What we learn about money
From an early age, what we believe about money and how to make financial decisions is influenced by our parents or caregivers. These beliefs can either propel us towards financial success or slow down our progress.
The four 'money scripts'
Financial psychologists, Ted and Brad Klontz, identified four ‘money scripts’ that shape how we think about money: Money Avoidance, Money Worship, Money Status, and Money Vigilance. “How Clients’ Money Scripts Predict Their Financial Behaviors” by Bradley T. Klontz and Sonya L. Britt.
Money Avoidance means you associate money with negative outcomes, for example, you avoid investing because you are fearful of losing money.
Money Worship is the belief that money means happiness, leading to the notion that buying expensive things will bring you joy.
Money Status ties your self-worth to wealth, often leading to excessive spending to show off your wealth.
Money Vigilance is all about being careful with money, saving, and spending wisely, which can be good but also limiting.
By becoming aware of which money scripts we follow, we can make sure that our financial choices fit with personal values and objectives.
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Set specific targets
One key tip for developing a saver mindset is to set specific targets you want to save for. For example, an emergency fund, holiday savings, or long-term investments. Clear goals help you to keep your motivation and focus.
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A growth mindset
Adopting a growth mindset also helps. What this means is that you embrace challenges rather than avoiding them. We all make mistakes with money, such as overspending, making poor investment decisions, or falling for scams, and saving won’t always be straightforward. Now and then, we all need to tap into our emergency funds, search for new jobs, or deal with higher mortgage rates.
A growth mindset is about having the confidence to tackle these hurdles and being adaptable. Developing these skills requires patience and practice, so it’s important to celebrate small wins along the way.
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Avoid spending urges
Resist the urge to splurge. Learn to pause before you buy something to work out if it’s a necessity or a want, and if it fits with your goals and values.
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Get negotiating
We all need to get better at negotiating. Whether it’s discussing a higher salary, reducing monthly expenses, or switching providers, negotiating may help you increase your income and reduce unnecessary costs.
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Educate yourself
Finally, financial education is the backbone of a saver mindset. Just 15 minutes a week can make a difference. The more knowledgeable you become, the better equipped you’ll be to make informed decisions. Wealth alone doesn't ensure happiness, but financial stability gives you the freedom to pursue your passions. Developing a saver mindset is worth the effort and patience it requires.
