Photo by Ken Teegardin, www.SeniorLiving.org
Money is better than poverty, if only for financial reasons.
Woody Allen
Tax season is behind us. For many of us April 15th is a tension filled date and it is a relief to be finished with the task of gathering, collating, recording, and preparing our tax returns.
May is an excellent time to build on that relief and explore how we could better deal with our money in the months ahead. For many of us money is a mixed bag. It can be the ‘root of all evil’ or a means to affect change.
Core Beliefs
What do you believe about money? Do you have a hard time creating and sticking to a budget? Did you get a financial plan from an advisor but you haven’t executed it yet? Are you anxious about losing money so haven’t moved your assets from your bank account into an investment account?
Your internal thoughts and feelings about money will determine your financial behavior. We all have received many money messages growing up. Learning more about what we believe about money is an essential first step in becoming more masterful with money.
Photo by peasap
What’s Your Money Story?
Here is a simple quiz that will help you better understand your attitudes about money. The quiz is based on the work of Doctors Brad and Ted Klontz. In their book, Mind over Money: Overcoming the Money Disorders That Threaten Our Financial Health, they outline four stories people have about money: Money Avoidance, Money Worship, Money Status, and Money Vigilance.
To learn which of these attitudes you hold, score each of the following statements from one to five, with one meaning you strongly disagree, and five meaning you strongly agree.
Money Avoidance
- I do not deserve a lot of money when others have less than me.
- Rich people are greedy.
- It is not okay to have more than you need.
- People get rich by taking advantage of others.
Total points for Money Avoidance: ______
Money Worship
- More money will make you happier.
- You can never have enough money.
- Money would solve all my problems.
- Money buys freedom.
Total points for Money Worship: ______
Money Status
- I will not buy something unless its new (e.g. car, house).
- Your self worth equals your net worth.
- Poor people are lazy.
- If something is not considered the “best”, it is not worth buying.
Total points for Money Status: ______
Money Vigilance
- It is important to save for a rainy day.
- You should always look for the best deal, even if it takes more time.
- If you cannot pay cash for something, you should not buy it.
- I would be a nervous wreck if I did not have an emergency fund.
Total points for Money Vigilance: ______
Now use the following key to assess how strongly you hold each of these views about money:
5 – 11 points: You don’t really hold this belief.
12 – 19 points: You hold this belief moderately.
20 – 25 points: You hold this belief strongly.
In which category did you get the most points? The least?
You can read more about each of these views below. Note that these four categories aren’t necessarily mutually exclusive, nor are they intended to be comprehensive. They’re merely a good way to begin the process of better understanding your own personal financial beliefs — an exploration we’ll continue in the next post in this series, How To Talk With Your Partner About Money.
Money Avoidance
Money Avoiders believe that money is bad or that they do not deserve it. They believe that wealthy people are greedy and corrupt, and that there is virtue in living with less money. Avoiders may sabotage their financial success or give money away in an unconscious effort to have as little money as possible. Money avoidance is associated with ignoring bank statements, increased risk of overspending, financial enabling, financial dependence, hoarding and having trouble sticking to a budget.
Money Worship
At their core, Money Worshipers are convinced that the key to happiness and the solution to all of their problems is to have more money. At the same time, they believe that one can never have enough. Money Worshippers are more likely to have lower income, lower net worth and credit card debt. They are more likely to spend compulsively, hoard possessions and put work ahead of family. They may give money to others even though they can’t afford it or be financially dependent on others.
Money Status
Money Status Seekers see net worth and self worth as synonymous. They pretend to have more money than they do and as a result are at risk of overspending. They believe that if they live a virtuous life, the universe will take care of their financial needs. They tend to grow up in families with lower socioeconomic status. People with money status beliefs are more likely to be compulsive spenders or gamblers, be dependent on others financially and lie to their spouses about spending.
Money Vigilance
The Money Vigilant are alert, watchful and concerned about their financial welfare. They believe it is important to save and for people to work for their money and not be given handouts. They are less likely to buy on credit. They also have a tendency to be anxious and secretive about their financial status. While vigilance encourages saving and frugality, excessive wariness or anxiety could keep them from enjoying the benefits and sense of security that money can provide.
Last Cents
Take a few moments to review these categories. Gather your thoughts about your own personal beliefs and actions about money. Successful money management depends on your awareness of your core beliefs.
