Ted & Brad featured in Investment Advisor magazine

April 1, 2007

Child is father to the man: Few messages are as enduring as the ones a son learns from his dad

by Olivia Mellan

Changing Destructive Money Behaviors: It is Not About the Money

From Brad

Let's face it, we all know the basics about what we need to do with money- save more, spend less than we make, stick to a budget, make a will, etc. However, more of this type of nuts-and-bolts information about money is not going to help us until we are ready to use it.

So what keeps us from doing what we KNOW we need to do around money?

A recent survey by the American Psychological Association showed that 73% of Americans identify money as the #1 stressor in their lives, above issues like children, work and health. Statistics reveal that the average family carrying a credit card balance owes more than $9,000. Also, did you know that last year more children watched their parents go through bankruptcy than go through a divorce! And this from one of the wealthiest nations in the world!

Many of us erroneously believe that the answer to our financial woes is to have more money. But research is very clear that there is no significant correlation between money and happiness once a household's income is above $50,000 (enough to care for basic needs), and as America has gotten wealthier, we have also seen corresponding increases in the prevalence of depression and despair.

Our problems with money are NOT ABOUT THE MONEY, and that is why more information about money won’t help!

Our problems ARE about our RELATIONSHIPS WITH MONEY.

Until we understand this and begin to explore our personal and generational history around money; examine, challenge and change our maladaptive money scripts, and heal our related emotional wounds, we will continue to operate in an unconscious and self-defeating manner around money.

Ebenezer Scrooge, from Charles Dickens' “A Christmas Carol”, is the ultimate model of how this type of transformation can take place (www.wisdomofscrooge.com). Scrooge experienced a “wake up” call from the Ghost of Jacob Marley, showing him the agony that awaits him if he doesn’t change his ways. The Ghost of Christmas Past took him on a journey to visit his painful childhood, during which he expressed repressed feelings and gained new insights related to how his past shaped his money beliefs and behaviors. This freed him up to see the world with clarity, guided by the Ghost of Christmas Present. The Ghost of Christmas Future showed him what would happen if he didn’t externalize with real life action his newly experienced internal transformation!

If one of the most despised characters in English literature can change, so can we all! But we have to be willing to wake-up and take the journey!

My Big Mistake

From Brad

The Big Mistake = moving a significant portion of one’s wealth into or out of the market at one time in an attempt to capitalize on the next big market trend.

I have to admit it. I made the Big Mistake. It was at the tale end of the tech bubble in 2000. I had just graduated from graduate school and for the first time in my life, I had some money I could begin investing. I was watching all my friends with no background in finance or investing make big money trading stocks. In some cases, they didn’t even know what a ticker symbol stood for, what the company did, or anything about the company’s financials, but they were still making money! Sitting on the sidelines, I felt a combination of envy, anxiety and urgency. The train was moving and I was watching it go by! I was missing out!

In a desperate moment I sold my truck and bought some technology stocks! I was making money too! I was on the train and it was burning up the tracks. It was pure exhilaration! Well, at least for a few months or so, then the train hopped the tracks and wrecked. When it was all said and done, I lost half of the money I had invested. I wasn’t alone.

As I wrote about in our book, The Financial Wisdom of Ebenezer Scrooge, this incident, although painful, was my Jacob Marley. It opened my eyes to some of my dysfunctional money scripts and spurred my desire to learn and growth. This lesson has come in handy for me as I have watched many people around me, with no background in real estate make big money “flipping” property. As their equity has increased, I have watched people take out 2nd mortgages on their homes and invest hundreds of thousands of dollars in the stock market, and in some cases, spend it on cars, clothes, fancy food and vacations. I have also noticed many of the real estate pundits singing the same songs I heard experts singing during the tech rally in the late 1990’s: “There is no bubble.” “This is a whole new market.” “Historical data does not apply today.”

While watching the real estate market explode around me, at times I have felt that familiar combination of feelings- envy, anxiety and urgency. However, I am happy to say I have not moved half of my fortune into this hot real estate market. My work with my money scripts has allowed me to stay true to my disciplined asset allocation and investment strategy. 

I have a hunch I will be glad I did!

Let's Talk Money Scripts

When we started this research and course of study years ago, we began to notice that many people, regardless of how much money they had or made, shared many of the same concerns, worries, fears and destructive behavior around money. Perhaps you know such people. Perhaps you are one. We certainly were.

Think about it. We all know someone who seems to very effectively get by, or even thrive, on what is probably a lot less money than you make. The family is happy, the living is comfortable, and everyone in that family is well-fed, clothed, and educated. And there is a palpable lack of stress and anxiety over what things cost and how important money seems. Well, you make more than they do. So, why are you envious?

Hopefully, your feelings are in part what brought you here. We have seen multi-millionaires spend money at the same relative rate as someone making $50,000 a year, who are convinced they do not have enough. For many, it seems like there is never enough. And we know it's not the amount -- it's something else. Something deeper. It's their Money Scripts.

In this section we are going to explore and interact with you aroundMoney Scripts. Rather than offhanded diagnoses or "prescriptions," we hope to communicate that you are not alone, the situation is not hopeless, and there is help. Join us here. What are YOUR Money Scripts?

Below is our "Top 10" list of money scripts that mess-up people's financial lives:

The Top 10 Money Scripts that Mess-Up People’s Financial Lives

© Klontz/Kahler 2006  www.wisdomofscrooge.com

We believe that all financial behaviors, even the most self-defeating, self-destructive, illogical, “I should know better”, craziest ones make perfect sense when we discover the underlying “Money Script(s)” that drives them.  These Money Scripts are at the core of all of our financial behaviors, both good and not so good.  They are the internalized and typically unconscious beliefs we have about what money is, what it is not, what it can or cannot do, the role we play in it, and the role it plays in our lives.  Money Scripts are formed in childhood and are reinforced by our experiences throughout our lives, often appearing as self-fulfilling prophecies.  Money Scripts will always influence our financial beliefs and behaviors and thus every aspect of our lives until we die.  Then, amazingly, they will continue to affect those who knew us who are left behind.  It is essential to identify and modify these erroneous Money Scripts if we are to reach our financial potential or change our self-defeating and self-destructive financial behaviors.

Every Money Script has an element of truth in it.  Not the whole truth, mind you, but an element of truth.  For example while the script that “flying is dangerous” is partially true, it is not the whole truth.  Other parts of the truth are missing, such as ”flying is safer than being a pedestrian in a major city”, ”flying is safer than riding a bicycle”, ”flying is safer than traveling by car”, etc.  Money Scripts work the same way.  While they represent a part of the truth about money, they typically do not represent the whole picture.  Operating as if they are the complete and absolute truth, without regard to context, can be disastrous.

What follows are 10 of the most common Money Scripts that show up in our work with clients.  If left unexamined and unchanged, these Money Scripts will contribute to some of the most common self-destructive and limiting financial behaviors that people experience.

1. More Money will Make Things Better

This is perhaps one of the most common Money Scripts afflicting Americans.  The problem is, that when the arbitrary “more money” target is met, the peace, security, happiness, or whatever else we believe “more money’ will give us” never quite seems to show up.  So we look for more.  Like the carrot just out of the reach of the donkey, though we are running like crazy, we never quite get there.  Entire lives, even generations of lives, can be dedicated to the pursuit of the fulfillment of this Money Script.  Recent research suggests what so many people already intuitively know.  There is no correlation between money and happiness beyond a household income of $50,000 per year, which happens to approximate the national average annual income in the U.S. has exploded!  However, there have been no significant changes in our rates of depression or misery. Folks, more money in and of itself will not make things better -- unless you are living in poverty and cannot take care of your essential needs. (e.g. food, shelter, clothing, etc.) -- happiness if not about the amount of money you have. There is a saying: "Wherever you go, there you are."  This certainly applies to your financial net worth. If you are miserable at your current income level, more likely than not, you will be miserable with more money.

2. Money is Bad

As with all money scripts, there are many variations to the “Money is Bad” money script.  They include such beliefs as: “The rich are shallow/greedy/insensitive/unhappy; “The rich got that way by taking advantage of others”, “When money walks in the front door, love walks out the back door” and so on..  When we operate from this unconscious money script, we are very likely to unwittingly sabotage any potential financial progress.  If having money, or being rich, makes us a bad person, or will make us an unhappy person, our cause our loved ones to become distant, why would we act to accumulate any?   While the truth is that some wealthy people took advantage of others to become wealthy, others were just at the right place at the right time. While still others were willing to follow a dream, a passion, or a vision and it came true for them.  There are people who are wealthy and unhappy.  There are people who are wealthy and very happy.  There are people who are wealthy and have extraordinarily intimate loving relationships. The point is money is neither good nor bad in and of itself; it is our own relationship to it that will determine whether it turns out to be a good thing or a bad thing.   

3. I Don’t Deserve Money

We see this money script in many people who have money which they did not earn, or do not fully accept as their own.  We see this also in people who believe that they should not enjoy what money can give them, because others are not so fortunate.  Often the “I don’t deserve money” money script is associated with lower self-esteem, and keeps people emotionally and spiritually poor, despite any wealth they may have.   This is also a predominant script for those who work in the helping professions.  Those of us with this “Money Script” tend to be underemployed and/or make ill-advised financial decisions in an unconscious attempt to “get rid of what we don’t deserve”.   It is a well established fact that individuals who experience ”sudden money” events (e.g. lottery winners, life insurance settlements, a sale of property, sudden fame and fortune) are often back to their original level of financial existence within several years.

4. I Deserve to Spend Money

Like all money scripts, there is always at least grain of truth in this one.  In fact, we hope you believe that you deserve to spend money on yourself and those close to you.  But, acting on the belief that you deserve something extravagant, or that you need to buy a gift to others, at the expense of saving for your future, can undermine your financial health.  A related Money Script is one that says “I might as well enjoy the money while I have it, if I don’t someone will come along and take it from me”.

5. There Will Never Be Enough Money

Ebenezer Scrooge, when we first meet him in Dickens’s “The Christmas Carol,” is a classic example of where this money script can take someone.  When we believe there will never be enough money, we set ourselves up to live a life of deprivation, experience constant anxiety, insecurity and fear.  Workaholics, who sacrifice marriages, children and health, often operate from this money script.  Those who grew-up in poverty, or whose family experienced poverty in previous generations, can internalize this money script.  While this belief might have served us by giving us drive, ambition and a solid work-ethic, it is not the whole truth, and if left unexamined, will spoil any benefits we could receive from our hard work.

6. There Will Always Be Enough Money

This money script drives the behaviors of many who grew-up in wealthy families, where wants, desires and activities were not restricted by a lack of money.  This script could also have its origin in families that didn’t have much.  In those families it may have seemed that things just showed up when they needed them.  Still others may internalize this Money Script when they believe that others will talk care of them.  With this Money Script, an unconscious trust that the universe will always take care of us regardless of our actions or inactions is internalized.  The problem arises when there is some kind of change in our universe related to our financial status.  If we are not conscious of this Money Script, a change in our financial landscape, without changes in our beliefs and behaviors, can lead to financial disaster.  

7. Money Is Unimportant

This money script can arise from an interpretation of certain social or religious tenets or from the Money Script that wealth does not bring happiness, love, and belonging.  However, these Money Scripts allow us to rationalize poor financial planning, lack of concern about financial matters, lack of ambition and sometimes even laziness.  The fact is that money does have importance.  It is a valuable resource that is as important as other resources in our lives- such as time, careers, relationships and health.

8. Money Will Give Me Meaning

There is a saying: “you can never get enough of what you don’t need to make you happy.”  Money cannot give what you what it does not possess- meaning in life, happiness, fulfillment, peace, good intimate relationships, a sense of belonging, etc.   It is true that money may help these things happen but money cannot make them happen.  Money is just a tool, like a hammer is to a carpenter.  A hammer has the potential to create a meaningful structure, but it takes a skilled carpenter to put it to good, productive use.  When used correctly, a hammer can build a home.  When used correctly, money can build security, give you financial peace, allow you to help others, and support your life aspirations.  But the hammer cannot do so without our being willing to learn and then use the skills necessary to allow it to be productive.

9. Its Not Nice (or Necessary) To Talk About Money

This is a very common money script in our culture.  While there are endless hours of TV and radio shows about money and countless books and magazines about money, in fact, talking about money and our relationship to it is one of our biggest taboos. We find it is easier for clients to talk about their sexual secrets than their money secrets!  There is a saying among therapists that “you are as sick as your secrets.”  If we apply this to money, then we must live in a terribly sick society.  The subject of money- what we believe about it, how we relate to it, how we behave with it, the secrets we keep about our own behaviors with it- is in many ways, the biggest set of secrets in American life.  The price we pay is that by not talking about money we restrict ourselves from learning, growing, and sharing our knowledge with our children. It is important to realize that our attitudes, beliefs and behaviors around money prove that, in the case of our children, the “Trickle- down Economic Theory” works.  Our children’s ideas, attitudes, beliefs, current and future behaviors and experiences with money are but mirrors of what they have observed from a distance and been taught by example.  We have hundreds of summer camps in this country for children for developing their ballet, baseball, basketball, and music skills, knowing all the while that there is little chance that our sons and daughters will be able to make a living doing those things.  Yet, there is only one summer camp we are aware of that teaches children the essentials about money, what it does, what it can do, what it can’t do, and how it all works (www.themoneycamp.com).  What is the message we are sending our children?  

10. If You Are Good, The Universe Will Supply All your Needs

Dr. Ted Klontz, a founder of Klontz Kahler, identifies this as one of his own money scripts.  He calls it his “twisted law of Karma”.  He lived many years of his life believing that if he did the right things, for all the right reasons, then he didn’t have to worry about anything, including his retirement or his future because the “good karma” would guarantee that good things would happen.  After all, doesn’t the Bible say not to worry, for if God cares for the sparrow, why should we worry about our needs?  Again, while there is great spiritual and emotional value in doing good things for others and not worrying, it does not, by itself, guarantee a safe and secure future.  Regardless of how “good” you are, your financial life will not take care of itself without effort on your part.  We are surrounded by many good people who dedicated their lives to doing the right thing for others at the right time and for the right reasons.  Even so, because of a lack of planning for their future, they find themselves struggling to heat their homes, feed themselves, and can’t afford to get the medical help and care they need and deserve.  At first glance it would seem that “the universe” has not magically supplied all of their needs.  Actually, “the universe” provides us opportunities, on a daily basis throughout our lives to help shape our own future.  Some of these opportunities include things like budgeting and saving.  If we fail to take advantage of these opportunities, it may seem as if the universe has failed us.  Actually we have failed ourselves.