Most dieters can recite the calorie, carbohydrate and protein
counts for hundreds of foods. And they know how many calories a
half-hour on the treadmill will burn. Never before has there been
such an abundance of knowledge about nutrition and exercise in this
country, and yet, as a nation, we're obese. Because it's
never-ever-just about the food.
How Money on the Mind Changes Our Behavior
It's the same for money problems. For some people, financial
know-how goes only so far. They've got every budget app there is
but can't seem to get control of their spending. Or their financial
adviser drew up an estate plan ages ago-but they fail to execute it
year after year. Or they're so paralyzed by their fear of running
out of money that they're unable to deploy their assets into wise
Such money hang-ups can run the gamut from minor glitches to
full-blown disorders. But they have this in common: You can't cure
them simply by studying up on finance or investments. You have to
address these dysfunctions in the part of the brain that deals with
emotions. For some people, says Rick Kahler, a certified financial
planner in Rapid City, S.D., "the emotional baggage is screaming so
loud that they can't even hear information objectively. Sometimes
financial literacy doesn't work."
The financial-planning community is starting to recognize this
truth. Planners are teaming up with coaches, psychologists and
counselors, or they're adding therapy skills to their own
credentials. A recent survey of financial planners found that
approximately 25% of their time with clients is spent on
nonfinancial issues, such as spirituality, death, family
dysfunction, illness, divorce and depression. A more holistic
practice, say those who offer it, can lead to breakthroughs with
the worst self-saboteurs, or at least to self-aware clients who are
more motivated to follow through on the advice they're given.
Amy Champeau, 60, struggled with money issues for much of her
adult life but didn't know why. Champeau, a psychotherapist in
Racine, Wis., signed up a few years ago for a workshop called
Healing Money Issues because a local financial planner was looking
for a therapist to refer clients to. "I thought it would be a good
career move," says Champeau. "But when I got there I realized I had
all these money issues-I was stressed out all the time." Left
destitute after a divorce several years earlier, Champeau had clung
tightly to her money for some time afterward, trusting it to no
one. She later built a successful practice, only to squander what
she earned. "I swung from being so careful to just going wild." She
amassed some $40,000 in credit card debt.
The workshop taught Champeau to take the emotional side of money
seriously. "It wasn't that I was oblivious or didn't do any work. I
did. I read books about managing money. At one point, I went to
consumer credit counseling. But I didn't connect the emotional
dots." That happened when Champeau, who had been raised in an
affluent community, examined the conflicting messages she'd
received about money as a child. "On the one hand, the message I
got was that I was always going to have plenty. On the other hand,
there was never enough." As she became more aware of her story, she
says, she could see how she had engineered her swing from one money
extreme to the other.
Champeau began seeing Brentwood, Tenn., certified financial
planner Melissa Hammel, who is also licensed as a professional
counselor and mental health service provider. "One of the biggest
things I can offer a client is a safe place to talk about this
stuff-and no judgment," says Hammel. Champeau was able to address
things that she'd been too ashamed to deal with before, and she is
now on track with a retirement plan and the savings to fund it. The
credit card debt will be paid off in two more years.
We're all motivated by money beliefs, many of which we form in
childhood. In the same way that a script informs an actor in a
play, these money scripts inform our financial life. Some scripts
are accurate and functional, says Brad Klontz, a clinical
psychologist, certified financial planner and pioneer in the
emerging field of financial therapy. But many contain only partial
truths or get twisted somehow. For example, "You should work hard
for your money" becomes "Money not earned is not worth having,"
with potentially disastrous results. "I've had clients come in with
a $5 million inheritance, depressed and despondent, says Kahler.
"Left to their own devices, the money would have been gone in five
Just how dangerous a script becomes depends on what it is and
the intensity of emotion surrounding it. "Everyone has money
scripts worth examining," says Klontz, "but not everyone has a
gambling or compulsive-buying disorder." Not all scripts mushroom
into disorder, and disorders may have a mishmash of scripts
underlying them. One person can even harbor conflicting money
scripts-say, "Rich people are pretentious" and "I'll never be happy
until I'm rich." It's a sign of health if you're not rigidly or
emotionally attached to a particular belief but are open to new
information and able to entertain other possibilities.
Money scripts fall into these four categories, says Klontz:
These scripts sound like the following:
Money corrupts people,
It's not okay for me to have a lot of money when others
Money-avoiding behavior can be as simple as letting 401(k)
statements pile up unopened. It can also lead to overspending. Or
you might become an easy touch for kids and others-at its extreme,
a disorder therapists call financial enabling. Money avoiders may
be just as prone to underspending (even on essentials) or excessive
risk aversion that prevents them from earning decent returns on
Money avoidance is common among therapists and others in helping
professions (like Champeau), who often have a hard time setting
reasonable fees and then collecting them. It's also fairly common
among the affluent, who may be more likely to blame money for an
unhappy family life.
These beliefs often boil down to variations of
Money can buy happiness
You can never have enough money.
Such thinking can lead to workaholism or lots of credit card
debt-and possibly to compulsive spending, hoarding or unreasonable
risk-taking. The irony is that research shows there is no
significant correlation between happiness and money once household
income rises above $75,000 a year.
Such scripts equate self-worth to net worth:
Success is measured by the money I earn,
If I live a good life I'll be taken care of financially.
Financial status-seekers pretend to have more money than they have,
are okay with keeping money secrets from a partner, and might be
drawn to high-risk investments with the goal of striking it rich
quick. Extreme status-seekers might be compulsive spenders or
pathological gamblers. Both money-worshiping and money-status
scripts are common among those who are financially dependent on
others-a condition that in itself can lead to resentment, anxiety
(about being cut off) and a stifling of motivation or drive to
Many of these money scripts are helpful, not harmful. Indeed, we
advocate plenty of them at
It's important to save for a rainy day
You should always look for the best deal before buying
something-even if it takes more time.
But remember, when money scripts become too rigid, it's a red flag.
Some supersavers are so focused on accumulating money that they can
never enjoy the fruits of their efforts. Think of someone 65 years
old with $1 million in the bank who can't entertain the thought of
retiring or won't take a vacation.
When misguided money beliefs stem from childhood trauma or are
laden with emotion, the combination is especially toxic. Sheri
Grant, 46, grew up outside Detroit, the only daughter in a family
that runs a successful business supplying rubber parts to the
automotive industry. Her dad, three brothers and former husband
were all active in the business and rewarded handsomely-but Sheri,
who now runs the family foundation, much less so. "All the
relationships in our family are built around money. My dad used
money to show love and as a means of control," she says. The result
is that she feels both insecure and powerless when it comes to
money. "I'm crippled by anxiety when making decisions about
money-buy a house, don't buy a house, buy a car, don't buy a car,
go on a trip, don't go. Everything is riddled with anxiety, which
makes it difficult to make decisions."
Grant has been working with Kahler, the South Dakota planner,
with whom she meets by phone monthly and visits annually. For
Kahler, who frequently works in tandem with a therapist, the
decision to integrate financial planning with financial therapy was
a no-brainer. Make that an all-brainer: "When I'm with a client
together with a therapist, both the right and left brains are in
the room," he says. "Sometimes you'd think we're talking about two
different clients. I'm all numbers, annual income and spending; the
therapist talks about body language and feelings."
For many people, simply recognizing a problematic financial
belief or behavior is enough to change it. Others need to work at
rewriting dysfunctional money scripts. One way to raise your
awareness is to keep a journal, jotting down thoughts that pop up
in any given financial situation. The scripts are there,
subconsciously driving behavior. Journaling slows the process, and
it captures patterns in your thinking. Once you're aware of the
patterns, you can work on changing them. Say you've had a bad day
at work and your first impulse is to go shopping. Journaling puts
some time between the impulse and the action, allowing you to make
a conscious decision to, say, spend time with friends instead.
The next step is to edit the harmful money scripts. If you tend
to panic when the stock market plunges, for instance, one of your
scripts might be something like
I'm going to lose everything!
Instead, remind yourself that stocks rise and fall, and while you
may lose some money, you have a plan and a diversified portfolio.
Instead of selling in a panic, plan to call your financial planner
or adviser in the morning.
A frequent stumbling block planners see is a sense of financial
I work hard. I'm entitled to spend my money.
Modify the money script to
I work hard. I'm entitled to a stress-free retirement.
Another common scenario is a sense of obligation on the part of
parents to help kids financially-to save for college at the expense
of retirement, for instance, or even to enable financially
destructive behavior. Change
The one thing I can give my kids that can't be taken away is an
My kids will better appreciate an education that they help pay
And recognize that enabling children can create a harmful
dependency, says Kahler. He recalls a couple who fought like cats
and dogs over money the father was doling out to adult children.
With some warning, $20,000 a month was whittled to $3,000 as the
father modified his beliefs about how best to provide for his
children-and the kids found jobs and prospered.
Adopting money mantras can help you keep resolutions. A
workaholic will feel less guilty leaving the office at dinnertime
after identifying a core value and repeating it often:
My priority is to spend time with my family.
You don't need to be a complete money mess to benefit from
examining the emotions that motivate you financially-particularly
at times of transition in your life. No one would call Elizabeth
Kautz, the mayor of Burnsville, Minn., a shrinking violet. But
Kautz, 65, took it hard when her investments sustained losses in
the financial crisis-and then her husband died. "We'd lost so
much," says Kautz. "Layered on top of my grief was fear. I wanted
to take what I had left and put it all in the bank."
Instead, Kautz met with Susan Zimmerman, of Mindful Asset
Planning in Apple Valley, Minn., a chartered financial consultant
and licensed marriage and family therapist. Zimmerman gives clients
an exercise that helps illuminate the motivations underlying
financial behaviors, as well as the intensity of the motivation.
Kautz learned that she was conser�vative, yes, but also
a calculated risk-taker. The insight gave her the confidence to
maintain a healthier balance in her portfolio.
Career transitions are obviously integral to one's finances but
loom large in other areas of life, too. Certified financial planner
J. Mark Nickell in Brentwood, Tenn., sees people at a fork in the
road on a regular basis. He'll do a makeover of their finances, but
when it comes to clients who are dealing with the blow of being
fired, untangling a partnership that didn't work out or wrestling
with the relationships of a family business, Nickell calls in a
For client Kris McCain, 52, it was a matter of aligning her
personal priorities with her work. A few years ago, McCain, a
gynecologist, quit her job despite her husband's qualms and looming
college costs for their son. "I'd always viewed being a physician
as having more of a personal relationship with a patient as opposed
to a financial one, but I was getting financial pressure at work."
When McCain and her husband met with Nickell to map out their
finances as a one-income family, he suggested a psychologist who
could assess McCain's career strengths and interests to help her
pinpoint what she needed in order to gain job satisfaction. Last
November, she found it in a health care practice that encourages
her volunteer work in India, Haiti, Guatemala and elsewhere, where
she provides cancer screening, surgery and other services.
Financial psychology isn't always about overcoming obstacles. At
Aequus Wealth Management Resources, in Chicago, psychologist
William "Marty" Martin, who is on staff, views his role as
facilitating financial wellness rather than addressing financial
dysfunction. Martin, author of
The Inner World of Money: Taking Control of Your Financial
Decisions and Behaviors,
assists clients in formulating goals, coaches them through the
steps required to meet those goals and, occasionally, helps someone
deal with success when it arrives. "I help them make decisions
about how to enjoy life," says Martin. Now that's a money script
we'd all like to learn.