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Is Your Subconscious a Bad Financial Advisor?

Fear, shame or parsimony could be sabotaging your financial security and happiness, without you realizing it

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Illustrations by Andrew J. Catanzariti

Afraid to make money? Are you recklessly sabotaging your financial security? Can’t bear to spend a penny, even though you have plenty of wealth? If any of this sounds familiar, Brad Klontz can help.

Just as people develop personality traits from their life experiences, they also “learn” to relate to money from their parents and others around them or from early financial stresses, says Klontz, a Kauai psychologist and a research professor at Kansas State University.

To help understand this problem, Klontz, his father and colleagues developed the Klontz Money Script Inventory, which defines four main attitudes toward money that develop unconsciously through childhood and young adulthood, and may hinder future financial success. Financial advisers are using the inventory to help their clients understand subconscious choices that guide their investment decisions.

The four main scripts are:

  1. Money Avoidance
    Money is bad or not deserved.
  2. Money Worship
    More money will always make things better.
  3. Money Status
    Money equates to self-worth and net-worth.
  4. Money Vigilance
    Money is shameful and requires secrecy.

MONEY AVOIDANCE: People in this category feel that money is bad or that they don't deserve it. Illustrations by Andrew J. Catanzariti

The inventory uses more than 70 questions to separate people into the categories of behavior. While people generally fit mostly into one category, they can also exhibit characteristics from several categories or even all four, says Klontz.

“Money is the biggest stressor in the lives of Americans, above work, children, physical health, everything,” he says. “People have financial flashpoint experiences early in life that lead to money scripts, which are unconscious beliefs around money and drive all of their financial behaviors.”

Loren Kayfetz, a Certified Financial Planner on Kauai, gives an example, a wealthy woman in her early 50s with an aversion to comfort and luxury. “Her new financial situation was running afoul of her upbringing and imprints about money being dirty, something she should deny,” Kayfetz says.

“It was about growing up in a broken home, living on the edge with relatives … and having the feeling that to survive you have to minimize your expectations and not enjoy yourself. Though that happened 35 years ago, it still made the whole change in her life uncomfortable. She was getting into arguments with her significant other about expenditures, such as vacations and cars, because she couldn’t accept having money.”

Klontz helped her understand why she felt the way she did, to make her relationship with money “more conscious.” Though every case is unique, stress about money is very common, Klontz says.

“Even before the financial crisis, three out of four Americans said money was a significant stressor in their lives – and this was when (the economy) was doing great,” Klontz says. But, the subject of investing psychology had been almost ignored by psychologists, he says. That’s why he partnered with his father to create a treatment program for people with money issues and, for his work, he was awarded the 2009 Innovative Practice Presidential Citation from the American Psychological Association.

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