How Your Money Memories Can Impact Your Retirement Decisions


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The biggest financial threat to your wealth is not the market; it is your brain.

Human behavior surrounding money varies greatly and can be fascinating to study. Allison Berger has been studying financial behavior in more detail over the past year in the Certified Financial Transitionist coursework.

On this episode of Financial Symmetry, we delve deeper into the common money scripts that drive financial behavior. Our conversation is inspired from the book Wired for Wealth by Brad Klontz, Ted Klontz, and Rick Kahler.

When you listen you’ll learn what a money script is and how it can impact your financial wellbeing.  You will also learn 5 steps you can take to help you improve your money mindset.

What is a money script?

Markets go up and down but one fact holds true: the money scripts you play in your head will determine your financial well-being. The things we do surrounding money are defined by the money scripts we learned in childhood.

Money scripts come from the explicit or implicit messages we received about money as children as we were trying to make sense of the world. Usually, these ideas are partial truths based on our parents’ teachings and actions around money. We have internalized these money scripts and unconsciously follow them as adults as the logical response to what we saw as children.

Here are common examples of money scripts: money doesn’t grow on trees, money can’t buy happiness, rich people are shallow, money is the root of all evil.

Money scripts can keep you poor

Your money scripts can become roadblocks in your thinking about money, so it is important to think about how they may be affecting your life. At their worst, money scripts can contribute to financial disorders like financial infidelity, compulsive buying, pathological gambling, compulsive hoarding, financial dependence, and financial enabling.

These are examples of money scripts that will keep you poor: your self-worth equals your net worth, it’s ok to keep financial secrets from your partner, if you are good your financial needs will be taken care of.

These negative money scripts can be linked with overspending, compulsive shopping, or workaholism. As people edge closer to retirement, the more they tend to stick with the money scripts that have led them through life. However, retirees may need to embrace new ideas to be able to reach their financial goals.

Money scripts may keep you poor in spirit

Money should be saved, not spent. You can never have enough financial security. Money that I did not earn is not really mine to spend. These are a few examples of money scripts that can cause people to underspend. Scripts like these can lead to hoarding wealth and workaholism.

A financial plan can help you break free from your money scripts. Without a financial plan in place, you don’t know how much you can safely spend. A financial plan will ensure that you look at the details and the reality of your spending situation. You want to make the most of your money and your life especially as you transition into retirement.

5 Steps to change your money mindset

You can change your mindset surrounding money and the book recommends 5 steps to overcome your limiting financial beliefs.

  1. Face your fear. Accept that you have beliefs about money that are not currently serving you. Identify your present reality to see how your money scripts have contributed to your financial situation.
  2. Visit your past. Ask yourself these questions to help you dig a bit deeper into your money scripts to discover where they stem from. What was your first money memory? What is a positive money memory? What money experience was painful to you?
  3. Understand your present. What is your current financial situation? What is your current reality? Explore your financial situation deeply to understand it fully.
  4. Envision your future. What does your future hold? What would you want your life to look like if you had 30 days to live? What are your goals?
  5. Transform your life. Redefine your priorities and your core values. In light of these changes, what are your new financial goals? What lifestyle or behavioral changes are necessary to take action?

These are not quick, easy steps to take. They require a bit of soul searching to get to the heart of your issues with money. However, if you find yourself with a money mindset that is not serving your goals you’ll want to do what you can to solve your problems.

Related: The Top 10 Economic Stories of 2021