By Antonio Porretta
Are you familiar with the sting of buyer’s remorse after a big purchase? Has the fear of failure ever kept you from investing, much less simply creating a budget? If you have experienced these scenarios, you know firsthand how much of a role emotions play in our financial lives. Psychologists refer to these emotions and beliefs we hold about money as “money scripts.†(1)
The Roots Of Your Money Habits
Have you ever felt that no matter what you do or how hard you try to eliminate irrational and impulsive financial decisions, you just can’t seem to succeed? This is most likely due to the emotional and psychological baggage each of us carries in relation to our money, otherwise known as our money scripts. And, before you go beating yourself up about this, understand that these scripts start forming at a very young age.
We may not be aware of it, but we spend our childhood watching our parents relate to and deal with money, and over time, our brains are unconsciously trained to respond in similar ways. If your parents modeled confidence and wisdom in their investing, you will likely face investing with confidence. If, on the other hand, your parents scrimped, excessively saved, or constantly fought over expenses, you may have strong negative feelings when investing or making large purchases.
Money scripts are planted in childhood and eventually grow to influence your financial behavior as an adult. For this reason, it is incredibly important to talk to your kids about money and model healthy financial behaviors. It is also vital for you to take the time to explore and understand your money scripts and how they influence your financial behavior.
The Negative Side Of Money Scripts
While it is true that some money scripts are beneficial to financial health, others, such as money avoidance, money status, and money worship, can be detrimental. Unhealthy emotions and belief patterns can lead to a plethora of financial problems, including financial infidelity, compulsive buying, pathological gambling, and financial dependence. There are even certain money scripts that have been tied to lower levels of net worth, lower income, and higher amounts of revolving credit.
Those may sound extreme, but have you ever let panic during a market downturn take your focus off of your long-term investing plan? Has worry and anxiety about the future ever caused you to be unable to make a decision? Have you ever wreaked havoc on your budget just to satisfy the momentary high of acquiring something you really wanted? All of these behaviors stem from your personal money script.
Money Scripts Can Be Changed
It is a common misbelief that if we had more money we wouldn’t have any problems. But the fact of the matter is, we have money problems because of how we approach money, not necessarily because of the amount we actually have. This is good news! We might not be able to drastically increase our income, but we can learn to control our attitudes and perceptions. Our money scripts may be ingrained from childhood, but they do not have to be permanent. With a focused and concerted effort, they can be changed.
The first step to overcoming your money scripts is identifying them. One way to do this is to become aware of your emotional responses to common financial situations. How do the following things make you feel?
- Earning money
- Buying things
- Saving for the future
- Budgeting and tracking expenses
- Making financial decisions
- Volatile markets
- Healthy markets
- Meeting with a financial professional
- Thinking about your financial future
As you reflect on this list, anything that elicits strong emotions warrants further reflection. Negative emotions are not the only ones that can harm your financial life. Some positive emotions, like optimism and self-confidence, can bring about negative results if they are illegitimate and continue on unchecked.
How To Manage Emotional Money Decisions
The key to changing your money scripts is learning to control your emotions and, in turn, developing healthier money habits. You can also incorporate helpful practices into your life that will add to your financial protection, such as taking advantage of automatic saving and investing through your bank or employer’s retirement plan. You can schedule regular family budget meetings and enlist a friend or loved one for accountability. You can learn how you respond to emotional triggers and mandate a “cooling off†period for yourself before making any decisions.
Finally, you need to be willing to forgive yourself when you make mistakes. Leave the past in the past and move forward with the new knowledge you have gained.
Your Financial Partner
One of the most impactful and vital resources you can utilize on your journey of taking control of your finances is your financial professional. At Blackbridge Financial, we believe that knowledge is what empowers you to set the solid foundation for wise decision-making. If you are ready to break free of your money scripts and make sound decisions that will help you pursue your goals and avoid costly mistakes, email me at [email protected] or call 704.960.9646.
About Antonio
Antonio Porretta is an independent wealth manager at Blackbridge Financial with 18 years of experience. He specializes in helping people create, distribute, and preserve their wealth. Antonio received an executive MBA from Saunders College of Business at Rochester Institute of Technology in 2007 and also holds the Accredited Asset Management Specialist (AAMS®) designation. Originally from Rochester, NY, Antonio has been a resident of Harrisburg, NC, since 2007. Outside of work, he enjoys playing soccer and tennis, coaching, and spending time with his wife, Laura, and their children, Cristiano, Victoria, and Matteo. To learn more about Antonio and how he can make a difference in your financial life, visit www.blackbridgefinancial.com.
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