Money Scripts

In this episode, Mike discusses money scripts - our hidden and often subconscious beliefs and stories we tell ourselves about money. He explores the impact of these scripts on our financial wellness, highlighting scripts which are correlated with lower net worth, lower income, and higher revolving debt. Mike highlights how our feelings about money are often uncorrelated to our actual money numbers due to the money scripts we unquestioningly follow. In this episode, Mike provides a framework for discovering and exploring the money scripts which may be holding you back from financial wellness.

Takeaways

• Money scripts - hidden drivers of financial behaviors
• Klontz Money Script Inventory
• Scripts: money avoidance, money status, money worship, and money vigilance
• Remit Sethi's money types
• Money types: avoider, optimizer, worrier, dreamer
• How you feel about money is uncorrelated to your financial numbers
• High professional achievement does not necessarily correlate to rational financial decisions

References

• Money Beliefs and Financial Behaviors: Development of the Klontz Money Script Inventory
• Discover the 4 Types of Money Scripts! (Video)
• How Clients' Money Scripts Predict Their Financial Behaviors
• Money Scripts: Why Do We Make Poor Money Choices?
• Evaluating the Klontz Money Script Inventory with a Diverse Sample
• Money For Couples
• Remit Sethi's 4 Money Types

Music: Perpetual Motion by Amarent via FMA (public domain)

Contact: rehabyourfinances@drmichaelpowers.com

Transcript

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Michael: Welcome to Rehab Your Finances, a podcast about personal finance for healthcare, education, and caregiving professionals. I'm your host, Mike Bowers, physical therapist, full-time educator, and certified financial education instructor. Quick reminder that this show is for entertainment purposes and should not be taken as investment advice. Let's get started. Today I'm excited to be talking about money scripts. Money scripts are beliefs about money that tend to be unconscious, developed in childhood. And thought to be key drivers of financial behaviors. These money scripts can really cause us to take on roles andor personas which impact not only us but our relationships. And these money scripts really cause us to tell stories that may or may not be true in terms of when you look at the actual numbers. And these money scripts really are, again, some unconscious drivers that cause us to do things maybe that we don't fully understand. Until we go back and look at these and explore and unpack, hey, why am I even behaving this way? Why does it seem like I can't save money? And we'll see how these hidden beliefs can really cause some interesting behaviors, even in people who in other areas of life may seem that they've got it all together. These scripts are really independent of intelligence or your analytical style or anything like that. So let's talk about these money scripts. So that you'll have the tools to explore your own and hopefully get to the point where you understand where some of your thoughts and beliefs about money may have come from, not only to understand it, but also to then make positive change moving forward. I'm going to talk about two different approaches to money scripts, one by Brad Klantz one by Ramit Seti. Brad Klantz et al. in 2011 developed the Klantz Money Script Inventory, the original. Article or the original study was titled Money Beliefs and Financial Behaviors: Development of the Klant's Money Script Inventory, and I'm going to link that in the show notes. Ramit Seti does a lot of podcasting, posts on YouTube, and he recently had a book, Money for Couples. And in that book, he outlines four money types, and he identified these types based on his work in the financial coaching field and also his background in psychology. Let's start by talking about the Klant's money script. So Klant's Is a psychologist that also works with financial clients. And he identified, he and his group identified four distinct money belief patterns. And these include money avoidance, money status, money worship, and money vigilance. Three of these money scripts are correlated with worse financial outcomes. And I'm going to outline these scripts in detail here so we can see which ones are correlated with worse money outcomes. Let's start by talking about money avoidance. And the underlying message here with this money script is that money is inherently bad. You can also with this money script think I don't deserve money. And it doesn't mean that everyone that has this money script grew up the same way, but this may be common to see if maybe you grew up in a lower socioeconomic class, think maybe you don't deserve money. And or because of associations with money feeling bad, the thought that money is bad or people that have money are bad. So you're you're essentially avoiding money or pushing it away. This money script is associated with lower incomes, lower net worth, and higher revolving credit card debt. So it doesn't mean it's causation necessarily. But if your inherent money script or belief is that money is bad or it's only for bad people and/or I don't deserve it, you may be working subconsciously to undermine your financial success while exhibiting denial about problems. So if you're thinking money is bad, you're not going out and seeking alternate forms of income, asking for that raise, trying to I don't want to say accumulate money, but you're not trying to increase your income andor your net worth as bills stack up. You may need to take on greater greater credit card debt, and you may not open the bills that are coming in because you're in denial. So that would be money avoidance. Money status, on the other hand, is thinking that self-worth is directly tied to money and net worth. And it previously in the show, we've talked about knowing your numbers and I've included net worth as a goal to increase your net worth for your financial health. And that I'm going to make an analogy to fitness here. That would be analogous to having a goal of I want to be able to run a 5K, let's say. I think those are reasonable goals, but if you then start to associate your self-worth with, how fast you can run that 5k, or look at how fast you run versus someone else and think you're better than them. I think that's where we're getting to here with this money status. If you're thinking that your net worth really determines your self-worth and you look at others and compare yourself in terms of am I better than someone because of my net worth? Social comparison is normal. There's no way around it. We're human. But this money script of money status is really taking that net worth, your income, and saying, this is what makes me worthwhile. This money script is correlated with lower income and lower net worth. Because from a behavior perspective, this money script is linked to increased spending because you're trying to maintain an image and or project wealth. You may also see this in cases where maybe you've gone through or people have gone through a period of self-deprivation. This is pretty common in physicians where the income was low for a while during med school and residency. Then all of a sudden the income takes off, and there's an element of keeping up with the Joneses, but also that very common phrase, well, I deserve this. So there's a lot of spending to project an image, but also a lot of spending because, hey, I've made it. I'm worth it. I'm gonna spend this money. So money status, somewhat paradoxically, is actually correlated with lower income and lower net worth. Money worship. This next script is that money will solve problems and bring happiness. As I think about this script, it's easy to see that maybe this is someone who grew up in a lower socioeconomic status or lower socioeconomic class. And if you didn't have ⁓ a lot of money growing up, you might think, well, once I make X amount, I'm gonna be happy. Or once I have X amount in the bank, then all my problems will be solved. So money worship is just thinking that money is the solution to all the problems. This money script is associated with lower income, lower net worth, and higher credit card debt. And from a behavior perspective, this is because you're going to use a credit card more. There's going to be increased credit card usage because you're thinking happiness is just a windfall or a higher salary away. So somewhat associated with this money worship is also a little bit of maybe unrealistic thinking that there's just one big thing coming up that's going to save you. And often that thought is not. necessarily linked with the behaviors needed to make something consistent happen. It's more of a lottery ticket type of mentality. The final money script that Klantz and his group found was money vigilance. And the script here is money should be guarded and I should be frugal. This money script is correlated with having robust emergency and savings plans. However, if taken too far, this money script can result in financial anxiety And difficulty enjoying rewards of hard work. So this one is actually associated with some financial wellness. I would just encourage you to think about going too far in this area. If you have a money vigilance script, you may have what would be considered adequate savings, you've got a robust emergency fund, you've got your investments going, and you're still thinking it's never enough, or how am I ever able going to spend this? Maybe you're not able to spend it all, which some people might say, well, that's a great problem to have, but the money vigilance is good in some ways, taken too far, can be problematic. So to recap, we've got money avoidance, money status, money worship. And those three are associated with worse financial outcomes. And then money vigilance, which is actually associated with having good emergency funds and savings plans. The Klotz MoneyScript inventory is well cited in the literature. However, it warrants mentioned that the findings are based upon a population that was primarily non-Hispanic white. So 82% of people in the development of the initial survey, 82% of survey respondents were non-Hispanic white, and 65% of respondents were female. So as we're thinking about how well do these money scripts apply to the general population, just keep that in mind that this may not have been a representative sample of the US population. Now, if you're using the money scripts for your own benefit or to think about Do any of these scripts apply to me? I think that's completely fine. The reason I bring this up as a caveat is if you're maybe a financial coach, financial professional, and you're trying to apply the findings of the money script inventory to the general population, keep that caveat in mind in terms of representation of that sample. Rider et al. in 2025 took a look at the money script inventory, the revised version. They explored factorial validity, internal consistency, and measurement variance, and really just wanted to apply it to a more diverse population. Now their population that they examine this on is also not representative of the US. They went a little bit in the other direction, which is reasonable. They're saying, hey, does this apply to a diverse population? But their findings are probably also not. representative of the population at large. So in the Ryder et al. study, they looked at a population that was 62% female, 23% non-Hispanic white, and they had over 2,000 respondents. And what they found was good internal consistency, but validity and measurement invariants not supported among populations that were more diverse than the population used during the development of the Klotz MoneyScript inventory revised. That's a long-winded way of saying money scripts, likely very helpful. Be cautious if applying it to the population at large. Probably still some more work to be done there. But I do think using the money scripts can be helpful on an individual basis. I think that exploration of where your thoughts and beliefs came from and really unpacking whether your thoughts and beliefs are in line with your financial goals and your financial numbers. Let's talk then about Ramit Seti's. Four money types, and these are based upon his observations and background and training in psychology. He did acknowledge in a LinkedIn post that the money types may seem reductive and people are a blend of types. And he didn't make that post to dismiss the types. He's saying these types are a starting point in terms of looking at your money psychology. And don't think that you're only one type and that there's only these four types, but these are really the main Kinds of money types that he's encountered throughout his work with financial coaching. Let's start out then with the money type of avoider. This person will dodge conversations, avoids looking at or addressing bills, also plays innocent, like, ⁓ I don't know what's happening. I'm not, I'm just not good with money, really dodging any consideration of money. Also frames this avoidance as a virtue. Saying something like, money just isn't important to me, putting out the subconscious or the affect that money is kind of beneath worrying about. So this is pretty similar to Klantz's money script of avoider. We see a lot of similarities. The avoider doesn't look at andor understand the numbers. The avoider's not going to work in a consistent fashion to increase income and/or net worth. There's going to be consistent money struggles and money anxiety. With the avoider money type. By contrast, the optimizer will have spreadsheets, look at credit card optimization, running multiple analyses, thinking, well, if this, then this, or how can I do this a little bit better? Common phrases of the optimizer would be I'm accounting for all the variables, or when talking to a partner, maybe it's here's how we can optimize this, or if we do this, then we can see this happen. From a numbers perspective. The optimizer's probably in a good spot in terms of increasing income, increasing net worth, but there's an overemphasis on the numbers and there's the risk of seeing money as an end goal and not a tool to live life. So as we're buried in our spreadsheets, if we're optimizers, we may be missing out on Connecting with others in relationships and really using money for its purpose as a tool and not as something that we're just trying to accumulate a lot of just for the sake of win seemingly winning a game. The money type of worrier is someone that no matter what the numbers say, is constantly anxious and worried. For this person, there's no sleep well at night number. This person may frequently check accounts out of worry. More commonly playing out worst case scenarios, regardless of the numbers. This person may be ruminating and thinking, what if we lose our jobs? What if the stock market crashes? What if the cars break down? The worrier often does know the numbers, but there's never enough. And so this person doesn't enjoy what money can provide. And in many ways, this person may be operating somewhat similar to an optimizer where the worrier is trying to stockpile as much money as possible. But there's really no link to reality here in terms of the warrior could have a robust emergency savings, good investments, and there's arbitrary numbers in terms of, well, I'll feel safe when I hit this number and the goalposts constantly move. The warrior is really not going to have a healthy relationship with money. And no amount of feeding that hunger of trying to get more money to feel safe is ever going to result in that. feeling of safety. And this is where I want to make that mention that how people feel about money, and this is common across all the money scripts, how you feel about money is really not correlated to the actual numbers. So if nothing else, as you go through thinking about these money scripts and these money types, I'd really encourage you to think about how does what I feel correlate to what my actual numbers say. And is there a story going on here That doesn't really match up with reality. And once you kind of deconstruct that, you will make tremendous progress in your financial wellness journey. Then finally, the dreamer. This person is full of get rich quick schemes, feels like they're one windfall away from making it. So they may carry large credit card balances because they're thinking, well, as soon as this winning lottery ticket hits, or as soon as I close this big sale, or as soon as I switch jobs. And get this new job, everything will be fine. They also may exhibit secret spending and borrowing from family and friends. Common phrases of the dreamer, it'll be fine, things will work out. And they'll say things will work out without having a true handle on the numbers. So they could be sitting on, let's say, $50,000 of credit card debt and thinking about buying a house and just saying, it'll be fine, I'll make it work, I'll pick up extra shifts, or once I get this new job, it'll work. The dreamer doesn't respect money. They may know the numbers, but don't really perceive the numbers as real. And if you're in a relationship and maybe you're the one looking at the numbers, or maybe you're a warrior and the dreamer will tell you, hey, it's fine. Everything's gonna be okay. And the dreamer's approach is not really linked to reality, not really looking at the numbers, just pushing things away and saying, ⁓ it'll happen once we hit these numbers. So probably a big Issue with the dreamer is not the optimism. I'm a fan of optimism, but I'm a fan of cognitive optimism, optimism based in reality. The dreamer could improve by looking at actual tangible steps and working with the numbers to make things better, not just thinking, ⁓ it's going to be fine without that being linked to reality. And here I want to reiterate that according to the money scripts and money psychology. How you feel about money is really uncorrelated to your actual numbers. So we can be a dreamer saying everything is fine while it's not, or we can be a worrier lying awake at night, anxious about things, while mathematically running everything through 800 Monte Carlo analyses. We're fine, we've hit our magic number, we're good. So really think about how well. your feelings match up with your numbers. So here I would highly encourage you to know your numbers. And we've talked about knowing money coming in, going out, knowing your net worth, knowing your targets, know those numbers and then deconstruct and think through your money scripts and psychology and how your scripts and your approach to money is matching up with your actual numbers. So food for thought and looking ahead, knowing your numbers, money in, expenses, net worth. is foundational, but that's only part of your money journey. What's really going to drive your money journey is going to be your money psychology and those money scripts. Those scripts and stories we tell ourselves about money drive many of our behaviors. And unpacking these goes a long way towards rehabbing our finances. High achieving analytical people who earn a high income Don't make rational financial decisions. And that's due to these money scripts. So these scripts and behaviors are really unavoidable, even if you have expertise in one area of life, doesn't necessarily carry over to finances. And these money scripts will lay out some hidden behavior traps that you'll keep falling into until you start to see them and work through them. Looking ahead to next episode, we're going to talk a little bit more directly about. caregiving and finances. So we're continuing with the psychological aspect of finances, including looking at caregiving through a more professional lens, such as jobs of healthcare and education, and a personal lens. So caregiving in terms of family, particularly those who may be in a sandwich generation where there's caregiving responsibilities not only to children, but maybe to aging parents as well. Thanks again for trusting me with your time and attention. I look forward to connecting with you in the next episode. Until then, I encourage you to explore these money scripts and really think about to what extent some hidden thoughts and beliefs about money may be impacting your approach towards your financial wellness.