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To Improve Your Finances, Learn Your ‘Money Script,' Psychologist Says

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  • Most people's financial behavior can be explained by the "money script" they learned as children and are probably still following, psychologist says.
  • The four money scripts are: money avoidance, money worship, money status and money vigilance.

Many people may have heard about the various so-called attachment styles psychologists and sociologists say we display in our closest relationships, such as "anxious attachment" or "avoidant attachment." It turns out we also tend to follow certain patterns when it comes to our relationship with money, said Brad Klontz, a Boulder, Colorado-based psychologist and certified financial planner.

In fact, most of our financial behaviors will "make perfect sense when we understand the beliefs that are underneath them," said Klontz, managing principal of YMW Advisors and a member of CNBC's Financial Advisor Council. "We call that, in our research, 'money scripts.'"

Here's what Klontz says people should know.

Money scripts, from avoidance to vigilance

In Klontz's research, he's found that there are generally four different money scripts: "money avoidance," "money worship," "money status" and "money vigilance."

Money avoiders can have negative ideas about wealth and understand having less as morally sound, he said. As a result, they may unconsciously not allow themselves to do well or even save up. "We have a tendency to self-destruct when we have that belief," Klontz said.

On the other end of the spectrum, money worshippers believe wealth is the key to solving all their problems and finding happiness.

"This is where we put money on a pedestal," Klontz said. Money worshippers tend to spend too much, he added, overestimating the sense of satisfaction and meaning they'll get from buying things.

Money status seekers, Klontz said, often conflate their net worth with their self-worth.

Studies find that those who grew up in households with more financial struggles tend to be more vulnerable to later using money to seek status, he said: "We want to display status items to show people we have worth, so we're prone to overspend and have higher credit card debt."

People who fall into the fourth category, money vigilance, usually tend to be wealthy but still have higher-than-average financial anxiety.

"You could be so anxious around money, you hoard it and don't enjoy life," Klontz said.

Scripts often started in childhood

If you find yourself unhappy with your financial life, Klontz recommends reflecting on your past and the ideas you might have picked up in childhood. They may now be working against you.

"Take some time, interview your family members, be an anthropologist into your own family," he said. "Try to figure out why your family has the beliefs around money that they have."

For example, if your parents grew up poor, or your grandparents did, there might be a fear that there will never be enough money. Then ask yourself, is that belief still well-founded?

"For many of us, just being aware that we're living out a belief that our great grandparents had can really help us transform our relationship with money," he said.

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