“Money isn’t real. It’s a method of exchange, a unit we exchange for something we actually need or value. Our bank balance is merely a number, bits represented on a screen, but it’s also a signal and symptom. We tell ourselves a story about how we got that money, what it says about us, what we’re going to do with it and how other people judge us. And those stories, those very powerful unstated stories, impact the narrative of just about everything else we do.” – Seth Godin
In 2011, researchers at Kansas State University conducted a study to uncover the most common stories about money from men and women around the United States. Over the course of their research, they interviewed over 400 people to assess their level of agreement on 70+ money-related beliefs.
- I would be happier if I had more money.
- Money is power.
- Money corrupts people.
- It is not polite to talk about money.
- Money should be saved, not spent.
The study participants spanned all ages and income levels. Some statistics of interest:
- 78% had at least a bachelor’s degree; another 43% had some sort of advanced degree.
- 49% made $60,000 or more, per year; 23% made $100,000 or more.
- 59% had net worth of $100,000 or more. Of that group, 20% had net worth of $1,000,000 or more.
- 60% described their childhood socioeconomic status as middle-class or upper-middle-class; 2% came from “wealthy” backgrounds.
At the conclusion of the study, the researchers had identified four distinct money stories or belief patterns (what they named “scripts”). According to the research, these beliefs describe a person’s general predisposition toward money and heavily influence decision-making where money factors in.
According to the study, the four most common scripts — what I call “money mindsets” — are as follows:
Individuals with an avoidance mindset assume a “head in the sand” approach to managing money — all things being equal, they’d rather not deal with it.
For the avoider, money stirs up feelings of fear, anxiety and disgust. They often don’t know exactly what’s in their accounts and may not open their credit card statements when they come in the mail.
People with an avoidance mindset may think and say things like:
- “I don’t deserve a lot of money when others have less than me.”
- “If I’m rich, I’ll never know what people really want from me.”
- “There is virtue in living with less money.”
- “As long as I keep working hard, I won’t ever have to worry about money”
The worship mindset is most commonly associated with the belief that “things would be better if one had more money.”
Has that thought ever crossed your mind? If so, you’re not alone. According to the research, this is the single most common belief among Americans. People with a worship mindset tend to attribute current unhappiness or dissatisfaction with a lack of money and, accordingly, believe that a higher salary or financial windfall would solve their current problems.
People with a worship mindset may think and say things like:
- “You can never have enough money.”
- “Money is power.”
- “Things would get better if I had more money.”
Those with a status mindset tend to believe self-worth is commensurate with net worth. In the context of our core needs, people with this mindset equate money with significance — they use it as a proxy for importance in society. Often, the status mindset manifests as a competitive stance to the acquisition of goods and material possessions, often referred to as a “keeping up with the Joneses.”
People with a status mindset say and think things like:
- “Look at that expensive car… he must be successful.”
- “If someone asked, I would probably tell them that I earn more than I actually do.”
- “Poor people are lazy.”
Those with a vigilant mindset pay very close attention to how much money is coming in and how much money is going out each month. They likely wear labels such as “cheap,” “tight” and “frugal” with pride.
Those with a vigilant mindset commonly live well below their means – struggling, at times, to get comfortable with spending money on themselves even when they can afford to. Lastly, the money-vigilant are often secretive about their personal finances and may distrust financial institutions.
People with a vigilant mindset say and think things like:
- “It’s not polite to talk about money.”
- “Money should be saved, not spent.”
- “It is extravagant to spend money on myself.”
- “I would rather publicly share the details of my sexual history than the details of my financial history.” (Direct quote from a “vigilant” friend of mine!)
What’s Your Mindset?
Take a minute now to reflect on your personal money mindset(s):
- Based upon the descriptions above, what’s your dominant and/or active “money mindset(s)”?
- What recent personal or professional decisions reflect this mindset?
- How does your current mindset help you?
- How does your current mindset hold you back?
- Which experiences or individuals have had the greatest influence on your current money mindset?
Why This Matters
Like our other values and beliefs, adult beliefs about money often map to what we learned as children. Ted and Brad Klontz, the leaders of the Kansas State study, concluded that these beliefs are passed down from generation to generation in our families and are generally unconscious.
The implication: Many of the big decisions we make — in fact, any decision with financial implications — are influenced by our money mindset without our even knowing it!
The takeaway: If you want to make decisions you don’t regret, it’s time to get clear on what your story about money is – and where it comes from. (Click here to tweet this thought.) Once we know that, we can then decide whether we like it as-is, or whether we want to change it in order to improve the ending.
What new insights do you have about your money story? Share in the comments!
This post originally appeared on Regret Free Life.