in: Career & Wealth, Wealth

• Last updated: September 30, 2021

Podcast #529: The Money Scripts That Are Holding Back Your Financial Future

If you struggle with getting your financial house in order, you may feel that what you need is more information on how things like stocks or IRAs or budgets work. However, my guest today would say that what you actually need most of all, is a better understanding of the relationship that your parents’ and even your grandparents’ had with money, and how the “money scripts” they’ve passed down to you have affected your own thinking about finances. 

His name is Brad Klontz; he’s a psychologist who specializes in money issues and the author of Mind Over Money: Overcoming the Money Disorders That Threaten Our Financial Health. We begin our conversation discussing what Brad calls the Big Lie in personal finance. Brad then explains how money scripts form in your childhood, and can keep you from making progress with your finances in your adulthood. We dig into why you can feel shame over being both poor and rich, why it’s hard to move ahead from the socio-economic status you came from and easy to get dragged back into a financial comfort zone, and how you can break out of old ingrained patterns. We end our conversation with how to be more intentional about the money scripts you’re passing down to your own kids, including why you shouldn’t tell them, “We can’t afford that.”

Show Highlights

  • Why psychology has largely ignored the topic of money/spending
  • What’s the Big Lie of personal finance advice?
  • Why there’s so much shame connected to personal advice 
  • How money scripts/events that get passed down generation to generation
  • The way relationships can get us into a financial comfort zone (and why it’s hard to change)
  • What’s going on when we avoid money?
  • What happens when people grow up with a lot of money?
  • How to handle money friction in family/friendship settings 
  • What’s going on with money-worshipping scripts?
  • What is relative deprivation?
  • How to pass good money scripts to your kids (and avoid passing on the bad ones)

Resources/People/Articles Mentioned in Podcast

Mind over money by brad klontz book cover.

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Read the Transcript

Brett McKay: Welcome to another edition of The Art of Manliness podcast. If you struggle with getting your financial house in order, you may feel that what you need is more information on how things like stocks or IRAs budgets work. However, my guest today would say that what you actually need most of all is a better understanding of the relation that your parents and even your grandparents had with money, and how the money scripts they passed down to you have affected your own thinking about finances.

His name is Brad Klontz, a psychologist who specializes in money issues and he’s the author of the book, Mind over Money: Overcoming the Money Disorders That Threaten Our Financial Health.

We begin our conversation discussing what Brad calls the big lie of personal finance. Brad then explains how money scripts from your childhood can keep you from making progress in your finances in adulthood. We dig into why you can feel shame over being both poor and enrich, why it’s hard to move ahead from the socioeconomic status you came from, and easy to get dragged back into a financial comfort zone, and how you can break out of old ingrained patterns.

We end our conversation with how to be more intentional about the money scripts you’re passing down to your own kids, including why you shouldn’t tell them, “We can’t afford that.” After the show’s over, check out our show notes at Brad joins me now via

All right, Brad Klontz, welcome to the show.

Brad Klontz: Excited to be here, Brett. Thanks so much for having me.

Brett McKay: You’re a psychologist, but you specialize in issues people have with money. What led you down to go that path with your practice or your studies?

Brad Klontz: Yeah, a bit of an odd duck for sure. Thanks for pointing that out. I’ll tell you, I got out of graduate school and for those of you who’ve gone to college, you can totally relate to this, at least many of you can. I owed $100,000 in student loan debt by the time I was done with my doctorate degree.

I was raised, I would say lower middle-class, sort of working-class mentality and environment. My parents however, were very frugal around money and so there was this sense that, “There’s not enough money. We need to save money, and whatever you do, don’t borrow any money. Debt is bad. Try to avoid it at all costs.”

When I got out of graduate school owing $100,000 in student loan debt, I was pretty anxious about it, especially the first year when I saw that I ended up paying about $8,000 in interest. I was mortified. I would say I was fairly desperate to get out and I was looking for ways to, “How can I pay this off as fast as possible?”

Well, during the same year, I saw a friend of mine make about a hundred thousand dollars in 12 months trading stocks. The thing about this friend is, he knew nothing about stock market. In that sense, he was just like me, right? I saw him make all this money and I thought, “What a brilliant strategy for me to do. I can get out of debt in a year and then just move on in my life.”

I sold what I had of value at that time, which was primarily my truck, and I got all the money I could and I put it all in the stock market. Brett, I had just had a fabulous three or four months watching that money grow. I was on track, I realized this was the solution to my debt problems. Then the tech bubble burst, and I saw my money just start to melt away and slide away. It was agonizing. I felt ashamed. I felt like I was an idiot. I was beating myself up around it.

Then I did what I was trained to do in psychology, which was to try to look at, “What is my role in this? How would a reasonably intelligent person do something so stupid with his money?” I went ahead and started to do what we do in psychology, we call it a literature search. As I was like, “Okay, certainly, psychology has studied this whole issue of money before and I can read some articles, read some books, and figure out why I did what I did.”

Along that journey… Very quickly when I started to do searches, I realized that psychology had totally ignored the topic of money, much to my dismay because I was actually just looking to find the cure for myself. Then I joke, Brett, that within a matter of about three or four months, I became the world’s leading expert in financial psychology, mainly because psychologists had avoided the topic of money for over a hundred years. I got interested in this quite awhile ago, back in the tech bubble, and really it came from trying to sort out my own relationship with money.

What I did is I actually… After that experience, I went back home and I sat down and I started to interview my family members. I sat down with my mother and I asked her questions that I’d never asked her before. Like, “What was it like for you growing up around money? What do you know about grandpa and grandma and what it was like for them?” I did the same thing with my father.

Through those discussions, I was blown away with stories that I’d never heard of before that made my experience with money totally logical. It made total sense. I knew exactly why I did what I did, which was a huge help in terms of like lowering my feelings of shame and my sense of failure. Really it was that experience that led me on this journey to become a financial psychologist.

Brett McKay: So research is me search, for you is true?

Brad Klontz: Exactly. I do conduct a lot of research, but I feel like for me, I got interested primarily to figure out why I did what I did. Since then I’m trying to help other people figure out why they do what they do.

Brett McKay: You published a book, authored a book, co-authored it with your father called Mind Over Money. Throughout this interview, please talk about that experience of writing a personal book about money with your dad. But in this book you too highlight psychological issues that people have with money. Before we get to the specifics, you talk about in the beginning of the book that everyone believes, or just about everyone believes this big lie about personal finance. What is that big lie that most people believe?

Brad Klontz: The basics of personal finance are incredibly simple. Most Americans go wrong in these two basic areas; saving for the future and not spending more than you make. Because it’s so simple, there’s an incredible amount of shame that goes along with our financial struggles. The big lie about personal finance is that your financial struggles are the result of you being crazy, lazy or stupid. It’s a big lie because your financial outcomes and financial behaviors are actually totally predictable.

If you can understand your financial psychology, if you can understand the money scripts that were passed down to you from your parents, your grandparents, your great grandparents, your culture, we get these from a bunch of different sources, and these belief patterns that get passed down, will totally predict for you things like your income, your net worth and your financial behaviors. It’s not the result of you being crazy, lazy, or stupid. It’s entirely predictable based on where you’re from and what you learned about money.

Brett McKay: Well, another thing you talk about in the book as well, is that another… I mean, call it a lie, but a misconception people have about getting their financial house in order is that, “If I only had more information,” right, so that’s why personal finance books are perennial bestsellers. “If I can get just enough information, then I’ll turn it around.” But that usually doesn’t work out that way.

Brad Klontz: It doesn’t. Information is incredibly valuable. So I don’t want to discount that, especially since I’m a professor and I educate people and I provide information. It’s incredibly effective for about, and this is all research-based, for about 20% of the people. You 20% of the time you’re in the action phase. We call it around change, where, just tell me what to do and I go do it. That’s the minority of people, that’s us, the minority of times if you will around any given issue.

So much more of it is psychological. A great example on this is overeating. It’s like we know that we should eat better and exercise more, it’s pretty simple. You can in about two minutes Google a good diet for yourself or exercise program. So it’s really not about giving you more information, more details about the negative effects of obesity on your health, or the benefits of exercise. You already know that.

That’s typically what happens with money. Our problems with money aren’t that complicated. It’s not like I’m in financial trouble and I have a ton of financial stress because I don’t know the difference between a traditional IRA or a Roth IRA. Really important information for you to know, but giving people that information, stuff they already know isn’t very helpful. So the work that I do is really focused on looking at, what is that underlying psychology you have around your relationship with money?

Because the research we’ve done has shown that your beliefs around money, your relationship with money, that is a very strong predictor of whether or not you become wealthy or whether or not you stay in a struggle with money.

Brett McKay: You’ve mentioned the idea of money scripts. We develop these money scripts oftentimes in childhood based on when we were growing up. At the time these money scripts probably made sense, right, actually we developed that script about money because of one, the situation we were in, the context we were in, it actually made sense. Then you talk about how there’s certain flashpoints throughout our childhood where those money scripts really set in. So what are some examples of those types of financial flashpoints that set money scripts for the rest of our life?

Brad Klontz: Yeah. I’ll give a personal example. I mentioned earlier that I’d made this mistake in the tech bubble, losing all my money. Again, out of a sense of desperation to pay off my debt. I went home and I started to interview my mother. One of the stories I found, which blew my mind, because I had no idea this was happening and I was actually very close to my grandfather, but when my grandfather was a young man, he lost all of his money when the banks collapsed during The Great Depression.

Now just imagine that. Imagine going to the bank tomorrow, and a lifetime’s worth of savings is now gone. As a matter of fact, you can’t get anyone to talk to you. All you know is that the money’s gone. It’s gone forever. You can’t get any of it back.

That’s what happened to him. Very traumatic experience, I would imagine. My grandfather, through hearing the stories, he arrived at the money belief, “You can’t trust financial institutions with your money.” Now to your point, Brett, that is an actual true statement for my grandfather. As a matter of fact, if he had believed that before the banks collapsed, he would have taken out his money and buried it in the backyard and we probably would have been fine.

100% accurate back then, that you absolutely cannot trust banks with your money. The people who did put trust in the banks with their money lost their money. He had such an emotional intensity related to that belief that he couldn’t shake it. What I mean by that is that the context very quickly changed. The federal government came in and said, “Okay, we get it. Nobody trusts banks. We’re going to start guaranteeing bank accounts up to $100,000, where if the banks collapsed, we’ll step in and give you that money.”

The context changed, the reality changed, but my grandfather’s beliefs did not change. He passed away in his 90s, and what I didn’t know is that he’d never put a dollar in the bank the rest of his life. What he did is he kept his cash in a lock box in the attic or under his bed.

Brett McKay: Yeah. That’s a great example. Yeah, keep going.

Brad Klontz: Yeah. When I heard that story, my mother’s anxiety around money started to make total sense to me. I knew she was afraid of not having enough. I knew that she was afraid of the stock market, didn’t want to invest in the stock market. As I mentioned though, she was extremely frugal and so she was a saver. So she took it a step further and she would put money in CDs, which is good. But because of that intense fear, she missed out on decades of growth in the stock market.

I came along, and I was very committed at an early age to not be poor like my family. I realized that, “I’m not having enough money,” is an immersive experience and it’s better to have money in order to do things that you want to do and have opportunities and travel and go to school and all that kind of thing. I determined at an early age, I don’t want to be like my family around this.

At an early age I was looking for, “I’m going to do things differently than you do.” That’s one of the things that set me up. My family’s extreme distrust in the stock market led to, I call it a dysfunctional pendulum swing, swinging to the opposite side.

What I did is I’m not going to be like them. Instead of taking a balanced approach, I did the opposite. I took all my money and I put it not just in a financial institution but in the riskiest possible stock market sector and I put all my eggs in one basket. That’s hugely dysfunctional pendulum swing in the opposite direction, which wouldn’t have made any sense to me unless I had done that history. And then it made total sense. Here I am trying to desperately not repeat the patterns my family was in, I didn’t know the full story, and I went to an extreme behavior on the other side.

Money beliefs like, “You can’t trust banks with money. You can’t trust the stock market,” which by the way, an entire generation of millennials are struggling with this and have been struggling with this because they saw their parents lose their money and homes back in 2008, and so there’s been studies showing that this belief that you can’t trust the stock market or it’s not a good approach in terms of growing your wealth is something that an entire new generation is dealing with. These beliefs, we call them money scripts in our research and they’re typically passed down through the generations. They’re typically rattling around in your subconscious.

One of the problems with our relationship with money is money as a big taboo topic. So we don’t talk about it. We don’t talk about it much. So there’s not a lot of opportunities for us to examine our thinking and to challenge and change it or to hear what our friends’ parents are thinking about money or aunts or uncles or other people who are further along or more successful. It’s a taboo topic.

We’re left to make up these stories and try to sort it out ourselves. So these money scripts are incredibly powerful. The studies we’ve done have shown that they predict your income, your net worth, your level of debt, the socioeconomic status you grew up in, and a whole host of financial behaviors.

So I think there’s a lot of value in examining, “What did your mother teach you about money? What did your father teach you about money? What experiences did you have growing up around money? What did these experiences and messages lead to in terms of what’s rattling around in your own brain about how you believe money works?” Because they are definitely impacting your financial behaviors and your ceiling of success.

Brett McKay: Okay. A flashpoint is sort of a moment surrounding money that’s like highly emotionally charged. So a stock market crash could be one, a parent losing a job could be one of those flashpoints, and that could ripple down through the generations. But also, besides these events, these moments that can be the origin of these money scripts, you also talk about how our relationships with other people can set us up into a financial comfort zone that will stick with us for the rest of our life.

Even though our financial situation might have changed, we still feel comfortable in that comfort zone. So we still carry those scripts that allow us to live within that comfort zone. Walk us through some of these comfort zones and why it’s so hard to change as our money circumstance change.

Brad Klontz: Yeah, absolutely. We are human beings who’ve evolved over tens of thousands of years in tribal groups. Being a part of a tribe in terms of our lower brain, our mammalian brain is essential to survival. 50,000 years ago, if you were separated from your tribe, or exiled, you died. You died and your children died and that was it for you.

So our status and connection with a tribe is so critically important to us on a psychological level, that even today we will utterly destroy ourselves financially in order to stay within our family group or tribe. This is how we’re wired. You’ve heard many stories, I’m sure of people who come in with massive amounts of money, let’s say winning the lottery or athletes who come in to big contracts, or musicians who come into big contracts, who then take this money and then totally get rid of it and destroy it and live totally irresponsibly, and then it’s all gone.

It’s really easy to sit back and go, “Oh my Gosh, these people are idiots.” Right? Like if that happened to me, I wouldn’t do that. I’d be much more fiscally responsible. But what happens is that chances are, your top closest family members and friends are around the similar socioeconomic level as you are. It’s almost a culture.

The culture I grew up in, it wasn’t very fancy. I remember the first time I went to a restaurant and I saw that there was more than one fork at my plate setting and I’m like, “There’s three of them. What am I supposed to do with all these sports?” I immediately felt like I was outside of my comfort zone in a big way. I wasn’t sure exactly how to behave. I looked around, people are dressed differently than me, they’re acting differently than me. It was an incredibly uncomfortable situation.

You’ve probably had an experience like that either on that or going into an area where people have much less than you and they drive different cars and they dress differently and you’re feeling uncomfortable. Those people are staring at you and they can tell you don’t belong there, and you’re not even sure exactly how to operate, keep yourself safe or whatever.

Those are examples of getting out of that financial comfort zone. It’s amazing how so many of our behaviors, especially if people are trying to enter into a higher socioeconomic level. Let’s say they grew up relatively poor, they go to college and now they’re making much more income than their family or friends. Or as I said, they come into some like sudden money events, we’re actually wired to get rid of that money to get back to our comfort zone. So it’s extremely powerful.

To override that, you have to be extremely conscious of what’s happening because emotionally, you’re going to just feel a sense of disconnection and probably panic that could lead you to make some bad financial decisions.

Brett McKay: It can go the other way too. You could start off in a higher socioeconomic level and then you lose a job, but you still feel comfortable in that level. So you’ll take on debt to maintain appearance, so you can go to the country club or whatever it is that your group does.

Brad Klontz: Yeah, that’s a really good point, and that’s not an uncommon experience because people are feeling ashamed or they’re like they don’t belong. So they’ll do whatever it takes to maintain their status in the tribe. From the outside, using your prefrontal cortex, your scientist brain, you look at it and you say, “Well that’s very illogical. Of course, you should just sell your house and move to a middle-class home. That’s fine. You should get rid of your luxury car and get a Honda or Toyota and this is a totally reasonable thing to do. Of course, you should do that.” That’s what the rational brain says.

But that emotional brain that’s very much linked to tribal survival feels an incredible sense of anxiety. You’ll actually see people with that amount of strain actually take their own life. That’s not an uncommon thing. Quite often it’s males doing it, whose self-esteem and self worth is entirely wrapped up into the money they make and their social status. And just that level of unconsciousness can lead to somebody taking an incredibly permanent and terrible action because they feel such a sense of desperation because they’re separated from their tribe.

Brett McKay: Let’s get into some of these money disorders, in specifics. We’ve been talking about a few of them so far. But the first one you talk about in the book is this money disorder called money avoidance. This is weird because you think people would want more money, but as you’ve been talking about in the book, there’s a certain set of situations where people would want to avoid it at all costs. So what’s going on there and what are the different ways that money avoidance can manifest itself?

Brad Klontz: Yeah. Brett, you’re pointing out that it doesn’t make a lot of sense. I’m going to agree with you. What’s so interesting in the research we’ve done is that people who, for example, strongly believe that rich people are greedy and that money corrupts and there’s actually virtue in living with less money. So these are actual beliefs that we’ve tested. People who really strongly believe that, also, very strongly believe that more money will make them happier, that more money will solve all their problems and that they wish they had more money.

Imagine that level of conflict rattling around in your subconscious and how that might play itself out. That money avoidance, you have a negative association with money, and typically you’re coming from a group of people who had shared that negative association with money. One of the things that come into play is a sense of ambivalence around it, so part of you really wants money, another part of you feels like you don’t deserve it or you don’t belong in that socioeconomic status. So which is easier? Getting more money or having negative feelings about money?

Well, it’s easier to just hold onto those negative feelings about money. Then you’ll engage in that confirmation search for all the reasons why it’s good for you to not actually have money and actually why you’re probably even a better person than somebody who has more money than you. These are rationalizations to make us feel better about where we’re at.

So some of those money avoidance type disorders are ones where people are squandering inheritances or like lottery winners or that sort of thing, or people who are avoiding thinking about money altogether. Then people who seesaw between trying to pursue money and getting it and then blowing up and getting back to their comfort zone.

Brett McKay: Yeah, you highlight examples in the book of people who grew up in a family or a household where money was bad, rich people are evil. So once they inherit money or get a lot of money, they give it to family members or just squander it. You also highlight examples of people who grew up in well-off families and made them feel uncomfortable because they weren’t like the rest of their peers.

I think there was an example of a girl, parents are really rich and like she got dropped off by a chauffer and had a nanny that would come to the parent teacher conference. It kind of set her up for going in… She could have had a great life, but she just shunned money because it made her feel awkward.

Brad Klontz: It’s not uncommon to have shame about having too little and feeling really embarrassed about that. But studies also show that people feel ashamed and embarrassed when they have more than the people around them. A lot of it has to do with, who’s in your neighborhood and who are you hanging around? For many of our clients, and you’re mentioning one, and her story is when you’re growing up around people who don’t have as much than you, you can start to feel really bad about yourself.

Yeah. So you have more than people, but you’re feeling bad about yourself. What’s that about? Well, the fact is that you’re not belonging to the tribe and so you’re feeling like a sense of threat and not a lack of belonging. This is not an uncommon experience where people grow up having wealth and feeling ashamed about it and embarrassed and feeling guilty about it because compared to the people closest around them, they don’t belong and they don’t feel a sense of connection.

So they link that to money. Their little brains, as kids say, “It’s bad to have money, if you want to have love and connection, you need to not have money.” That’s the interesting thing about these money scripts, is they’re very often developed with a child-like mind. Because we were children when we were developing them and we don’t really sit back and think about them. Like, “Is that really true? Is that really accurate? Let me look at the pros and cons and weigh the evidence.” That’s not what kids do. They’re just like, “We have money. My friends don’t, I feel bad. They look at me weird. Okay, I don’t want any money.”

That gets played out in adulthood where people will, as I said, engage in self destructive financial behaviors or somehow sabotage themselves right before they reach success or live basically way below their means, not out of a sense of, “This is how I want to live my life,” but out of a sense of guilt.

Brett McKay: How do you overcome that money avoidance disorders, is it just a matter of being self aware or is there like some work you have to do?

Brad Klontz: I think awareness is hugely important and valuable and quite often you do need to do some work and some extra work related to that. But since money is such a huge taboo topic for many people, this is like a light bulb popping on for them for the first time because we just don’t really talk about it that much, and there’s not a lot of places where you can go and examine this.

I think just having some consciousness like it did for me with my grandfather, just understanding that, that fear and that anxiety of not having enough, that’s something that just goes back for generations in my family. So when I’m experiencing, it gives me another perspective like, “Well, I don’t have to do the same thing they did so I can actually engage my scientist’s brain a little bit by putting that into perspective.”

The other thing that we do, and on a very practical level with entertainers we work with and athletes and other people who’ve come into large sums of money, part of what we do in their financial plan is, if your value is to help family and friends and community, which is incredible, that’s not a value that I would discourage anyone from having, it’s essential, I think, to how we function as a society, how can we meet those needs of wanting to love and support your family, friends, and community in a way that will be helpful for them. Not hurtful.

If you just give money to the average person without some structure to it, and let’s imagine somebody who’s been living at a certain level for years or maybe not be a great manager of money themselves, you’re probably not helping them very much by giving them a bunch of money. They’ll probably just blow through it or spend it irresponsibly or whatever, and it’s gone. This is the pattern for most of us that I mentioned.

All of a sudden you get a bunch of money and it creates a sense of anxiety or excitement or whatever and then it all disappears. So how can we take that need to want to help people and structure it in a way that maintains your wealth, allows you to continue to provide support for years and years to come, and also does it in a way that doesn’t enable somebody or set up some financial dependency that can be crushing for them?

Brett McKay: What sort of advice do you give your clients who, they come into money or they first graduate college and they get a good job, but their family is still where they were? Then they start experiencing the friction with just offhand remarks, right, cutting remarks. How do you advise your clients on how to manage that?

Brad Klontz: Yeah, and it’s a very real experience, Brett. And it’s a very painful experience for many people. It’s a combination typically. So obviously a lot of has to do with the exact situation is that people involved. But typically it’s a combination of, perhaps you’re not going to be quite as… This happens in research too. People who actually have more money than the people around them tend to be more secretive about it for very good reasons.

Some studies have shown that children of wealthier families, they totally get that people don’t like them and judge them because they have more money. So they’re actually pretty secretive about it and they don’t want to flaunt it, and they don’t want to show it off because they’re worried about people not seeing them for who they are and judging them.

So part of it is that in terms of like, “How much are we going to disclose, what’s a good thing to disclose? Then what conversations might you need to have?” By the way, some relationships can’t tolerate this. Let’s say that you have a family assumption that there’s six of us. You come into money, you’re going to break it up into six portions and give it to us. By the way, this is not an unusual assumption that can come from a family system, so how are you going to handle that? That’s the question.

For some people, they have to be willing to have some difficult conversations. I’m not going to do that. That comes with a tremendous amount of risk. Maybe people aren’t going to want to be around you anymore or love you anymore or like you any more, talk to you anymore. That’s a very real thing. Typically is trying to find, strike a balance between, is it your value to try to help your family in a very direct financial way? If so, how can we do that in a way that takes care of you and takes care of them?

Brett McKay: Let’s move onto another money disorder, which is the opposite of money avoidance, which is money worshiping. What are the scripts that are going on there with money worshiping?

Brad Klontz: Yeah, these are very common in our culture, and they are beliefs like, “More money will make me happier, more money will solve all my problems. Things will get better when I have more money.” There’s some scientific evidence to prove that, that’s actually correct. Okay?

It is true that being in poverty is a terrible experience for people and that their happiness actually goes up when they enter that middle-class level and the number shifts, but typically it’s the median income in the United States. You’re able to pay your rent or mortgage. You’re able to put food on the table. You’re able to take care of the basic needs of your family. So there’s a certain level of stress that you no longer have. So totally true. More money will make you happier and solve a lot of your problems once you hit that level.

Now what’s interesting is that, most of the research shows that money above that level, there’s no correlation between happiness and having more money. That belief, which becomes very true as you’re moving into the middle class, becomes utterly false as you’re moving up into higher socioeconomic areas.

Now, not to say that a happy person can’t find other ways to express their happiness and enjoy life more by having more money, it’s just to say that odds are, it won’t. And odds are it won’t happen for you as much as you might think it would. So money worship is really this intense belief that that’s enduring, that, “Money’s going to solve all my problems,” and frankly it won’t. The research shows that people who really strongly believe that are likely to have less money, less income, less net worth and engage in self destructive financial behaviors.

Because the flip side of that is, “More stuff will make me happier.” These individuals have a tendency to overspend in an effort to have money and stuff, bring them happiness, joy, and a sense of fulfillment.

Brett McKay: How do those scripts develop? Is there like a flashpoint in childhood that sets them on that path?

Brad Klontz: Yes. I feel like our culture is an entire flashpoint for that message. Back when I was a kid, there used to be a show called Lifestyles of the Rich and Famous.

Brett McKay: Oh, yeah.

Brad Klontz: I was like, “Wow, look at what money can give you.” But that show was on only once a week or whatever. But now you can pick up your phone and on Instagram you can look at people posting the best parts of their life and you can constantly feel like you’re missing out because, “Wow, somebody is on an island somewhere, that’s incredibly beautiful. I don’t have that. Now I’m starting to feel poor.” It’s this concept called relative deprivation.

Our actual happiness related to what we have is entirely subjective. What I mean by that is there’s not an actual dollar amount across the world. It’s where we’re stack up compared to people close to us. So in the United States, as I mentioned, all that research was around the median income. So like your average, so you’re okay. But when you are put in front of people who have way more than you, it creates a whole psychological avalanche of bad feelings that emerge for you.

In an effort to feel better, you are at risk of overspending and abusing credit to try to get yourself access to some of that other stuff those people are experiencing that seems to make them happier. In our current culture, we’re inundated with Lifestyles of the Rich and Famous type television shows and social media constantly making people feel like they’re deprived and reinforcing the belief that if I had more money, I’d be happier.

Brett McKay: Yeah. That relative deprivation thing can be a booger, because there’s been studies where they show… You highlight this in the book where people would rather make… they have an option of like making more money. Just more than they’re making right now or making less than someone else, even though… You know what I’m talking about? It’s like they’d rather make less money as long as like they’re not making less money than the guy next to them.

Brad Klontz: Yeah, yeah. Perfect example of how crazy we are when it comes to money in terms of our logical brain. You’re referencing a study that was done with Harvard graduate students where they asked them, “Would you rather make $100,000 but your…” Forget the numbers, but this is essentially what it was. “Would you rather make a $100,000 while your friends are making $200,000, or would you rather make $50,000 but your friends are making $25,000?”

Obviously you should pick the 100,000 because that’s twice as much as 50,000 but the majority of those Harvard Graduate Students said, “I’d rather make half as much but more than my friends.” That makes no logical sense. That’s why you have to think about that emotional brain, that tribal brain, because it makes perfect sense when you look at it from that angle.

Brett McKay: I imagine this money worshiping can also be the result of being deprived in childhood. So maybe you had a hard childhood and you come into money and you’re like, “Man, I’m going to spend this money because I didn’t get to do this as a kid.” Like your example, right? Where you grew up relatively poor, you came into money, you put it all in the stock market and lost big.

Brad Klontz: Yeah. Brett, are you saying that my money scripts might be some money worship? Are you being my psychologist? Because you’re actually right.

Brett McKay: I’m being a psychologist. Yes. I’m putting-

Brad Klontz: Yeah. It’s totally true. People who grow up in, lower socioeconomic levels, that belief is really common because as I mentioned, not having enough money for basic needs can be a really uncomfortable and somewhat traumatic experience for many people. So there is truth to that. The problem is that the truth only extends to once your basic needs are met. So if you’re not balancing that truth with the actual things that will actually make you happier, which by the way aren’t money, it’s close relationships, it’s being immersed in an endeavor that you love, that fulfills you, you’re not going to be happy chasing a job that you find miserable and working a hundred hours a week at that job just to get you money and expect to be happy. That’s just actually not how you become happy.

It’s a accurate belief to a certain point, but it becomes destructive the more intense you believe it for sure.

Brett McKay: Let’s talk about some relational money disorders. Because like you highlight this in the book is that, money is one of the biggest sources of marital conflict, sources of divorce. So what are some of the big issues you see pop up between spouses but also parents and kids when it comes to money?

Brad Klontz: Yeah. Money is one of those things that just weaves into every aspect of our lives and certainly relationships. The odds are that you and your spouse have different money scripts. You’re coming from different family systems and maybe the same side of the tracks, maybe not, but just assume there’s going to be some disagreements around money because you grew up in different families.

One of the challenges is, if you’re not aware that you’re playing out these scripts that were written by your great grandparents, you can spend an entire marriage trying to convince your spouse that their beliefs are wrong and yours are right, without really understanding that yours might be a little biased too. Fights around money in marriages, relationships, it’s just ubiquitous. It just happens all over the place. It’s a huge issue.

So it really does help to understand your psychology in order to find good ways to negotiate. Another common one within couples is you’ll find people who hide their spending or lie, if you will, we call it financial infidelity, lie about their spending or how much money they’re making or the investments they’re making or even money they’re receiving. There’s a lot of different ways that couples can not give the full truth around what’s happening.

As a matter of fact, it’s about one out of three couples, people in a relationship admit to lying in some form to their partner around money. So it’s a pretty common issue, which can be a big problem when it gets discovered, where people start to wonder, “Okay, what else are you lying to me about?” It can rattle the sense of security and safety in a relationship.

Other ones we see have to do with that larger family system. A real common one that I run across is the relationship between financially enabling someone and then the financial dependence. A financial enabler is giving money to someone, always out of a sense of, “I want to help,” or even out of a sense of guilt, so it’s financial help, but it hurts. So that’s the enabling part. It hurts because money is an incredibly powerful reinforcer.

There are days that you get up and you don’t really want to go to work. You may be you love your job, but you’d rather go fishing today or skiing or whatever it is. But you do go to work and the reason you go to work is because you get money for it. That’s an incredibly reinforcing thing. Money increases behavior. That’s what a reinforcer does. So if I get money for doing nothing, it is going to totally reinforce me doing nothing. Or if I get money for begging my parents to give it to me and then they give it to me, it’s going to increase my begging my parents to give it for me.

This is just human nature. I’m not criticizing people who are financially dependent. It could happen to anyone. You could set up that situation and create this in anyone. So the financial enabler is giving money that it actually hurts. On the financial dependent side, and studies have shown this, the research we’ve done, financial dependence leads to a sense of a lack of creativity, a lack of drive, a lack of life satisfaction, and even resenting the people who are giving it to you because invariably there’s some strings attached.

So that financial dependent personality is a really tough way to go through life. What’s interesting is that personality is really similar in terms of how they look at the world and their experiences of the world for people who come from like multi-generational welfare families to multi-generational trust fund families. You’ll find in both of those individuals a fundamental lack of drive, a lack of passion, some self-loathing, and then of course resentment towards the source of the money.

Brett McKay: I’m listening to this, the relational aspect of money. I’m a dad and I’m thinking, “Okay, what can I do to make sure that my kids have a healthy relationship with money and that I don’t pass on any money scripts that I might’ve picked up because grandfather or grandma experienced The Great Depression and I still have that with me for whatever reason.” So what can parents do to break that cycle that might be going on within their family?

Brad Klontz: Brett, I’m so glad you asked that. I’ve of course got it all figured out because I’m a financial psychologist but I do have two little boys myself, and so of course I don’t at all. I think being aware of your money scripts and just being aware that you are teaching your children stuff right now today about money. Whether you’re talking about it or not, they’re picking up on it.

I’ll tell you, this is a true story happened last week. My wife and I are in the middle of moving, which is a very stressful thing. My son, for whatever reason, he said, “Dad, I wish I had $1 million.” Now I’m curious. I’m like, “Wow, that’s interesting.” He’s six. I’m like, “Well, what would you do with $1 million?” He said, “I would take the money and I would give it to pay for the movers.” I was like, “Oh my gosh. He must’ve overheard us talking about paying the movers.”

By paying attention to that, first of all, I feel like, “Huge mistake. My son overheard this. Oh, no, now he thinks he needs to chip in or whatever. Where did he get that idea?” But my awareness of that gave me an opportunity to sit down with them and say, “You know what, son, you don’t need to worry about that. We’ve got it covered. We can totally afford it. I appreciate your thinking about us, but that’s not something you would need to worry about. So assuming you don’t need to worry about that, what else would you do with $1 dollars?”

So this is just a really personal example that happened just the other week. Again, I’m a father and we are giving messages to our children every single day. I think just really being conscious of that and noticing if they’re saying something that seems to be our money script that we can work with them a little bit and expand it. That’s really what health is in terms of money beliefs is making that belief more accurate in more situations.

For example, the belief that rich people are greedy, it’s certainly true that some rich people are greedy. So now all of a sudden that becomes a much more accurate statement. It becomes even much more accurate if you say, “Some people are greedy and money can corrupt people, but some wealthy people are incredibly generous and have done incredible things in the world.” Now that’s the money script that’s even more accurate.

So part of it is observing what’s happening in your kids, being conscious of course, as you can in terms of what you’re teaching them, but then also looking for those opportunities to expand that definition of whatever script that you have given them probably unconsciously.

Brett McKay: Yeah. That’s a perfect example of countering that money avoidance script. But another one be like with the money worshiping things like, “Hey, money’s great, it can buy you happiness to a certain point, but after that, it’s not going to do much for you.”

Brad Klontz: Yeah. Another one that comes to mind too is I really encourage parents to not tell your kids, “We can’t afford that.” I think that’s a terrible thing to say because I would bet you that you probably could, like if you sold your house and cashed out all your retirement funds, you could probably go to Disney World. I don’t think you should do that, but I’m just saying that it’s not that you can’t afford it.

So you don’t want to give your kids a message that there’s not enough money. But what you might want to do is take that as an opportunity to say, “You know what, we’re not spending our money that way. And here’s the reason why. We’re spending into these other categories. We do want to take that vacation, and so this is what we’re going to do. We’re going to actually start saving for that and it’s going to take us a year and we’re going to save X amount per year or per month. We’re going to put it in this account. Once all that money saved up, then we’re going to…”

So what you’re doing is you’re actually educating them on a skill set and a mentality you want them to carry with them. That’s a huge mistake in our culture and two, is that we have such immediate access to the stuff we want, that kids will just watch you, want a new TV and then just go buy one. So what’s the message? “Oh. when you want something, you just go buy it. There’s this little piece of plastic and you just swipe it and then you get to take it home.”

Because of that, our kids don’t get to watch us saving for something. So looking to contrive experiences that teach your kids how to delay gratification by modeling it yourself. So pick something that you want as a household, maybe you can go buy it right now, but how about if you tell your kids you’re going to save up for it and involve them in that process? Put a little thermometer on the wall and it goes up until you get that thing you want because you’re teaching your kids how to delay gratification and the importance of saving if you can model it for them.

Brett McKay: What’s your advice to parents when their kids asked them like, “Dad, are we rich or are we poor?” What should be the response there? How do you have that conversation?

Brad Klontz: Well, I think that the first thing you should do is to become really curious about that. Don’t just start educating your kid. Just say, “What do you mean by that?” Chances are they’ll start to tell you a story about something that someone said or the context and then it’s your opportunity to start to pass along your values. So this is a very personal thing.

For me, I would probably talk about that, “Compared to the rest of the world, we’re incredibly rich.” It’s true for just about every American, if you compare yourself to the average income, even if you’re on public assistance, you are incredibly wealthy compared to everyone else in the world.

It’s a matter of perspective, and so I would like to flesh it out like that. Like, “Well, in many ways we are, and these are the ways we have access to all this and that. And in some ways we’re not, some people have more than us.” I would talk about it in those terms.

Brett McKay: Well, Brad, where can people go to learn more about your work in the book?

Brad Klontz: Well, I am putting a lot of energy into my YouTube channel at this point where I’m trying to make videos to educate people on financial psychology and doing my best to make them entertaining, which is Dr. Brad Klontz. I’m also @doctorbradklontz on Twitter and all the social media places. Then I actually have, if people are interested in looking at their money scripts, the test that we used in all of our research projects, is available to take for free online.

You just stick in your numbers there and your answers and then the email will get sent to you and that’s at

Brett McKay: Fantastic. Well, Brad Klontz, thanks so much for your time. It’s been a pleasure.

Brad Klontz: My pleasure, Brett. Thanks so much for having me.

Brett McKay: My guest today was Dr. Brad Klontz. He’s the author of the book Mind Over Money. It’s available on and bookstores everywhere. You can find out more information about his work at his website, Also, check out our show notes at, where you’ll find links to resources where we delve deeper into this topic.

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