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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Driscoll has discovered that virtually everyone has a money script.
“Overspending is a huge problem,” she notes. “Overspending or spending inappropriately. It’s making decisions to spend on the wrong thing and then having to forego something you need. For instance, you buy something that’s very, very expensive and the net result is you don’t have enough for food. Or taking your paycheck and spending, spending, spending and saving nothing for retirement.”
Grant K.T. Kubota, a wealth- management and financial adviser at Morgan Stanley Smith Barney, says that understanding a client’s frame of mind and attitudes has been crucial.
“The first step in my consulting process is to develop an understanding of the clients’ values, goals, interests and relationships, in addition to their financial situation,” says Kubota.
He’ll start by finding out about clients’ tax situation, investment allocations, risks and liabilities. “More importantly,” adds Kubota, “I’ll need to develop an emotional understanding of the clients’ unique goals and values, which will include their risk tolerances. In general, the more information that I learn about clients during this first step will be beneficial in designing solutions to meet their financial goals and values.”
MONEY STATUS: People in this category equate money to self-worth and net worth. Illustrations by Andrew J. Catanzariti
Kubota says he often starts with a series of questions, including: “Do you feel anxious when your investments fluctuate month to month?”
To Klontz, a deeper understanding of our personal “script” must start with reflection on what each of us learned or were taught about money.
“Every financial planner should ask questions such as, ‘What did you learn from your mother around money?’ ‘What did you learn from your father?’ ‘What was your most joyful and painful money experience?’ ‘What lessons did you take away with you?’ ‘How is that helping or hurting you now?’ You can help people become conscious of their beliefs and help challenge some of those beliefs that are only partial truths. It’s important to be self-aware. That’s the key.”
People in this category feel that money is bad or that they don’t deserve it, according to the Klontz Money Script Inventory. Money stirs up fear and may even provoke them to sabotage their own financial success. People with this script in their subconscious may avoid spending money even on reasonable purchases, and excessively worry about abusing credit cards or about bank overdrafts. In some cases, they may unconsciously spend money or give it away so they have as little as possible. People in this category generally have low incomes and net worths, and are more likely to be younger and single. However, as they age, their scores on the money-avoidance scale often fall.
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