Whether it's going to bed before midnight, eating broccoli or dealing with your finances, doing the "right" thing can sometimes feel like a herculean effort.
Similar to an erratic sleep schedule or an aversion to eating green things, there are consequences to delaying wise financial moves. If you avoid creating a budget, putting your bills on autopay or learning how to invest, your financial life may become more stressful.
But knowing something is good for you isn't always enough to make you do it. Many people have complicated feelings around money, and for good reason. Getting to the bottom of those feelings may be the most effective way to deal with avoidant tendencies.
Uncovering financial beliefs
To get to the root of your financial anxieties, it might be helpful to learn about your "money scripts," a term that's a registered trademark of the Financial Psychology Institute. Money scripts are what financial therapists call the unconscious beliefs we hold about money. Often, these beliefs are rooted in our childhood and continue to shape our financial lives as adults.
Rick Kahler, a certified financial therapist and founder of the Kahler Financial Group in Rapid City, South Dakota, had one client who struggled to save despite being a high-earning professional. Through several interviews, Kahler learned that the client's parents had filed for bankruptcy when she was a child and, in the process, she lost her own savings.
"She just knew that all her money that she worked hard to save disappeared. And so the lesson she took away from that was 'don't save money, because it will disappear,'" says Kahler.
Georgia Lee Hussey, a certified financial planner and founder of Modernist Financial, a B Corp wealth management firm in Portland, Oregon, says that taking what may seem to be a logical step, such as investing just a small amount, before unearthing your deeper emotions may sometimes do more harm than good.
"The small step to get closer to the logical action is actually a reinforcement of the mega story," says Hussey.
Tools you can use
While uncovering your money scripts may feel daunting, there are a lot of tools out there that can help you get started. You can take the Klontz Money Script Inventory-Revised (KMSI-R), which is a free short quiz that helps you identify your dominant money scripts and offers actionable advice. The KMSI-R evaluation is offered by Your Mental Wealth Advisors, a financial adviser firm based in Burlingame, California, that focuses on overall financial health. Hussey's firm offers a similar reflective experience you can download for free that can help you facilitate a conversation about your money history.
And if you're able, it may be worth working with a financial therapist in conjunction with these tools.
"Working with a financial therapist can really help," says Kahler. "But if a person doesn't want to do that, they may want to employ journaling or mindfulness meditation that is specifically geared to money scripts. But typically, people can make pretty good progress in really focusing on their personal situation, and a financial therapist can help with that."
Be OK with baby steps
After doing some deep work on your money story, and on how your long-held beliefs came to be, you may be feeling ready to take some small steps toward a better financial future.
A few baby steps you can consider could include moving your money into a high-yield savings account instead of a standard savings account. If you have a 401(k) with an employer match, you could also look into contributing enough to receive that match.
But be ready for those old stories to come up, because even an account type like a 401(k) may become an emotional stumbling block.
"One of my favorites from the Great Recession is, 'I'm not going to invest in a 401(k) because my uncle lost all of his money in his 401(k),'" says Hussey. "It wasn't the 401(k) that was the problem. It was your uncle, who in the middle of the night got freaked out and sold everything in his 401(k) at the bottom of the market. That's actually what was wrong. It was the human making an emotional decision. The 401(k) itself is just a tax wrapper. It has no personality. It doesn't do things to anybody. So let's unpack what that story is about."
Hussey encourages people to deeply investigate where the stories they've heard about investing came from.
"I think those kinds of questions like, 'What am I telling myself? Where's it coming from? Who told it? What was the location I heard that? Where do you think they heard that from?' That's how we start to unpack these stories about investing and saving," says Hussey.
This content is for educational and informational purposes and does not constitute investment advice. Alana Benson is a writer at NerdWallet. Email: [email protected]. X (formerly known as Twitter): @alananeedsanap.
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