“Money scripts,” coined by Brad Klontz, describes our unconscious beliefs about money, often developed in early childhood.
Without understanding your money scripts, you may simply label yourself as a spendthrift or an overspender, but learning to understand these scripts helps us to better manage our financial wellbeing and navigate situations involving money more wisely.
In this post, I’ll share my own experiences with money scripts, real-life stories of others who have felt trapped by their scripts, and how you can create new scripts to live your Rich Life.
What are money scripts?
Money scripts can be defined as the ‘why’ behind how we manage our money, it’s the stories we tell ourselves ingrained in our psychology. They explain why we spend, save or even discuss money the way we do. Often generational, these scripts are like inheriting traits from your parents – you can adopt their fears and thoughts about money, just as they did from their parents.
In childhood, money experiences create deep grooves that shape us and can affect us for decades, often our entire lives. We might like to imagine that we make money decisions based on budgets and cold, hard logic, but the truth is we’re often just repeating what we were exposed to—whether that’s a scarcity mentality, a sense of ease and abundance, or fear and confusion around money. Our relationship with money plays out in big and small ways.
Here’s a simple example: As we push our shopping cart down the grocery store aisle, we want to believe that we’re making a careful cost-benefit calculation when we stop in the snack aisle. In reality, our parents taught us that love meant eating Ritz crackers as an after-school treat. Forty years later, we mindlessly reach for the Ritz crackers, never realizing that our behavior has been shaped by our invisible scripts. These are the beliefs about money we hold so deeply that we don’t even realize we have them. If you constantly worry about money, you almost certainly have invisible scripts.
Another example of an invisible script that has long dominated society (but is now being questioned) is the belief that you need a college degree to be successful.
Most people don’t realize they have these invisible scripts about money ingrained in them. Thoughts like “investing is only for the top 1%” and other false narratives limit what you can achieve with your money and prevent you from living a Rich Life.
The good news is you can acknowledge where you came from and decide where you want to go. When it comes to the invisible scripts you inherited from your parents, it’s important to remember that your parents did the best they could, but I doubt they read books on money like you’re doing at this very moment. They probably didn’t understand all the intricacies of investing and money psychology. But you’re learning that now, which means you have the opportunity to rewrite your story.
Losing my money was a wake up call…
I realized my own invisible scripts when I started this journey in 2004 while studying technology and psychology at Stanford. Coming from a middle-class family, the only way I could afford college was to pay my own way. I built a system to apply to more than 60 scholarships — and it worked. I eventually earned enough to cover my undergrad and grad school.
The struggles I went through with not being able to afford college in the beginning is one of the reasons why when I got my first scholarship paycheck, I invested it in the stock market. And I lost half of it right away.
Losing that money was a wake-up call. I decided to learn how money really works. What I found was that most money advice out there is irrelevant. It focused on fear-based approaches, and I refused to accept that financial stability had to mean restriction, caution, and confusion.
I believe that money is about psychology. The way our money scripts dictate our financial situations and our lack of understanding about our relationship with money can make or break our financial well-being.
But once you’re in the right mindset and have a positive identity with money, the rest falls into place.
Check out the video below where I talk more about this and how you can change your mindset to start earning the money you want.
How to identify your money scripts
The first step is admitting that generational habits are very real. If your parents didn’t talk about money, it’s likely you don’t talk about money. If your parents were always worried about money, you probably are, too.
This is why I make it a point to ask couples what money messages they remember hearing as children.
Here is some of the responses I got:
“You can’t afford it.”
“That’s too expensive.”
“I would never pay that much. What a waste.”
“Don’t get too big for your britches.”
“A man is not a financial plan.”
“Keep a little money set aside, just in case.”
“You might as well stop working since all your income is going to childcare.” (Moms’ wages are often the first to go without truly considering the effects on the woman’s career later on.)
“You need to save your money.” (Young women are often told to save, but rarely taught to invest.)
“You will never have a lot of money.”
“Being in debt is just part of living.”
“You come from a long line of teachers and farmers. Don’t expect to earn much money.”
“We don’t need money to be happy.”
“Be a man.”
“Men should provide for their family.”
“Your job is to be the rock. Men don’t worry about emotions.”
“Why would you stay at home? Dads work.”
“Keep up with other people.”
“Did you hear? John bought a new house. . . .”
“How can they afford to go on a third vacation this year?!”
“You don’t stay in an apartment when you have three kids.”
“Investing is for rich people, not for you.”
“We keep our money in the bank.”
“The stock market is just gambling for the wealthy.”
“I’d rather buy gold or silver. Something I can touch with my own two hands.”
“Things will work themselves out.”
“Stop worrying. Things always turn out fine for us.”
“I’m more of a ‘go with the flow’ kind of person.”
“Why are you so obsessed with money? Can’t you just relax?”
“Rich people are shallow.”
“Must be nice . . .”
“More money, more problems.”
“Of course they can afford to spend $500 on a meal.” (eye roll)
These observations often lead to invisible scripts that can hold you back, and you start telling yourself these stories.
Some of the most common ones that usually come out of these experiences are:
- “I’m not good with money”: This is a self-limiting belief that can prevent you from taking control of your finances. Everyone can learn to manage money effectively. It’s a skill, not an innate talent.
- “Budgeting means depriving myself”: This mindset views budgeting as a restrictive diet for your wallet instead of a spending plan that aligns with your values and goals.
- “I need to make more money to save”: This belief implies that saving habits are solely about income. While earning more helps, you should start with what you have, even if it’s small.
- “Investing is only for the rich”: This mindset can keep you from growing your wealth and achieving long-term financial goals. Investing can be done at any income level, and with proper guidance, it can be a powerful tool for building financial security.
- “Money is the root of all evil”: This belief associates money with negativity and can lead to guilt or discomfort around wealth. In reality, money is neutral; it’s how we use it that matters.
- “I’ll never be rich”: This story we tell ourselves creates a sense of helplessness and limits your financial ambition. Believe in your ability to improve your financial situation and set ambitious goals.
- “It’s better to enjoy life now than worry about the future”: While it’s important to enjoy the present, neglecting the future can lead to financial insecurity and missed opportunities. You should strive to balance between enjoying today and planning for tomorrow.
Here’s a challenge for you: try to identify your own money beliefs. Where did they come from? Are they serving you well? If not, how can you reframe them?
When I discovered my own money scripts, I decided that instead of tying myself to rigid money beliefs, I would set up Money Rules for my life. My 10 Money Rules are flexible and have helped me build life changing wealth, check them out:
Pivotal moments that form money scripts
Many of our money beliefs are formed at very specific moments in our lives. What’s conveyed at these pivotal times—like holidays, birthdays, and graduations—often sticks with you forever. This list will help you uncover money moments that you may have forgotten but still continue to affect you today.
- Childhood experiences: Learning to save or delay gratification if given an allowance, experiencing financial hardship that can lead to deep-seated anxieties, or witnessing parents argue about money, which can create a fear of finances.
- Family attitudes and behaviors: Learning messages about money, money goals and strategies, and attitudes like secrecy surrounding finances.
- Cultural and societal influences: Media portrayals of wealth that can lead to unrealistic expectations, societal pressures to “keep up,” and cultural norms where some cultures value frugality while others value spending on social events.
- Significant financial events (positive or negative): Experiencing an influx of wealth or losing a significant amount of money, or watching close friends or family go through similar financial events.
- Education and money: Associating a college degree with success (a belief now being challenged) or viewing student debt as a necessary investment.
When it comes to money, what do you remember about…
- Holidays with your family?
- Birthdays?
- Allowances?
- Graduations?
- What you wore to school?
- Back-to-school shopping?
- How did your parents talk about money when bills were due?
- Your first job?
- Your first love?
- Applying to college?
Pick one script and go deeper:
This shouldn’t take a lot of time. Usually, the first thing that pops into your head reveals a lot about your relationship with money.
- Where did this script come from? Get specific.
- Where were you sitting when you first heard it?
- How many times did you hear it?
- How has this script affected you and your relationship?
- How can you rewrite it so that it’s something that serves you today?
- What happened?
- How did that shape your view of money?
- How does that lesson show up in your life today?
What a healthy relationship with money looks like
We’ve talked a lot about money scripts and the unhealthy relationship they can create with money, but what does a healthy relationship with money even look like?
I think it’s about understanding that money is a tool to enrich your life, not a source of stress. It’s about taking control of your finances, making conscious decisions about spending and saving, and allowing your financial situation to enhance your life, not dictate it.
Basically, a healthy relationship with money is one that empowers you to live a fulfilling life, free from the shackles of financial anxiety.
It’s about having a safety net of savings and an emergency fund so that life’s curveballs don’t throw you off balance. It’s about taking control of your debt instead of letting it dictate your choices. It’s the freedom to spend on what’s important to you, guilt-free, because you’re living within your means and in line with your values. And it’s about open communication-whether with loved ones or financial advisors-to make sure everyone is on the same page. Finally, it’s about setting financial goals that aren’t rigid, but evolve and grow with your dreams and aspirations.
Building a good relationship with money takes effort and intention though. You need to challenge yourself to a journey of self-discovery and growth by…
- Asking yourself the hard questions: Reflect on your thoughts, feelings, and behaviors around money. Identify any limiting beliefs and envision your ideal financial life.
- Improving your mindset: Read books, listen to podcasts, watch videos about money, or consider seeking professional guidance.
- Setting goals for your relationship with money: Define what a life of abundance means to you and change your habits to achieve it.
- Forgiving and accepting yourself: Release any guilt or shame about past financial mistakes. Embrace self-compassion and learn from your experiences.
- Educating yourself: Continue to expand your financial knowledge through books, articles, and other resources.
Remember, transforming your relationship with money is a process, not an overnight fix. Be patient with yourself, celebrate your progress, and focus on moving forward.
Living your Rich Life with new money scripts
Now for the fun part, how do you live a Rich Life with your new money scripts? Identifying, unlearning and coming to terms with your invisible scripts is only part of the process. You have to make your new money scripts fit into your goals for your rich life.
How do you do that?
First, define your personal Rich Life. It doesn’t mean imitating others, it means living your own life as you define it. As in my post here, you need to ask yourself, “Why do you want to be rich?” and use your new money scripts to help you set actionable goals to build that life. You can also check out this article here to learn the rules for living this rich life.
You can also check out this post here to learn the rules for living this envisioned rich life.
Second, you need to align your new money scripts with your values and goals. I touch on this in my post “How to Make Expensive Purchases: Spending Money on Yourself (Minus the Guilt)” but essentially you should be able to have a guilt-free relationship with money because you know you’re living within your means and values.
Third, you should be able to create a plan to support your vision of a Rich Life. In my post, “How to Get Rich: 7 Realistic Steps to Build Your Wealth Today,” I give you a guide on exactly how to do this.
Want to discover scripts that go beyond the invisible and actually save you money? Check out this video where I dive into real-world scripts you can use to keep more money in your pocket.
Real life stories from my podcast
Everyone has their own money scripts which they need to work around, so you’re not alone.
The key is to make small psychological progress in order to start living your Rich Life.
Take Bebe and Paul. They’re stuck in invisible scripts that have given them false narratives that are sinking their finances, making it difficult to recognize the negative effects of their actions which are silently eroding their financial stability, all while masquerading as harmless, everyday choices.
[00:04:18] Bebe: We needed a new mattress so we went to a mattress firm. Got approved for a new credit card. Got like a midline mattress. I think Paul just kinda ran with it like a Lowe’s credit card, and a Home Depot credit card. But it was all things that had been piling up that needed to be addressed. But he could say the same for the credit cards that I have.
[00:04:37] Ramit: How much did that mattress cost?
[00:04:41] Paul: $2200
[0:04:42] Ramit: Okay, is that a lot or a little? What do you think about that number?
[00:04:44] Bebe : I think it’s very midline for someone who has to take out a line of credit to get a decent mattress that’s going to last what 8 years, the recommended 8 years. We’ve never had a new mattress in our lives. Knowing that we couldn’t pay cash for it and being approved for a line of credit.
[00:05:00] Ramit: You couldn’t pay cash cause you didn’t have enough cash to pay?
[00:05:03] Bebe: Correct. Absolutely not.
[00:05:05] Ramit: Would you say there are other examples of that in your life? Making short term decisions that end up costing you a lot more.
[00:05:12] Bebe: Oh yeah. Everything is now, everything is in the now for us.
[00:05:16] Ramit: Do you wanna change that?
[00:05:19] Bebe: I do. But at the same time I don’t want to be those people who don’t enjoy life now because they’re saving for something that may or may not happen in the future
Bebe and Paul’s story reveals a common paradox in personal finance: the tension between enjoying life now and preparing for the future. Their view of the future as unpredictable doesn’t lead them to save more as a safety net. Instead, it fuels a compelling urge to spend in the present, driven by a fear of missing out on life’s pleasures.
This ‘carpe diem’ approach, their invisible script, blinds them to the long-term consequences of their choices. What they see as “living in the now” is actually a series of short-sighted financial decisions that compound over time, gradually eroding their financial health.
The more I talked to them, the more I found the pivotal moments that created these invisible scripts they tell themselves. What I found out from talking to them was that Bebe grew up wealthy – penthouses, businesses, the works. But when she was 18, everything changed. Her parents had previously divorced, and although her mother had a business and amassed wealth, she made some decisions when Bebe was 18 that ultimately caused her to lose most of it.
Reading about her experiences, you can probably already see Bebe’s invisible scripts and how they were formed. Unfortunately, her traumatic past has led her to spend money unwisely because she didn’t learn saving habits when she was younger and had an unreliable money role model.
Growing up wealthy and associating money with prestige rather than its intrinsic value, she now has a sense of self-worth tied to money. She wants to make sure her children don’t feel the same lack by giving them what they want, regardless of the cost.
Paul, on the other hand, feels the same and doesn’t want his children to miss out because he grew up with a lack of money. When he wanted to pursue hobbies like drumming or soccer, he was told they didn’t have the money to invest in those things.
[00:29:31] Ramit: Paul, do you see any similarities with the action your mom took and with the action you took when you were traveling? What connection if any do you see between those two behaviors?
[00:29:42] Paul: An emotional decision without thinking about it. An impulse. Trying to fix a situation without thinking about it.
[00:29:50] Ramit: And what was the emotion behind each of those decisions?
[00:29:55] Paul: Love. I wanna help the person I love. I feel bad for them. I wanna give them something.
If Bebe and Paul could acknowledge and address these deeply ingrained beliefs they share, they could begin to make choices that are aligned with their long-term well-being. The possibility of breaking free from paycheck-to-paycheck living, especially at their current income level, could become a reality if they focused on not reacting impulsively to emotional triggers and instead focused on investing for their future.
The mindset shift here needs to go from “we should spend now because we don’t know what the future holds” to “we should save now because we don’t know what the future holds”. It’s also learning that it’s not just about accumulating savings; it’s about creating a sense of control and peace of mind, knowing they’re prepared for whatever life throws their way.
Remember, money scripts are deeply held beliefs that can significantly impact your financial life. By identifying, understanding, and challenging these scripts, you can rewrite your financial narrative and build a healthier relationship with money. It takes effort and intention, but the reward is a Rich Life of financial freedom and abundance.
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