Money Scripts: The Childhood Lessons Still Guiding Your Financial Decisions

Key Takeaways   

• Money scripts are subconscious beliefs about money formed in childhood that impact financial decisions throughout life.  

• Money scripts typically stem from one of three sources: parental influence, cultural surroundings, or significant life events like job loss or death in the family.  

• Money scripts often cause us to hoard cash, feel guilty about our wealth, and have an excessive fear of spending money, no matter how much we have.  

  
  

One of the first questions we ask new clients when they start working with us is: “Can you tell us about the money messages you received when you were younger?” Clients are often taken aback by this question. But once we explain that it’s important for our planning process to understand their foundational relationship with money, they usually open up.  

Most people have what financial psychologist, Dr. Brad Klontz, calls Money Scripts™ – subconscious beliefs about money often formed in childhood or cultural surroundings - that heavily impact their financial decision-making. For instance, they may be afraid to spend money despite being very well off, or they may avoid making big financial decisions because they fear never having enough money.  

Research shows money scripts tend to come from one of three areas: 

1. Inherited From Parents. Were you going on international vacations as a kid, staying at five-star resorts, and buying new TV’s all the time? Or were your parents more like mine – always trying to fix things rather than replace them when they became worn out or broken? In your household, was there constant pressure to turn off the lights in rooms you weren’t using or never running the heat or air conditioning enough to stay comfortable? Those early influences are common money messages that stay with us for life. 

2. Cultural Influences. Here, your money scripts are influenced by those around you. They can come from your religion, your community, or the schools you attended. When I turned 15, my parents told me, “Dan, if you want to get a car when you turn 17, you'd better start working for it.” I took their advice, took on many odd jobs, and eventually saved enough to buy an old Pontiac Bonneville. It wasn't a cool car by any stretch, and when I went to school, many of my friends who were driving new BMWs, Audis, and Mercedes made fun of me. Suddenly, all the money lessons I inherited from my parents were being challenged by my peers. When I complained about not having a nicer car, my parents said, “Dan, if you want a nicer car, make more money.” That made me angry at the time, but I’m glad they held their ground. Their money message about working for what you want has stayed with me to this day. 

3. Life Events. Money scripts can also be the result of an emotionally charged experience, such as divorce, job loss, death of a loved one, or even a sudden inheritance. Because money scripts are mostly subconscious, they can really impact our decision-making throughout life, even if we know better intellectually. 

We often see this among clients who grew up during the Great Depression. No matter how much money they have, they’re reluctant to spend it because there’s a constant fear of scarcity that was ingrained in them from childhood. We work with a successful business owner from that era. He once told us he wouldn’t retire until he’d saved $4 million for retirement. He kept working at a grueling pace until he eventually sold the business for $8 million. But even with that windfall, he still wouldn’t allow himself to upgrade his plane tickets or pay for contractors to do repairs on his house.   

In those cases, we review the client’s financial plan with them and show them they have more than enough money to spend on things like upgraded plane tickets and household repairs without ever running out of money.  

Another script is feeling guilty about being wealthy, especially if surrounded by people who are less well off. We often see this among socially conscious clients who inherited a large sum of money. By reviewing their plan with them, we show them how they can set up a donor-advised fund or other charitable giving vehicle to support the causes and organizations they believe in – without the fear of running out of money. 

Another deep-seated money script running through people’s brains is that if you don’t control everything, you’re going to lose all your money. And so, you typically end up hoarding cash and micromanaging all your finances and avoiding all risk, including healthy risk. My dad, a child of the Great Depression, suffers from this. He invests all his money in ultra-safe investments such as bonds and cash. With this approach, he won’t “lose” money per se, but he’s often not keeping up with inflation and sometimes feels cash-strapped. Further, his money scripts have caused him to lose out on numerous, relatively safe investment opportunities that would have doubled or tripled in value.  

That’s why we ask new clients how their parents handled spending, saving, and giving. We look for specific money moments in their childhood that may either be helping them or holding them back when it comes to financial decision-making. 

From there, we try to help clients rewrite those money scripts and reassure them that yes, they have a plan and yes, they have enough money. It’s also important for clients to revisit their plan regularly. 

Another thing we ask new clients is what they want to happen to their wealth when they pass. Similarly, many of our clients procrastinate about estate planning because contemplating their own mortality is unpleasant and can stir up a lot of emotional baggage, often going back to childhood. For couples with children, the most common response is: “We want to live comfortably in retirement and then give whatever is left over to the kids. If there’s nothing left, so be it. We sent them to college, we got them set up for life, and they're financially independent at this point.”  However, some couples with children in lower-paid occupations worry they’ll never make enough to own a house or be financially independent. In those cases, parents often want to leave as much as possible to their child so they can keep supporting them. Finally, for couples who don’t have children, they often want to leave all their money to charity when they’re gone – and feel good about their decision. 

Conclusion  

At Novi, we don't just build financial plans; we also help clients make sense of their own financial psychology, so that they can align their financial decisions with their current lifestyle and values, not with how they grew up. If you’d like a deeper discussion about financial psychology or just want to live better with the money you have, reach out any time. I’m happy to discuss. 

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DAN SATZ MS, CFP® is a Partner at Novi Wealth