The term money scripts, describing the unconscious beliefs that underlie our financial decisions and behavior, has been used by financial planners and therapists for over 15 years. Since the term (coined by Brad Klontz, Ted Klontz, and I) was first published in my co-authored book Conscious Finance in 2005, my views on the formation and intent of money scripts have evolved. Recently, I have been speaking on this nuance in a presentation I call “Money Scripts 2.0.”

Here is a quick primer on money scripts:

  • Unconscious and unexamined beliefs about money
  • Formed early in life—overtly or covertly
  • The deepest are usually the result of trauma or drama
  • Formed by parts of ourselves, with good intentions to protect vulnerability
  • Contextual, partially true and partially false
  • Rigid and inflexible
  • Some are generational
  • Many are polarized or conflicting
  • Limit our financial choices and behaviors
  • Result in driving hurtful financial behaviors

In the past, I taught that money scripts were written for us by someone else, like a parent or authority figure. We memorized these scripts until we internalized them and had them down perfectly. Like an actor’s lines, they work perfectly in the right setting, or play. But try that same script in a different play, and the result is chaos and confusion.

What is new about my thinking on money scripts is that, unless they are generational, they are not written for us by someone else. The bulk of our money scripts are written by parts of ourselves. Many of the deepest and most problematic money scripts are crafted as the result of a trauma or drama, meant to protect a wounded part of ourselves from ever reliving or feeling the deep emotion again.

Here is how money scripts form:

  • I experience trauma or drama (painful, abusive, shaming events)
  • The resulting emotional wounding is not processed or resolved
  • I make up a story (rationalization) to explain what happened
  • From the story, I internalize lessons meant to avoid future pain
  • The lessons gel into a rigid money script/extreme belief
  • The money script is ingrained in my limbic system/subconscious brain
  • The money script leads to financial behavior, meant to be protective, that may be harmful

Money scripts cause problems in our lives when they drive harmful or self-sabotaging financial behaviors. We’ve identified 13 of these behaviors that I’ve written a lot about. The most common are overspending, financial enabling of children, and workaholism. A few others are compulsive buying, gambling, hoarding, financial dependency, and underspending.

One aspect of my thinking on money scripts has not changed: They can be reframed. The first place to start modifying a hurtful financial behavior is to explore the money scripts driving that behavior. Once you understand the underlying money scripts, all hurtful financial behaviors make perfect sense, no matter how illogical they appear.

An efficient way to identify your major money scripts and hurtful behaviors is by taking the KMSI-R and KMBI-R evaluations, designed by Brad Klontz and Sonya Britt Lutter. Once you tabulate the results, you can assess your level of awareness around how the behavior and underlying money scripts are affecting your financial life. Sometimes, at this stage, all you need is more information ( i.e., how to budget or set up a retirement account).

If more information does not work to change your behavior, you are probably struggling with entrenched money scripts that are beyond your ability to cognitively change. You may need the help of a financial behavioral specialist, like a financial therapist, to make progress.

In either case, it is helpful to understand that money scripts are not “wrong” or shameful. Even when a behavior does not serve you well, the beliefs behind it were formed with positive intentions.

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