What’s Your Money Mindset?
“If you can’t measure it, you can’t improve it.”
One of the first meetings I have as a financial planner working with a new client is a workshop called Money Mindset. The goal of the meeting is to help me, as your advisor, learn as much as possible about how you relate to money. (There is a reason it’s called “personal finance”— it’s personal.)
As some of us remember from grade school, we are each unique and special, and that includes our beliefs about money (both conscious and unconscious). These beliefs influence our behaviors, perspectives and ultimately, our financial decisions.
Gratuitous photo of me (Stacy) being my unique self in grade school.
The psychology of financial planning is a relatively new field of study. The CFP Board, (who sets and enforces the requirements for CERTIFIED FINANCIAL PLANNER™ certification), recently added The Psychology of Financial Planning as a major topic to its course material and exam questions*. There is even an emerging field called financial therapy.
While I’m not about to go out and buy a leather coach for my home office, there is a simple assessment tool available which helps people learn their “money scripts” and how they influence their money decisions. Money Scripts™ were scientifically researched and developed by Brad Klontz**, a financial psychologist and professor at Creighton University, and are the unconscious beliefs about money, often rooted in childhood, that affect adult behaviors and perspectives.
There are four main money scripts: money avoidance, money worship (or focus), money status and money vigilance. The first three are linked to negative financial behaviors and the fourth is a positive indicator of financial wellness. The assessment scores each script between 0 and 6.
I can’t read the word vigilance without thinking of my favorite vigilante superhero, Batman.
For me personally, while most of my money script scores were in the “normal” range of 2-3, my money worship score was on the higher end of normal at 3.7. After some reflection, I know that my way of expressing the money worship script is to buy things to achieve happiness. This is consistent with some of my favorite memories as a kid shopping with my mom. Even if we didn’t have a lot of money to spend, there were always some fun things to find at Target. One way I’ve been trying to counterbalance this money script is to put some time between my impulse to buy and pulling the trigger. Needless to say, my Amazon cart has many items “Saved for Later”.
I’m a pretty basic American who equates buying stuff at Target with happiness.
The best part about understanding your money beliefs is that once they are measured, they can be managed. As your financial advisor and advocate, I can help you replace negative money beliefs with positive ones, a switch which has the potential to dramatically improve your decisions and financial outcomes.
Understanding your money mindset, including your money scripts, is an important part of the financial planning process that I do with each new client.
If you’re wondering if working with a financial planner is right for you, take this short (8-question) Financial Wellness quiz, get your personalized report and learn more about how I can help.
Full Disclosure: Nothing on this website should ever be considered to be advice, research or an invitation to buy or sell any securities. Please see the Disclaimer page for a full disclaimer.
About the Author:
Stacy Dervin, CFA, CFP® provides fee-only financial planning and investment management services in Eugene, Oregon. Tailored Financial Planning (TFP) serves clients as a fiduciary and never earns a commission of any kind. As a financial advisor, Stacy is on a mission to help Gen X and Gen Y be truly proactive about their financial futures.
*https://www.cfp.net/knowledge/psychology-of-financial-planning
**https://www.financialplanningassociation.org/article/journal/NOV12-how-clients-money-scripts-predict-their-financial-behaviors
