How your early years can shape your financial future

When it comes to money, most of us think we’re making logical decisions based on numbers and facts. But in reality, our financial behaviours are often shaped by deep-seated beliefs, many of which were formed in our childhoods. These beliefs - often unconscious - can strongly influence how we manage, save, and spend money throughout our lives.

Dr. Brad Klontz, a leader in the field of behavioural finance and a Certified Financial Planner based in the US, explores this concept in his book Mind Over Money: Overcoming the Money Disorders That Threaten Our Financial Health. He discusses how early life experiences, particularly what we learn from our parents, caregivers, and our socioeconomic environment, can shape our present relationship with money. Understanding these influences is the first step toward cultivating healthier, more intentional financial behaviour.

How parents and caregivers play a role in shaping our money mindset:

From an early age, children observe their parents' relationship with money - whether it’s their spending habits, attitudes toward saving, or how they manage financial stress. If for example, a parent struggles with debt or constantly worries about money, a child is likely to adopt similar beliefs about financial insecurity. On the other hand, parents who emphasise the importance of wealth might create a belief that financial success is directly tied to happiness or self-worth. In contrast, children raised in homes where budgeting, planning, and financial goal setting are emphasised, tend to develop healthier financial behaviours. The key takeaway is that the lessons we learn early on, whether intentional or not, shape how we approach money as adults.

Money Scripts: What are they and how do they shape our financial decision-making?

Dr. Brad Klontz coined the term "money scripts" to describe the unconscious beliefs we hold about money which are typically formed in our childhoods. These beliefs influence how we view wealth and impact our financial behaviours later in life. Money scripts can fall into four broad categories:

• Money Avoidance: The belief that money is bad, leads to greed, or is inherently evil. People with this script might struggle with accepting wealth or achieving financial stability.
• Money Worship: The belief that money is the solution to all problems. Those with this script may constantly chase wealth and tie their self-worth to financial success.
• Money Status: The belief that money equals success and social standing. This can lead to overspending and accumulating debt in an attempt to "keep up with the Joneses”.
• Money Vigilance: A strong desire to save and avoid spending, often accompanied by anxiety or distrust in others' financial decisions. This script can lead to financial security, but also excessive worry.

How to overcome your unhealthy Money Script:

Recognising these scripts is a crucial first step toward breaking unhealthy financial patterns and creating more positive financial habits, but awareness alone isn’t enough. Transforming deeply ingrained money habits requires a combination of introspection, practical strategies, and, sometimes, professional support. Here’s how to take action and overcome unhealthy money scripts:

1. Reflect on your financial history

The first step in overcoming your money script is to take a deep, honest look at your financial history. Spend some time reflecting on your upbringing, the messages you received about money as a child, and how these messages might influence your financial decisions today. Ask yourself:

• What beliefs did my parents hold about money, and how did they impact my financial habits?
• Was money a source of tension or stress in my household? Did I feel financially insecure as a child?
• Did I grow up believing that financial success equals happiness or that money was inherently bad?

Answering these questions will help you identify which money script resonates with you. You might notice that your financial anxieties or behaviours align with one of the four categories. This awareness will allow you to understand the underlying motivations driving your financial decisions.

2. Challenge and reframe your money beliefs

Once you’ve identified your money script, it’s time to challenge and reframe those beliefs. Money scripts are often unconscious and formed from outdated or limiting beliefs, so it’s important to question whether they still serve you in your current life. For example:

• If you have a Money Avoidance script, you may believe that money is bad or that you don’t deserve financial stability. Reframe this belief by understanding that money, in itself, is neutral—it’s simply a tool. Shift your focus to how money can positively support your values and goals.
• If you have a Money Worship script and believe that wealth will solve all your problems, consider reflecting on what truly brings you happiness and fulfilment. Money can be a means to create security and comfort, but it’s not the answer to emotional wellbeing or a sense of self-worth.
• If you have a Money Vigilance script and often feel anxious about spending or saving, it’s important to find a balance. Reframe your beliefs around money to embrace both saving and enjoying life. Consider setting specific goals for your money so you can feel more at ease about your spending without sacrificing long-term security.

Reframing your beliefs helps transform how you perceive and interact with money, shifting from fear or anxiety to empowerment and control.

3. Set clear financial goals that are aligned to your values

It’s also important to set clear, actionable financial goals that reflect your values rather than simply reacting to past fears or desires. Whether you’re saving for retirement, planning for a major purchase, or eliminating debt, aligning your goals with your values helps you prioritise what really matters.

• For someone with a Money Status script, setting goals based on personal fulfilment, like building an emergency fund or investing in a hobby, might help shift the focus away from external validation.
• For someone with a Money Vigilance script, it might help to include goals that focus on enjoying life and spending within reasonable limits while ensuring long-term security. This balance can help mitigate the anxiety of never feeling "secure enough."

Writing down your goals, breaking them into smaller steps, and tracking your progress provides tangible markers of success and builds confidence in your ability to manage your finances in a healthier way.

4. Seek professional guidance

In many cases, overcoming deeply ingrained money scripts requires more than just self-reflection and willpower. It may be helpful to work with a professional, such as a financial adviser who is trained in behavioural finance and can help you create a more balanced and positive relationship with money.

Our relationship with money is influenced by a combination of our past experiences, beliefs, and emotions. By recognising our money scripts and understanding the role our childhood and psychological factors play, we can break free from unhealthy patterns and cultivate more intentional, mindful financial behaviours. With the right tools, mindset, and support, anyone can overcome their money scripts and create a healthier, more fulfilling relationship with money.

*Shelley Hartman, Sales Associate at Morningstar Investment Management South Africa