Think about your parents. Now think about money. What kinds of ideas, images, and feelings come to mind? Do you recall any discussions about money - or were these hidden from you? Was there always enough to go around - or were you ever-conscious of its absence? What little incidents do you recall that ended up becoming defining 'money scripts' of your life? Perhaps it won't be a shock to learn that just as we learned how to raise children from our parents, we also learned how to think about money from them.  And as we will raise our children the way we were raised unless we choose a different path, we will also pass on our ideas about money - unless we decide differently. Today we hear from Dr. Brad Klontz, co-author of the book Mind over Money: Overcoming the Money Disorders That Threaten Our Financial Health (Affiliate link), who helps us to think through the money scripts we want to pass on to our children - and how to adjust course if we decide we need to do this. Find more information from Dr. Klontz on his YouTube channel.   Other episodes in this series This episode is the first in a series on the intersection of parenting and money.  You can find other episodes in this series: 038: The Opposite of Spoiled 107: The impact of consumerism on children 112: How to Set up a Play Room 115: Reducing the Impact of Advertising to Children 118: Are You Raising Materialistic Kids?   [accordion] [accordion-item title="Click here to read the full transcript"]   Jen: 01:36 Hello and welcome to the Your Parenting Mojo podcast. Today's episode kicks off what I'm hoping is at least going to be a miniseries on issues related to money and economic privilege, although I'm still in the process of figuring out exactly where we're going with this. So, quite a long time ago now, we talked with New York Times columnist, Ron Lieber about money and we got a high level overview of some of the problems we can face when we're thinking about how to talk with children about money. So, things like from what information to give at what age and what to do when your child nags you to buy something that they want at a store. But a friend recommended that I read the book that our guest today co-wrote with his father. His father is Dr.Ted Klontz and the book is called Mind over Money: Overcoming the Money Disorders That Threaten Our Financial Health. So our guests, Dr. Brad Klontz holds a Doctorate in Psychology. He's a certified financial planner. He co-founded the Financial Psychology Institute and he's an Associate Professor of Practice in Financial Psychology at Creighton University Heider College of Business. So, we're here today to take our conversation on money to the next level by thinking through how our own relationship with money will impact our children's relationship with money. Welcome, Dr. Klontz.   Dr. Klontz: 02:45 I'm so happy to be here and I'm really happy that hopefully I can get some parenting mojo and a conversation too.   Jen: 02:51 Do you have children?   Dr. Klontz: 02:52 I do. I have 2 children.   Jen: 02:53 How old are they?   Dr. Klontz: 02:54 I've got a 6-year-old and a 2-year-old.   Jen: 02:57 Oh, okay.   Dr. Klontz: 02:58 And it's sort of amazing what they're already reflecting back to me on what I'm sort of unconsciously teaching them around money.   Jen: 03:03 I can imagine. Okay. So, you should know that it's perfectly fine to share personally learned lessons with us.   Dr. Klontz: 03:09 Okay, I'll do my best.   Jen: 03:11 All right, cool. So, let's dive right in. I wonder if you can kind of get to the crux of your book, which I think is about this idea that you call money scripts. What is a money script?   Dr. Klontz: 03:20 Yeah, so I got really curious. I grew up myself in a, my mom likes to say we were middle-class except lower. And I said, well, they have words for that, but we don't have to say what those are.   Jen: 03:30 Yeah. We need to say them.   Dr. Klontz: 03:32 Right. But I became really curious at a young age, I was surrounded by a loving family of real hard workers who never seem to really get ahead financially. And so I sort of had that inquisitive mind, I think as a child. And so going through my adolescence and then later on professionally, I was always really curious about how people look at the world differently, whether it's different religions or different sort of socioeconomic backgrounds. We all sort of have this worldview and it sort of collects around people who are similar to us. So, I became really curious. That's sort of the framework.   Dr. Klontz: 04:04 And so a large part of my research into the realm of financial psychology has been looking at what we call money scripts, which are these beliefs about money that are passed down to us, typically from our parents, our grandparents, our culture, society at large. You know, these are things that sort of get into our subconscious mind around what money is, what's possible, how the world works. And then my research has really been focused and by now we've done research with thousands and thousands of people on how these beliefs predict things like your income, your net worth, your financial behaviors, and a whole host of other financial outcomes.   Jen: 04:43 Okay. And so what are some of these money scripts?   Dr. Klontz: 04:47 So, we found four main categories and what we did is we collected basically beliefs around money that we worked with people around. And so we had some tools that you saw in the book Mind over Money to sort of draw these to the surface. So, we collected all of these and then we put them into a test. And as I mentioned, we've given it to thousands of people thus far. And we found some patterns and so we found four main patterns. The first one is what we would call money avoidance and this is where we have a negative association with money and in true for all of these money scripts, they come from really valid experiences that have happened to you as a child or your parents or grandparents or sometimes even further back in your family history, but it's a negative association with money, so things like rich people are greedy, money corrupts or there's virtue in living with less money.   Dr. Klontz: 05:33 Now, no big surprise, and this is true with the next couple of categories I'm going to describe to you, if you have those beliefs around money, it's going to be damaging to your financial health and sure enough, what we found is that people with this belief pattern tend to sort of undervalue themselves financially at least. They end up having lower net worth and they engage in some self-destructive financial behaviors, which makes sense. If you have this negative association with money, chances are you're probably gonna to repel it or try to get rid of it when it does come into your life. The next category we found is what we would call money worship beliefs. And this is sort of, I would say, ubiquitous in our culture. This belief that money is going to somehow magically make my life better, take away all my problems and finally get me to the place where I can be happy in this world.   Dr. Klontz: 06:20 And of course this leads to a lot of consumerism. So, what we've noticed in our studies, people have a tendency to overspend, spend more than they make, really be attached to stuff because we sort of make that belief money and stuff will make us happier. And of course there's been a lot of research done on this and it's certainly true. It's absolutely true that money will make you happier up to about middle-class. And that's sort of where we feel like, okay, so we're okay. Above that, there’s really no significant correlation between money and happiness, a bunch of studies that's been done all over the place. And so for many people, again, like if you’re trying to climb that socioeconomic ladder to get to stability for your family, a roof over your head, clothes, taking care of your children. Absolutely. But above that, there's really no significant correlation.   Jen: 07:07 It's kind of amazing, isn't it, considering how we still pursue it beyond that point?   Dr. Klontz: 07:12 Yes. Yes. Right. So, this is something that I keep studying because I'm like, of course not. Come on. So it's one of those things that I think confuses researchers.   Jen: 07:20 Yeah.   Dr. Klontz: 07:21 But you know, I work with a lot of people who are, have money and have means and it's totally true. Like wherever you go, your humanity follows you and whatever you're worried about in terms of health and children and meaning in life and purpose, none of that gets erased depending on how much money you have. So it's sort of this, we call it a hedonic treadmill in psychology too where we're always sort of striving to get to the next place. And what you learn over time is that it doesn't fundamentally change who you are or your experience of life when you get to that new place, we sort of become accustomed to it.   Dr. Klontz: 07:50 It's a bit of a curse of humanity, if you will, which has actually led to a lot of advancements because we're never sort of satisfied. So there's the good part. But the bad part is that if you believe that somehow money is going to magically solve all your problems and make your family closer and your marriage better and all this sort of thing, it's not. And so the message I always give to people is really strive to be happy now. That’s sort of the practice because then when you get money and more money, you can use that to definitely accentuate that happiness, but it's not gonna magically make you happy. The third category we found is what we call money status. And this is where we're really linking our self-worth with our net worth.   Dr. Klontz: 08:32 And some other items on this particular scale are, you know, I tell people I make more than I actually do, or I'll only buy something if it's new, really focused on that outward display of value and of wealth. And in our studies we found that people who come from lower socioeconomic households are more vulnerable to this type of belief. And I see it all the time in social media too. There's this belief that wealthy people and rich people live a life of luxury, have very expensive watches and cars and mansions. A bunch of studies done on this and we did one, actually you mentioned Ron from the New York Times, I did a study with Paul Sullivan in the New York Times where we looked at the psychology of wealth as well as spending habits of ultra-wealthy compared to middle-class. And it sort of confirms the classic book, The Millionaire Next Door, where it turns out that if you actually do want to climb that socioeconomic ladder in terms of net worth, it requires you saving money, not spending it.   Dr. Klontz: 09:30 And so as a culture, I think, well we do, we have a real misperception on how people who have money, how they actually spend money and it's a gross exaggeration of how much money they spend. In our study, for example, we saw that the ultra-wealthy in our study had about 18 times more money than the middle-class comparison group, but they spent only about twice as much on things like cars, houses, vacations and watches. Well, those exact things. So those are the things we asked people how much they spend on. And which by the way is great. I mean like having a house that cost twice as much is probably twice as good, but it's also not 18 times as good. And so for me, that really drove home the point and it’s definitely true anecdotally with the clients I work with, a lot of them are just really hard workers.   Dr. Klontz: 10:15 A lot of hard workers across all the socioeconomic spectrum, but had a real value towards saving money. Like this was something built into their consciousness. They started early, they were saving 10, 20 sometimes 30% of every dollar they made. And when you start doing that in your 20s and 30s it's almost impossible unless you do something really stupid for you not to be a millionaire a few decades later. So anyway, that's the money status and that's, I'm sort of like challenging some of those beliefs as we're talking. The fourth category, and there's some good news here, there's a good one for you and we called it money vigilance. And this is the belief that it is important to save for rainy day. I put that item in our studies now I sort of surprised at the number of people who actually don't believe that's true.   Dr. Klontz: 10:56 So these are people who believe it's important to save for rainy day. They'd almost, they'd be a nervous wreck if they didn't have money saved for an emergency. So there's, we call it vigilance because there's some anxiety associated with it. Like this is something I need to pay attention to and be vigilant about. I mean, of course that's good for your net worth. I mean that's good for your income too. So they had much better financial outcomes and this is across a bunch of different studies. So people who are doing better financially have better financial health, are taking care of themselves financially are more likely to endorse that money vigilant belief pattern. And interestingly part of that belief too was they trended towards sort of minimalism in the sense that they would actually, if somebody asked them how much they made, they would probably tell them they made less than they actually made. So there was some secretiveness around how much they were making. Now interestingly, not within their partner relationships, so they weren't lying to their spouse around money. Some of the other categories were, but much more likely to sort of downplay how much money they have.   Jen: 11:54 Okay. And so you kind of alluded to where these money scripts come from and that they come from our childhood, they come from potentially further back even in our family than that. I'm curious about how things like shame and stress connect to where our money scripts come from.   Dr. Klontz: 12:11 Yeah. So you know, shame and stress are very profound influencers in our lives. And in terms of stress, money is the number one source of stress in the lives of Americans. And the American Psychological Association does a survey every year and they've been doing it since 2007 and it kind of doesn't matter what's happening, about three out of four Americans are identifying money as the biggest source of stress in their lives, which is always a little bit ironic too, given that we're the richest country in the world at the richest time in human history. But this is how much it consumes our emotions and our psyche. And of course a big part of that stress, when we're talking about money scripts, is how we are comparing ourselves to those around us. That actually creates the stress. It actually doesn't have anything to do really with objectively how much money you have.   Dr. Klontz: 13:00 And this is something in psychology called the Theory of Relative Deprivation. And it turns out that our subjective well-being, so how good we feel like we're doing in the world is entirely related to the comparison group we're using. It has nothing to do with actually how much money we have, which is just really interesting. And it helps explain why people who are in war-torn poverty laden countries can be happier than the average American because for them, they're in a small group, sort of a tribal group, and we all have tribes too. This is sort of our brain in the modern world that is really the prehistoric cave person brain we all have. And this is how we're operating around money. So, you compare yourself to the people around you and if you feel like you're doing as well or about as well, you're fine psychologically.   Dr. Klontz: 13:48 If you feel like everyone else is doing better than you, it creates a sense of panic, a very deep primal sense of panic that things aren't okay and actually your survival's at risk. And so I think that drives a lot of that anxiety. And of course, social media just makes it so much worse. Like in terms of what's being put forth as like look at all this stuff people have that's better than you and look at this incredibly happy family. Doesn't that couple look like they're really in love. I'm looking at my wife, I don't feel quite as much in love right now with her as they seem to be. So we're inundated with all this stuff that sort of tells you that things aren't okay and other people are doing better than you, which really creates, and is a driver for a lot of that stress and anxiety.   Jen: 14:29 Yeah. And I’m also thinking about how these events that can seem completely insignificant maybe to the parent at the time can really form the basis of something that seems much bigger to the child. And thinking about an incident from my childhood, I think I was probably between about age six and eight and I was up in my bedroom one day, I was cold, I turned the heating up. Our heaters will always set on number two out of six. So it was set on number two. I turned it up to the top setting of 6. But the thing is in England we are on central heating, and it actually takes a long time to warm up. And it wasn't until later in the evening that my mom and I came into my room to go to bed and we both suddenly realized it's really warm in here. And when she saw the radiator was set on number 6, she was so mad at me.   Jen: 15:10 And she made me go and tell my dad what I had done. And I don't remember being punished for it, but I so clearly remember the shame and I clearly remember the message that we do not waste. And that has become an absolutely defining money script for me. And I try and make sure that my daughter doesn't waste water and food and stuff like that. But I also try not to shame her about it when it does happen. And so I'm wondering is there a way to know whether I'm passing on sort of, I don't know if good is the right word, but productive or useful money scripts, healthy messages about wasting and about money or how to tell if, you know, when we're parents and we're in these moments if we've overstepped the line.   Dr. Klontz: 15:47 Yeah. So, wow, just a profound example that you just gave me and those are the defining moments for many of us in terms of our relations with money.   Jen: 15:56 Yeah. And did it seem defining to my parents?   Dr. Klontz: 15:59 Probably not at all.   Jen:...