In a conversation with 3 others recently the topic turned to what we do with our colleagues at work. One person mentioned he had participated in a lottery pool where each person had put in $2 a week for the office to buy lottery tickets. The pool had never won more than $50 or $100 which they contributed back to buy more tickets.
Now you may be thinking, $2 a week big deal. But this person had contributed for more than a decade and a half, and only stopped because he left that company. When you do the math it adds up to more than $1700. What could a person do or buy with that same money? But even me writing those 2 sentences shows MY money script!
I recount this true anecdote to show readers that everything financial in your life is determined by your money script and your financial personality.
Your money script will determine how successful your financial life will be. In fact, your script will define what you believe is success. For example is your definition of success reaching goals or beating the market?
Your history and upbringing has shaped your money script. Your observations of significant others’ past financial decisions has influenced your current outlook on money matters. There are subconscious, biological, and societal factors that helped you write your script.
Your money script will determine your financial personality. The more we are aware of both our money script and financial personality the more we can make it work for our future. In my financial planning practice I have seen how money scripts can be both a help and a hindrance. Reflecting on your money perspective will be very helpful in helping you make better and more rational decisions. Studies have shown that we believe ourselves to be more rational decision makers than we actually are.
Here are some questions that will help you reflect on your money perspective.
Do you consider money to be a renewable or finite resource?
Do you equate wealth with high income, or is your definition of wealth more involved? Is wealth status and power, or independence and productivity?
Does your money personality enable you to distinguish between wants and needs?
Let’s go back to that number you calculated in the last blog post. What was your reaction to that number?
Your yearly salary should be considered as part of a larger picture. Think beyond this year or next and its expenses. What will the balance sheet of a lifetime of working look like? Is financial independence a probability?
My role as your financial planner is to help you identify your financial goals, set out an action plan to achieve them and to keep you accountable to reaching them.
Women and Wealth: Insights into Female Clients’ Decisionmaking Process. Meagan Swanson CFA Commonwealth Financial Network.