinancial therapist or accountant; it can also just be a friend who is good with money and will give you smart advice.
Then repeat. “Understanding your money story and rewriting the things you want to change is a lifelong process of gathering information, applying it to the practical aspects of money, and then gathering more information,” says Tessler. She recommends paying close attention to how you feel physically when making daily financial decisions (another common CBT technique). Are you sweaty, dizzy, exhausted, in a rush? “Most people aren’t even aware of the stories they tell themselves about money, but if you take the time to pause before you buy something, take a breath and see how you feel, it gives you more insight into what’s driving your choice and whether it’s being driven by a narrative that’s more you don’t want to follow,” she explains.
My friend Arianna, who describes herself as having an “anxious-avoidant” relationship with money that causes her to procrastinate on paying bills and avoid her bank balance, says that facing her own money story has helped her overcome some of the sheer panic she used to have feel when she opened her credit card statement (made worse by the fact that she would sometimes ignore it for months). “After my parents divorced, money was a very tense topic. My dad always sent us random gifts even though my mom could barely afford to buy us new shoes,” he tells me. “I think it was my dad’s way of trying to show that he cared about us. But all it did was highlight his absence and frustrate my mum.”
As a result, Arianna vacillated between extreme budgeting and splurging. After tracing that cycle back to the way she grew up, she was able to control it a little more; she gives herself a monthly allowance for “fun” purchases so she doesn’t feel deprived, but she doesn’t overdo it either. “I used to feel like there was something wrong with me, but now I realize it’s just something I have to keep working on,” she says.
Letting go of your past and inevitable future mistakes is an important part of the process, Tessler says. Sure, it’s bad to question your own mistakes (and your parents’ mistakes, and society’s mistakes, and so on), but it’s a lot easier if you don’t suffer because of them or use them as a constant excuse for never getting a break. “You uncover a pattern by looking at it, drawing attention to it, and then noticing the moment before you fall into the hole,” she explains. “You might still fall, but the next time you go back there, you’ve learned something new about it.”
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