You don’t need to be a math whiz or expert in personal finance to improve your financial situation, according to Brad Klontz, PsyD, a financial psychologist and director of research at H&R Block Dollars & Sense. And you don’t need to make dramatic changes, either.
“[T]he most critical aspect of improving one’s financial health is to uncover, challenge, and change self-defeating money scripts.”
Money scripts are often unconscious beliefs about money, which we learned in childhood.
In other words, each of us has a unique relationship with money, and understanding that relationship is key to improving it.
“Understanding our financial life is part of our self-care,” said Joe Lowrance, PsyD, a clinical psychologist who helps clients struggling with money issues. That’s because the choices we make with our money affects other areas of our lives, including our “physical, mental and relational health.”
Below, Lowrance and Klontz revealed the small steps you can take in greatly improving your financial situation.
1. Figure out your financial history.
In his research at Kansas State University, Klontz found that money scripts predict everything from how we use money today to our income and net worth.
For instance, the following money scripts have been linked to lower levels of income and net worth: “More money will make you happier,” “Rich people are greedy,” and “If something is not considered the ‘best’ it is not worth buying.”
Since our beliefs around money are shaped in childhood, digging into your history can be illuminating. Ask yourself: What did I learn from my mom about money? What did I learn from my dad? What about other family members? How has the culture affected my beliefs?
2. Think about your experiences.
Another way to improve your financial situation is to sit down and think through your experiences around money. Ask yourself these questions, said Klontz, also author of four books on financial psychology, including Mind over Money: Overcoming the Money Disorders That Threaten Our Financial Health.
- “What is your most painful money experience?
- What is your most joyful?
- What is your biggest financial fear?
- What beliefs about money emerged from these experiences?
- How have these money scripts helped you?
- How have they hurt you or limited your potential?”
3. Pay attention to the everyday.
Focus on the thoughts and feelings that arise as you spend, save, earn, borrow, give and invest your money on a daily basis, Lowrance said. This gives you a clearer picture of “how you relate to money and what serves your best interests.”
Again, having a deeper understanding of your beliefs, attitudes and feelings around money helps you make insightful decisions that improve your life.
4. Revise your money scripts.
After you identify your money scripts, it’s important to revise them. Consider “What is a more helpful money script?” Klontz said. Then consider the individuals “you know that operate from this more helpful money script.” In other words, identify several people who are closer to being where you’d like to be.
Then ask those individuals to chat with you. “Interview them about their relationship with money and use whatever wisdom you collect to make changes in your financial approach.”
5. Work with a professional.
Sometimes you can have great insight into what you’re doing and why, but still have a tough time changing it. If that describes your situation, “seek professional help from a financial planner or a financial therapist,” Klontz said. Learn more from the Financial Therapy Association.
Each of us has a relationship with money that influences how we use it. Uncover your beliefs, attitudes and daily thoughts about money. Then revise the money scripts that sabotage your relationship. As Lowrance said, “Financial wellness is a component of wellness itself.” Improving your relationship with money will no doubt positively affect other parts of your life.