How to control your budget
Do you live in a strict financial budget? That doesn’t mean you have no control over your finances.
One day, when Dr. Brad Kronz’s maternal grandfather went to his bank, he discovered that all his money had been gone.
His bank was one of thousands of financial institutions that failed at Great Repression. He was so hurtful that he never put dollars in the bank again. His daughter brought some of that aversion to risk into her life, investing only in a deposit certificate or CD, and she felt embarrassed to be poor.
Growing up, Kronz wanted to internalize some of that shame and become wealthy. To get there, he decided to go in the opposite direction, not as careful as his mother or grandfather.
Gazing at his $100,000 student loan debt in his 20s, he sold a truck, bought a $500 car, and invested the rest in one asset class in the stock market.
Then the dot com bubble burst and he watched the money go away.
“I went from avoiding the most risk to the most dangerous approach,” said Kronz, a certified financial planner and psychologist. “It’s dysfunctional. It’s not moderation.”
Klontz says he followed the “money script.” This is often a term created for unconscious beliefs rooted in childhood, which affects your financial behavior as an adult.
“For many of us, it’s like a script written by someone else, and you’re just reading it,” Kronz said.
But just because financial habits are often first molded by things out of your control doesn’t mean you can’t change them. The first step to having a healthier relationship with money is to understand where you are currently standing.
What is your money script?
Kronz’s story is just a few examples of how people’s attitudes towards money are passed down over generations and shaped by experiences and trauma.
He calls his experience “a dysfunctional pendulum swing.” He said alcoholism is something that is common when running with family members. If the parent is an alcoholic, the child will not take a drop in his or her life.
Kronz said it helped people to uncover and rewrite the money script, leading to mental health improvements. One study he conducted found that people’s savings rates increased by 73% when they were more aware of their psychological relationship with money.
The four main money scripts are money avoidance, money focus, money status, and money vigilance. Klontz offers free diagnostic tests to help you decide what’s yours.
Some people get better financial results than others, but there are tips that can help you develop a healthier relationship with money, regardless of the script.
Avoiding money
According to Klontz’s framework, those who avoid money tend to believe that money is inherently bad or corrupt. Money avoiders may avoid thinking or talking about money, ignoring financial statements, making financial effectiveness and oversupplying others.
Jack Howard, head of Financial Wellness at Ally Financial, discusses “money stories” (a concept similar to money scripts) at a financial education workshop.
She said she frequently watched parents hesitating to conversations with their children about finances as their parents avoided the subject.
“We hear that in a lot of our class. “We didn’t talk about money. It was a taboo. It was seen as rude,” Howard said.
Klontz’ advises to avoid money by schedule regular money check-in, financially supporting people and causes they care about, and strengthening their overall relationship with the funds to use their wealth to do good.
Money vigilance
Money vigilantes are cautious and worried about their financial well-being. They believe that they will save for the future, avoid unnecessary debts, and that their hard work will be rewarded.
“The average American needs to be more vigilant for money,” Kronz said. “That’s the bottom line.”
However, equating this script can lead to missing experiences due to fear-based decisions. As a financial advisor, Kronz said he saw wealthy people struggling to spend their money even after they retired.
“People with really high monetary vigilance may have the highest net worth,” Kronz said. But “Are they happy? Can they sleep at night? Are they very wary of money that they can’t spend it?”
If that sounds like you, he advises you to create a “fun money” budget, check in with an advisor that will reassure your mind, and limit the frequency with which you monitor your finances.
The focus of money
While individuals who focus on money often think that money is the key to happiness and the solution to life’s problems, according to Klontz’s framework, they believe that the amount is not sufficient.
Kronz himself identifies this script, but he also scores high in the Money Warning category. That’s the duality he sees a lot in business professionals.
“They’re holding hands,” he said. “Why are you so conscientious and worried if you don’t want it more?”
However, unchecked money focus can actually lead to lower net worth and higher levels of debt, as people try to buy happiness and prioritize work over relationships, research shows.
A tip for focused money is to pause before you buy and decide if you need it, and make money come true, but not a connection. Giving people both money and time with the cause that matters to you can help those identify this script.
Money status
If you frequently link your self-worth to your net worth, you may find your money status script familiar. According to Klontz’s framework, individuals falling into this category may be fans of the outward display of wealth, an exhibition of wealth appearances, and a way to gain respect.
Kronz said he would have scored a high score in this category when he was younger. When he first started making numbers for six, he bought a gorgeous watch and a gold bracelet for his mother, despite still having a significant amount of student loan debt.
“I don’t know why I did that. I heard that there’s an entire club right now when I’m making money, so I did that. ‘That’s a signal, do you know?’ Hey, I made it. ”
Howard said as a mother of Gen Z’s children, she watches younger generations showcase their status on social media and buy things to achieve. Influencers and ads on these social networks could also lead to more impulsive purchases, she said.
Those seeking money status should take a step back to avoid the most negative outcomes of overexpenditure, obsessive gambling, and financial dependence on others. Klontz encourages you to not only chase your financial goals, but also pause before making a purchase, schedule money check-in, and handle your overall health.
Reach Rachel Barber at rbarber@usatoday.com Follow her at x @rachelbarber_
