What’s your life story, and how has it affected your attitude to money?
This emotionally moving exercise will help you find out.
This Insight is for you if you’re aged between 25 and 65, and striving to achieve more in your life, but feel that your attitude to money might be holding you back.
Here you’ll learn a proven and powerful exercise to discover how your unique life story might have affected your attitude to money, and how you can start changing it, if you need to.
10 to 20 minute read, depending on your speed… or click any ‘getting bored’ image if you prefer action to reading.
First, slow down and take your time
To be clear upfront, we’re exploring long term behavioural change here, and this is not a quick fix subject.
Big, sustainable changes to our lives can take up to six months or more to achieve – and we might go through as many as six stages on the way. At least that is the conclusion of the research in this book, ‘Changing for Good: A revolutionary six stage program for overcoming bad habits and moving your life positively forward’
So, normally, behavioural change takes time.
It does seem possible to speed up the change process, at least on certain craving habits (like smoking or smartphone use for example) with a mindful approach to the problem, as explained by the author of, ‘The Craving Mind’ and Neuroscientist, Judson Brewer M.D., PhD in this TED talk.
Also, while I’m not aware of research on it, any good financial coach will tell you that a mindful approach to planning your money – dwelling on the consequences of action (and inaction) – is very helpful in the financial planning process – once you’re engaged in it.
The issue I want to help you with here is getting engaged with it in the first place – when it’s something you prefer to avoid.
We also know that an all or nothing, confrontational approach to behavioural change (with ourselves or others) will likely backfire, as outlined in this ‘Scientific American Mind’ article on Why Dr Phil and Dr Laura won’t solve your problems (September 2010)
The JFDI (just f*cking do it) approach to change, in our personal or work life projects, might sound attractive to those who place value on machismo but serious changes are more often achieved by those who understand and respect their complexity.
Now before this gets too serious… and if you’re ok with some ‘adult language’, try this extremely funny excerpt from The Sopranos – on a non-judgemental approach to behaviour change 😉
All or nothing thinking seldom helps our mood, as we learned from a world-leading Psychiatrist, here and here and will often cause us to give up on our important life goals after a single mistake.
This behavioural trap that so many of us fall into (until we know better) is evidenced in this fascinating BBC documentary on dieting – be sure to check that one out sometime; there’s a funny but shocking revelation at the end of the short video clip.
In short, it’s far better if we have time (and we’re mindful enough) to develop our own desire for change, rather than having it forced upon us.
This is what I used to describe to my children as the ‘reverse Newton laws’ that apply to human interactions.
You can push an inanimate object in any direction and it will obey Newtons laws of motion. The harder you push it, the faster it will travel – provided that it isn’t ‘fixed’ to the floor 😉
However, with people, this law works in reverse; the more we try to force people to do things, the harder they push back against us. Indeed, very often, they’ll move in the opposite direction.
If you’re a parent, you’ll be very familiar with this challenge, and these 20 ideas for helping teenagers achieve more might interest you.
Significant and sustained personal change, normally, takes time, and we’re not helped if we beat ourselves up for the occasional step back on that journey.
Okay, so if you’re happy to take some time on this, it could be of real value… but please be warned, there are no quick fixes to our lifetime money challenges.
And you should run a mile from anyone who promises you such things.
Ten essential money jobs to sort out
You know that to improve your financial life over the long term, you might have to change some things that you’re doing today.
And you could approach this life (or any other, in health, personal relationships, or work) in a very direct way, by asking yourself (and preferably others) what things you need to:
- Stop doing
- Do less of
- Do more of and
- Start doing.
You’d then simply need to take action on the answers to those four questions.
Here’s a quick reminder in case you’re not sure:
- Earn enough income for your current (and future) needs.
- Get the state benefits you’re entitled to.
- Stop wasting money on things that give you no value.
- Have disaster insurance on your most precious asset, your life.*
- Insure against long term illness too.*
- Build a fund for unexpected emergencies.
- Pay off your expensive debts
- Plan your housing, and if buying, have a solid plan to repay the mortgage before you stop work.
- Build a fund to escape, or slow down from your work.
- Save and invest, to cut the cost of your other life goals, for yourself or your loved ones.
* BTW, while I’ve talked about ‘taking your time’ on behavioural change, please do not delay putting sensible levels of insurance in place ASAP, esp. if you have dependents. Obviously you can have no idea if, or when, a health or life disaster might strike you, or one of your loved ones.
So, if you’re in any doubt about the level of cover you need, talk to a good protection adviser. This type of insurance is hugely valuable and, if you arrange it while you’re relatively young and healthy, the costs are very low.
Also, if you’d like to follow a series of Insights into how to approach all 10 of those challenges, sign up to my Newsletter. Those Insights will be coming soon – and remember, I don’t sell financial products, this is about education – pure and simple.
Now, this image is another way to look at the money matters we might have to deal with, arranged around an (ideal-world) rising line of accumulating wealth.
Note that it shows the additional (tricky) financial questions we might face in our later years like:
- When to slow down from (or stop) work – and how much we’ll need for that.
- How to generate a sustainable income from our pension and other investments.
- What plans to make for care in old age.
- How we could leave money to others.
- How to avoid paying unnecessary Inheritance Tax, if that’s an issue.
Of course, these are not issues for us, younger folk, right now… and we could just copy that list of 10 tasks; write down ideas on how we’ll tackle them and find someone competent to guide us through the steps, if we need help.
That would certainly be a great start… and what could be simpler than that?
Is ‘worry’ holding you back?
If this is you, perhaps you skipped right past those 10 challenges above, and don’t worry, if you did, you’re not alone.
In their latest, annual survey of UK employees, Salary Finance, an award-winning FinTech, estimated that more than one-third of all UK employees have worries about money.
What’s more, these worries cause this group to be 15 times more likely to lose sleep, 12 times more likely not to finish daily tasks, 8 times more likely to have troubled relationships with work colleagues and 50% more likely to be looking for another job.
Why do we worry about money?
Well, this is not just about low pay.
Yes, it’s true that around half of employees earning less than £25,000 a year regularly worry about money.
And slightly more than half of all employees have either:
- Less than 3 months of savings
- No savings at all, or
- Often run out of money before payday.
(and those are the numbers before the Covid Pandemic)
However, it’s also the case, that about one-third of people earning between £40,000 to £60,000 p.a. – and nearly half of those earning more than £100,000 p.a. – regularly worry about money too.
So there must be reasons, in addition to lack of money, why so many people get stuck in a state of worry about money, rather than getting stuck in to tackle the issues. And, these reasons relate mostly to our attitude to money.
What is an ‘attitude to money’?
The first thing to note here is that Psychologists describe having an attitude toward something (an object, person, group, event or issue) very differently to how you or I might think of it.
Your attitude to money, for example, is your learned tendency to assess and react to it, in a certain way.
This attitude is the mix of your thoughts and beliefs; your feelings about and your behaviour towards financial matters.
The academics call these elements your Cognitive, Affective and Behavioural (CAB) components of attitude.
It’s also worth noting that while we might be aware of some of our attitudes, others sit in our subconscious minds, so we’re simply not aware of them.
Thankfully, as attitudes are learned (from experiences, teaching, media and advertising exposure, or by following social norms) we can unlearn them too if we need to.
Examples of blocking attitudes to money
When it comes to money, as with most other questions, different people have different attitudes towards it… and different attitudes to those who advise on money too.
Here are just ten of the most common beliefs (and associated feelings) people have told me about why they struggle to engage with their (longer-term) money challenges.
I don’t know enough about pensions, investments, or any of that money malarkey, to know how to approach this. And I feel too embarrassed to talk about it to others.
I feel quite anxious about my uncertain financial future, so I tend to avoid talking about it.
I’m afraid of repeating a mistake that I (or a friend or family member) made in losing a lot of money on investments (or property) in the past. So, I steer clear of anything investment related.
I don’t earn enough to save for a pension. I’ve looked into how much you need to save, and those numbers are completely out of reach for me.
To be honest, Financial Planning bores me and I’ve got better things to do with my life.
I’ve tried to sort this stuff out, but I feel baffled and defeated by all the complexity and jargon, so I’ve now given up.
I don’t trust financial advisers to work in *my* best interests.
I know most regulated advisers are honest enough. But generally, I’ve not found them to be very bright or technically competent for my needs. So, I don’t take advice.
I’ve looked into this – and I can’t afford the price for good financial advice.
My partner is the real problem. He/She won’t work with me to develop a financial plan or do what’s necessary to make it happen.
Do any, or all, of those (action-blocking) attitudes chime with you?
I’d be surprised if some of them don’t, as I’ve been recording these thoughts for over 30 years now – both from Inside, and now, as a writer, outside the Financial Services Industry.
And, Covid Lockdown aside, they haven’t changed in all that time.
By the way, I’m also writing a series of Insights to help people deal with all 10 of these action-blocking issues.
Money Avoidance – and other Money Scripts
Widen the question to what people believe about ‘Money in general’ and you’ll find an enormous array of beliefs that people hold about money.
Psychologist, Brad Klontz has done some interesting work to identify these ‘Money Scripts’ and group them into categories. For example, if you find yourself agreeing with the scripts listed below (from Brad’s Money Behaviours Inventory test) then it might suggest that your attitude to money is what Brad calls ‘Money Avoidance’.
Take a look and see how many of these statements you agree with.
- 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.
- I do not deserve money.
- Good people should not care about money.
- It is hard to be rich and be a good person.
- Most rich people do not deserve their money.
- There is virtue in living with less money.
- The less money you have, the better life is.
- Money corrupts people.
- Being rich means, you no longer fit in with old friends and family.
- The rich take their money for granted.
- You cannot be rich and trust what people want from you.
- It is hard to accept financial gifts from others.
What fascinates me about Brad’s research is how ‘Money Avoidance’ is often ‘associated with people who are wealthier, wiser, and more highly educated.’
That certainly confirms my experience.
You can assess yourself against those four categories too.
NB. This is not a recommendation of the associated wealth adviser firm. I make no recommendations to any such business. My work is about education, pure and simple. So, be sure to conduct your own due diligence if you need any form of investment advice service.
Also, be aware that your results in the Money Behaviours Inventory Test, might not show you as fitting neatly into any one of those four categories.
You will find, with most types of strengths or behavioural trait assessment (and here’s another good one) that you have a mix of the traits.
As Brad himself notes,
“it’s not uncommon to have money scripts that seem at first glance to contradict each other, such as endorsing the belief that: money corrupts people while also believing that things would get better if only I had more money”
Again, I’ve noticed that contradiction a lot!
Two simple truths about money
In this insight, we’re exploring attitudes that can block our financial progress, but let’s not forget the simple truths that we could choose to believe about money.
Here are two off the top of my head:
1. Money is just a store of value, a measure for valuing things and a means of exchange (which is far more efficient than barter!) Money is neither good nor bad.
2. Money gives you more freedom to choose what you can have, do or become, whether that’s:
- More comfort at home.
- More trips away to see the world.
- A more relaxed and peaceful life.
- A more fun-filled and exciting life.
- More time for learning, for you or your loved ones to become more of who you want to be.
- More time to do more purposeful and creative works to help, inspire or leave a legacy to, others.
Money also enables you to help others to have, do or become these things too.
How can you change your attitudes?
Okay, getting back to our (potentially blocking) attitudes to money, the critical question is surely this:
What can you do to change them?
To answer that, let’s see what the Psychologists say influences the strength of your attitudes. The main factors are:
- The gain you expect (or loss you expect to avoid) from holding to your attitude. In short, your incentive.
- Whether this attitude is repeatedly expressed by those who influence you – we have inbuilt tendencies to follow authority and conform to the attitudes of others, so these are very powerful forces for some.
- The experiences that you (or those you care about or have read about) have had in life.
- Your expertise* on the subject.
So be sure to watch out for that trap!
Psychologists have also explored how attitudes are changed, and this is a subject we’ll look at in more detail in the future.
Why? Well, because persuading people to change their minds (for the better) is at the core of good sales and marketing… and those skills are essential to earning more money, right?
The key point to note, from the Psychologists, for now, is this.
To bring about a permanent change in attitude (in yourself, or someone else) your messages need to be thought-provoking and logical.
This is not to deny the fact that our attentions are grabbed by more emotionally loaded messages, they are.
It’s just to say that decisions about significant and long term personal change, often require an ‘appeal to logic’
The trouble is that ‘appealing to logic’ is not always the same as being logical… or even correct, and it’s this challenge (finding the truth) that’s one of the greatest we face in life.
Many of the stories we tell ourselves, and the messages we get from others (esp. in adverts) sound perfectly logical, even when they’re not.
What’s clear is that:
We need enough knowledge on the subjects that worry us (about health, wealth and relationships) to know which messages we can trust
Understanding that, in relation to money, is why I wrote the book, ‘Who can you trust about money?’ – which explores the various ways in which others mislead us about money, and how we mislead ourselves.
So, the second half of that book is all about behavioural science that everyone’s talking about now; the enemies we carry inside our own heads if you like.
Indeed, protecting ourselves from misleading ideas is now a large part of my life’s work – and what this site is about.
If you do struggle with this subject, you might find it more interesting to approach it from a different angle, which is what we’ll try now.
This is a proven and powerful exercise to help you learn more about:
- Yourself and your unique life story
- How that story has affected your attitudes to money
- Your attitudes to those who have a lot, or very little of it, and to those who advise on it too.
- Whether your attitudes are all valid and
- Which you might want to change.
Sound more interesting than Pension and Investment Planning? 😉
Give it a go, I guarantee you won’t regret it… Or, if you do, I’ll refund what you paid for this insight!
Just be aware that the exercise has a profound emotional effect on many of those (including me) who complete it.
It might bring you to tears of sadness… or laughter, or both of these feelings and more.
So, when you can set aside some time, in a quiet and private place – give this simple paper exercise a go.
You’ll need about 3 minutes to read these instructions and at least 45 minutes for the exercise when you’re ready.
Download the exercise
I’ll then send you this exercise, and a free chapter from my book, ‘Who misleads you about money?’ and an outline of my 5 step process for planning your financial freedom and more besides.
Download those goodies now, while they’re still free and don’t worry, you won’t get lots of newsletters, I don’t send many at all.
The exercise – explained
Grab a piece of A4 paper and, on the left half (in landscape orientation) start writing a list of events in your life (starting from your earliest childhood memories, right up to today) in which money played a key part – directly or indirectly.
Focus on the memorable money-related events, or times, in your life that made you feel particularly high or low.
And aim to list between 5 and 10 of those events.
Now, on the right-hand side of the page, next to each event, in a series of columns:
- Note your age and the year at the time of the event.
- Assign a score (between minus 5 and plus 5) where the number reflects how low or high you remember feeling about the event – at that time. (Note that your lowest scores might have given you some of your most valuable lessons).
- Write a word or two to describe those emotions – and if you get stuck here, the tables below should help.
- Jot down what belief about money you think you formed as a result of the event and
- How you think it affected your behaviour immediately after the event and how that same event is affecting you today if that’s different.
FYI, the table is based on the work of Robert Plutchik (Professor Emeritus at the Albert Einstein College of Medicine in New York) who was concerned about the more than 90 definitions of emotions and almost as many theories about them.
In Plutchik’s model, simplified above, there are eight feelings (or advanced emotions), each of which is derived from a combination of two basic emotions. So, for example, ‘Optimism’ is derived from a combination of joy and anticipation, while ‘Love’ comes from having both joy and trust. Plutchik also suggests strong and mild forms of each basic emotion, as shown.
Alternatively, you may prefer to go beyond those umbrella terms – to identify more precisely how you were feeling at the time of your ‘money events’. In which case explore this list of feelings from Dr Susan David.
Susan is the founder of the Institute of Coaching at McLean Hospital of Harvard Medical School and an Instructor in Psychology at Harvard University.
And finally plot your events, using two or three words to describe each, in a box. Position each box horizontally to reflect the time it happened and vertically according to the score you gave it.
It illustrates the ‘roller coaster’ nature of our financial lives perfectly, don’t you think?
And you can use the same approach to map out significant events (or times) relating to your health or relationships too.
Here again, just as examples in case you get stuck, are some of the big financial events I charted when I did this exercise:
- First pocket money
- First adult paycheque
- First Credit Card
- Leaving the family business.
- First big sales bonus, and Australian holiday it funded.
- First big promotion
- Making a 40% profit on a house in 8 months (c. 1988)
- Losing 40% on the value of my home (c.1990 to 1996)
- Teaching my parents the magic of personal pensions
- Dealing with siblings after my parents died.
- Leaving the security of the corporate world.
- ‘Investing’ my life savings to start a new career as an educator and writer!
There were, of course, other financial events in my life including a divorce, but I won’t bore you with details of that here 😊
Now it’s time for you to create your own timeline of your big-money personal events.
How can you use your money-life story?
Well, that’s different for everyone, because those events (and your circumstances and your personal goals today) are all unique to you.
In fact, when it comes to money, there are at least 10 ways in which you are unique as I outlined here.
So, take some time to reflect on those events/periods of time that you’ve plotted on your money-life timeline.
Reflect on how they made you feel at the time; how you feel about them now and on the beliefs and behaviours, you believe that you formed as a result.
Some of your biggest successes (and highest times) might have taught you the wrong things about money, and may be holding you back today.
The classic example here is ‘survivor bias’ – where we only see the winners in games of chance, and this is an enormous trap for the unwary when it comes to investing and business.
On the flip side, some of your most valuable life lessons probably came from your hardest times or your biggest mistakes, right?
The key is to be honest with yourself and to be careful to interpret these experiences correctly.
If you’ve lost a lot of money in your life, was the loss someone else’s fault?
Possibly, but ultimately, could you have done more to avoid the loss?
What do you need to learn to avoid a repeat mistake (on the same or a different Investment or Scheme) in the future?
That’s a compelling and optimistic quote, isn’t it?
However, do we really learn from all our losses and mistakes?
Or do we repeat some of them over and over again?
The fact is it’s difficult to know what the lessons are from our experiences if we don’t know much at all about the subject.
What’s clear is that we don’t want to spend our lives on the left-hand side of the Dunning Kruger Curve whatever the subject in question.
So, we might need some guidance from a good financial coach, to avoid making more mistakes.
Is this a pitch for some coaching work?
Hah, no. I’m not taking on new coaching clients, right now but this article might help you decide if you need a coach at all – and if you do, what to look out for.
That said, if you’re an employer and would like this content delivered as a talk or workshop to engage your workforce, or you lead a Financial Services provider and would like this sort of content repurposed as a bespoke series of blogs or a guide for your business, contact me at firstname.lastname@example.org
The bottom line
Most of us have beliefs (whether on wealth, health or relationships) that are simply not grounded in reality.
Too many confuse luck for good judgement and fall prey to the grossly misleading overconfident people on a stage who sell nothing but snake oil systems.
That’s why I run this site – to bring you the facts you need about money.
To my mind, everyone in the world could make better decisions around money, if only they knew how to plan their money and choose suitable places to put it.
If you’d like to learn those things, from someone who won’t try to sell you any financial products, just follow along
There’s really nothing, not to like.
Thanks for dropping in
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As a thank you, I’ll send you my ‘5 Steps for planning your Financial Freedom’ and the first chapter of my book, ‘Who misleads you about money?’Also, for more frequent ideas – and more interaction – you can join my Facebook group here
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