We all have a voice inside our heads. Sometimes it’s depicted as the angel or devil on our shoulders, depending on whether the voice is urging us towards something positive or negative.
When it comes to money, that voice can get loud and repetitive. It reminds us over and over again about our mistakes or keeps us firmly stuck in place with a bad money habit. But why is it so hard to quiet that voice down?
Because that voice is playing internal money scripts that solidified well before we became adults. Read on to find out what a money script is and how you can rewrite yours.
What is an internal money script?
Financial psychologist Dr. Brad Klontz was one of the first to start talking about “money scripts.” These scripts are the beliefs we’ve internalized about money over the years. Many of us form scripts early in our lives, creating them based on childhood observations of our parents’ relationships with money.
“Children learn about money from a variety of sources, but as is the case with many psychological issues, our parents have the greatest impact; specifically, it’s the parent’s indirect messages that are often the most powerful,” explains Fortune.
“When repeated over time, these early experiences can solidify into firmly held beliefs. And because they’re developed through the eyes of a child, they tend to be incomplete or partially true, but yet they become indelible, controlling the way we interact with and use money,” the article adds.
Just because a money script is tightly woven into the fabric of your brain doesn’t mean you can’t rewrite it. But first, you need to find out what your money script is telling you.
4 types of money scripts
In a study on money scripts, Dr. Klontz and his colleagues outline the major scripts. These four basic principles are what feed into a variety of the money beliefs that circle through our heads daily.
If you fall into the money avoidance category, you likely tell yourself that money is bad. According to Klontz’s study, people with this script are not as in tune with where they are in their finances and feel “fear, anxiety, or disgust” in relation to money.
This outlook on money can sabotage your financial success. Those with money anxiety can be too cautious, causing them to miss out on potential investment opportunities. Money avoidance could also lead to overspending or poor money management if you choose to ignore your finances altogether.
According to Dr. Klontz, this script is the most common among Americans. It can be described as the idea that “more money will make things better.” In other words, it’s the belief that all of your problems can be solved if only you had more money.
Like money avoidance, this belief takes financial control out of your hands. You may take dangerous risks in pursuit of more money, or even engage in activities like pathological gambling, workaholism, or compulsive buying.
Those who have this script ascribe their self-worth to their net-worth. This script can not only lead to spending beyond your means, but it can also be bad for your health.
According to the study, being overly concerned with your financial success has been associated with lower rates of well-being. And that’s not all — the study goes on to say that materialism can lead to less “self-actualization, vitality, and happiness, and higher levels of anxiety.”
Finally, there’s money vigilance. With this script, money can be a “deep source of shame and secrecy, whether one has a lot or a little,” Klontz’s study explains.
This shame can lead to things like lying to your spouse about money, caution to the point of financial detriment (for example, not seeking credit), and a great deal of fear about money and privacy. This script can be a double-edged sword:
“While such an approach to money may encourage saving and frugality, excessive wariness or anxiety regarding pending financial danger keeps someone from enjoying the benefits and sense of security that money can provide,” the study points out.
How to rewrite your money script
Don’t like what your money script is telling you? Change it. Your best tool to change your internal dialogue is awareness.
The South African College of Applied Psychology (SACAP) explains what happens with and without awareness of your money psychology:
“A vicious cycle exists between a challenging external money-related event and an unconscious money script. The internal money script ‘colours’ our perception of the external money event, creating discomfort, which forces us to latch onto another money script to flee the pain.”
However, seeing your money script play itself out in the moment enables you to decide what to do with it.
The SACAP explains that when you are aware of your money script and understand how it affects you, you can decide whether your gut reaction is appropriate or not. Being conscious enough to make that decision means you’ve conquered autopilot decision-making.
What follows? The ability to break the vicious cycle of money scripts.
In the end, it all comes down to mindfulness. The more you understand your relationship with money and your reasons for engaging with it the way you do, the better decisions you can make. That means you get to be in control of your money — instead of the other way around.
Interested in refinancing student loans?Here are the top 6 lenders of 2019!
|Lender||Variable APR||Eligible Degrees|
|Check out the testimonials and our in-depth reviews!
1 Important Disclosures for Earnest.
To qualify, you must be a U.S. citizen or possess a 10-year (non-conditional) Permanent Resident Card, reside in a state Earnest lends in, and satisfy our minimum eligibility criteria. You may find more information on loan eligibility here: https://www.earnest.com/eligibility. Not all applicants will be approved for a loan, and not all applicants will qualify for the lowest rate. Approval and interest rate depend on the review of a complete application.
Earnest fixed rate loan rates range from 3.89% APR (with Auto Pay) to 7.89% APR (with Auto Pay). Variable rate loan rates range from 2.47% APR (with Auto Pay) to 6.97% APR (with Auto Pay). For variable rate loans, although the interest rate will vary after you are approved, the interest rate will never exceed 8.95% for loan terms 10 years or less. For loan terms of 10 years to 15 years, the interest rate will never exceed 9.95%. For loan terms over 15 years, the interest rate will never exceed 11.95% (the maximum rates for these loans). Earnest variable interest rate loans are based on a publicly available index, the one month London Interbank Offered Rate (LIBOR). Your rate will be calculated each month by adding a margin between 1.82% and 5.50% to the one month LIBOR. The rate will not increase more than once per month. Earnest rate ranges are current as of Month/Day/Year, and are subject to change based on market conditions and borrower eligibility.
Auto Pay discount: If you make monthly principal and interest payments by an automatic, monthly deduction from a savings or checking account, your rate will be reduced by one quarter of one percent (0.25%) for so long as you continue to make automatic, electronic monthly payments. This benefit is suspended during periods of deferment and forbearance.
The information provided on this page is updated as of 08/21/18. Earnest reserves the right to change, pause, or terminate product offerings at any time without notice. Earnest loans are originated by Earnest Operations LLC. California Finance Lender License 6054788. NMLS # 1204917. Earnest Operations LLC is located at 302 2nd Street, Suite 401N, San Francisco, CA 94107. Terms and Conditions apply. Visit https://www.earnest.com/terms-of-service, email us at email@example.com, or call 888-601-2801 for more information on ourstudent loan refinance product.
© 2018 Earnest LLC. All rights reserved. Earnest LLC and its subsidiaries, including Earnest Operations LLC, are not sponsored by or agencies of the United States of America.
2 Important Disclosures for Laurel Road.
Laurel Road Disclosures
APR stands for “Annual Percentage Rate.” Rates listed include a 0.25% EFT discount, for automatic payments made from a checking or savings account. Interest rates as of 11/8/2018. Rates subject to change.
Variable rate options consist of a range from 3.27% per year to 6.09% per year for a 5-year term, 4.64% per year to 6.14% per year for a 7-year term, 4.69% per year to 6.19% per year for a 10-year term, 4.94% per year to 6.44% per year for a 15-year term, or 5.19% per year to 6.69% per year for a 20-year term, with no origination fees. APR is subject to increase after consummation. The variable interest rate will change on the first day of every month (“Change Date”) if the Current Index changes. The variable interest rates are based on a Current Index, which is the 1-month London Interbank Offered Rate (LIBOR) (currency in US dollars), as published on The Wall Street Journal’s website. The variable interest rates and Annual Percentage Rate (APR) will increase or decrease when the 1-month LIBOR index changes. The variable interest rates are calculated by adding a margin ranging from 0.98% to 3.80% for the 5-year term loan, 2.35% to 3.85% for the 7-year term loan, 2.40% to 3.90% for the 10-year term loan, 2.65% to 4.15% for the 15-year term loan, and 2.90% to 4.40% for the 20-year term loan, respectively, to the 1-month LIBOR index published on the 25th day of each month immediately preceding each “Change Date,” as defined above, rounded to two decimal places, with no origination fees. If the 25th day of the month is not a business day or is a US federal holiday, the reference date will be the most recent date preceding the 25th day of the month that is a business day. The monthly payment for a sample $10,000 loan at a range of 3.27% per year to 6.09% per year for a 5-year term would be from $180.89 to $193.75. The monthly payment for a sample $10,000 loan at a range of 4.64% per year to 6.14% per year for a 7-year term would be from $139.65 to $146.76. The monthly payment for a sample $10,000 loan at a range of 4.69% per year to 6.19% per year for a 10-year term would be from $104.56 to $111.98. The monthly payment for a sample $10,000 loan at a range of 4.94% per year to 6.44% per year for a 15-year term would be from $78.77 to $86.78. The monthly payment for a sample $10,000 loan at a range of 5.19% per year to 6.69% per year for a 20-year term would be from $67.05 to $75.68.
However, if the borrower chooses to make monthly payments automatically by electronic funds transfer (EFT) from a bank account, the variable rate will decrease by 0.25%, and will increase back up to the regular variable interest rate described in the preceding paragraph if the borrower stops making (or we stop accepting) monthly payments automatically by EFT from the designated borrower’s bank account.
3 Important Disclosures for SoFi.
4 Important Disclosures for LendKey.
Refinancing via LendKey.com is only available for applicants with qualified private education loans from an eligible institution. Loans that were used for exam preparation classes, including, but not limited to, loans for LSAT, MCAT, GMAT, and GRE preparation, are not eligible for refinancing with a lender via LendKey.com. If you currently have any of these exam preparation loans, you should not include them in an application to refinance your student loans on this website. Applicants must be either U.S. citizens or Permanent Residents in an eligible state to qualify for a loan. Certain membership requirements (including the opening of a share account and any applicable association fees in connection with membership) may apply in the event that an applicant wishes to accept a loan offer from a credit union lender. Lenders participating on LendKey.com reserve the right to modify or discontinue the products, terms, and benefits offered on this website at any time without notice. LendKey Technologies, Inc. is not affiliated with, nor does it endorse, any educational institution.
5 Important Disclosures for CommonBond.
Offered terms are subject to change. Loans are offered by CommonBond Lending, LLC (NMLS # 1175900). If you are approved for a loan, the interest rate offered will depend on your credit profile, your application, the loan term selected and will be within the ranges of rates shown.
All Annual Percentage Rates (APRs) displayed assume borrowers enroll in auto pay and account for the 0.25% reduction in interest rate. All variable rates are based on a 1-month LIBOR assumption of 2.28% effective October 10, 2018.
6 Important Disclosures for Citizens Bank.
Citizens Bank Disclosures
|2.57% – 6.97%1||Undergrad & Graduate|
|2.47% – 6.99%3||Undergrad & Graduate|
|2.68% – 8.77%4||Undergrad & Graduate|
|3.24% – 6.66%2||Undergrad & Graduate|
|2.61% – 7.35%5||Undergrad & Graduate|
|3.01% – 9.75%6||Undergrad & Graduate|