What Is Your Money Mindset?

The sum of all your money scripts equals your money mindset. And the tricky part of discovering this mindset is some of the thoughts and beliefs are conscious ones and some are buried below the surface or subconscious. Remember Susan? She had a money script that was negatively effecting her financial planning; however, until she did wealth coaching this thought lived in her subconscious. The work is to bring these thoughts and beliefs to the surface so you can evaluate each one and decide which one’s will bring you toward wealth and which one’s will keep you stuck in financially unhealthy habits.

Your money mindset is influenced by a variety of factors. These include your family your culture, your gender, your social class and your personal financial experiences.

Culture: If you grew up in United States then you were raised in a capitalist society that equates being a good American with buying products and services to fuel the economy. Right after the stock market crashed in the fall of 2009, the President of the United States gave a speech encouraging us all to go out and spend money. Interestingly enough we were the same citizens who that had just lost approximately 30% of our retirement savings! Your culture has a big impact on your money mindset and ultimately your financial behaviors.

Gender: Boys are raised to be competitive, to make money and to be good providers for their families in adulthood. Women are reared to support the family, to help others and to put their needs, monetary and otherwise, second to those around them. If a man demonstrates a profit driven he is great businessman. Conversely, a woman who is motivated by money is viewed as greedy and self centered. While some of this is shifting, it takes generations to truly change mindsets.

Social Class: The social class you were born into also influences your money mindset. If you were born into an affluent family, chances are your view money and its purpose in life is dramatically dissimilar than if you were raised in poverty in the inner city. In a lower income family money was used to buy food, clothing, and shelter and to provide for basic needs. In a wealthy family, basics needs would be easily taken care of leaving excess cash to be invested, to support an enjoyable lifestyle or to pursue philanthropic endeavors. There is an assumption made by many that states that if you are born into affluence than you have a healthy relationship with money because there was an abundance of it in your life. Actually those from extreme wealth often have more work to do on their internal feelings about money than those who were born without.

Personal Financial Experiences: The last area to consider when looking at what contributes to your money psychology is your personal money experiences. Significant money events, including wining the lottery, receiving a sizable inheritance, filing for bankruptcy, an expensive divorce, being laid off, not getting a raise and the like, leave a lasting mark on your money psyche and ultimately alter our money scripts.

Beth is a good example of how personal experiences around money can profoundly impact your money mindset. You see, when she was young Beth worked as a babysitter like a lot of young boys and girls to make some spending money. She worked for about a year with a family and knew that they liked to hire her as she could manage watching all 4 of their children when they were out. At one point, Beth decided to ask for a raise and was never called upon to babysit again. This left her feeling unworthy and ashamed of wanting more money.

Flash forward 30 years, and Beth is now working as a family childcare consultant. She learned that her rate is low and she wants to increase it be more in line with the market rate for family childcare services. She is nervous but decides to face her fear and ask her employer for a raise. Beth’s request is denied and her belief that she is not worthy of a raise is reinforced. Her personal experiences with money, while only two instances, negatively impact Beth’s ability to demand and receive a fair wage.

What’s influencing your money mindset?

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How are Your Money Scripts Impacting Your Finances?

A money script is a thought or belief about money.  Like a movie script tells an actor what to say and how to behave in each scene, a money script dictates what you will say and how you will behavior around money in a particular situation. 

A good example of a money script in action is Susan, a client of mine who grew up watching her parents fight about money.  By the time she was 7 years old they divorced and she went to live with her mom.  Despite the divorce her parents continued to fight about money in court until she was a legal adult.  The money script that came out of this experience was “When couples talk about money they fight.”  Interesting enough, Susan became a financial advisor after she graduated from college because she wanted to help other couples have financial conversation and not argue like her parents. 

Things were going along just fine in her life until she got married and started a family.   Her concerns about her financial life grew with each child; however, Susan remained silent about the topic with her husband.   By the time she saw me she was very anxious and angry with her husband that they did not have a long term financial plan for their family.  She knew how to create one but felt blocked from sitting down and actually working on one with her husband. 

In our work she discovered the money script, “When couples talk about money they fight” was the culprit.  She realized consciously for the first time that she lived with this money script since she was a child and it fueled her avoidance of talking about financial matters with loved ones.   By identifying this belief, she was able to decide as an adult that it was only a partial truth.  Working as a financial advisor, Susan had witnessed many couples talk about money calmly.  Maybe she could do the same thing with her husband. 

In time, she let it go of her old money script and started engaging in financial conversations with her partner.  As a result she felt great emotional relief and her anger and anxiety subsided. And this proves that examining your money scripts and learning to communicate about finances with your loved ones does reduce stress and ultimately, improves your financial health.

What are your money scripts and how are they impacting your financial behavior?

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Beware of the Land of Scarcity

The land of scarcity is defined as a place where you give more than you receive because your money scripts tell you that there are not enough monetary and non-financial resources for everyone to prosper.  This money mindset contributes to you earning less than you are worth and feeling noble as a result.   Unless you shift this mindset you will under earn, not actively seek out opportunities to create wealth and remain unhappy with your relationship with money.

Timothy is a perfect example of someone who lives in the land of scarcity.  He is a hard worker from a blue collar upbringing and his parents really struggled financially to raise him and his five siblings on his father’s small salary.  Through hard work and perseverance, Timothy received his college degree, got married and started his own family.  His earning potential is much higher than his father’s but he works for a manufacturing company and earns just above minimum wage.  He believes that it is better to be poor than rich because money makes you greedy.  When asked why he does use his college education to apply for a higher paying management job, he explains that managers are crooks and take good money away from his co-workers.  He is angry about his financial situation but believes there is no way out.  

Timothy is an under earner and as long as he mentally lives in the land of scarcity he will have trouble seeing and acting upon circumstances that would bring more money and wealth into his life.  His attitude is costing him and his family dearly.
 
So how can you avoid Timothy’s fate, have an abundant attitude and recognize and act on situations that will bring money and wealth your way?  Its all in your money mindset! You need to practice receiving! Yes, with the right attitude you can be truly wealthy.

What land do you live in and how does this serve you?

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Are Your Money Scripts Stressing You Out?

A money script is a thought or belief about money.  Like a movie script tells an actor what to say and how to behave in each scene, a money script dictates what you will say and how you will behavior around money in a particular situation. 

A good example of a money script in action is Susan, a client of mine who grew up watching her parents fight about money.  By the time she was 7 years old they divorced and she went to live with her mom.  Despite the divorce her parents continued to fight about money in court until she was a legal adult.  The money script that came out of this experience was “When couples talk about money they fight.”  Interesting enough, Susan became a financial advisor after she graduated from college because she wanted to help other couples have financial conversation and not argue like her parents. 

Things were going along just fine in her life until she got married and started a family.   Her concerns about her financial life grew with each child; however, Susan remained silent about the topic with her husband.   By the time she saw me she was very anxious and angry with her husband that they did not have a long term financial plan for their family.  She knew how to create one but felt blocked from sitting down and actually working on one with her husband. 

In our work she discovered the money script, “When couples talk about money they fight” was the culprit.  She realized consciously for the first time that she lived with this money script since she was a child and it fueled her avoidance of talking about financial matters with loved ones.   By identifying this belief, she was able to decide as an adult that it was only a partial truth.  Working as a financial advisor, Susan had witnessed many couples talk about money calmly.  Maybe she could do the same thing with her husband.  In time, she let it go of her old money script and started engaging in financial conversations with her partner.  As a result she felt great emotional relief and her anger and anxiety subsided.

Simply by identifying your thoughts about money and challenging beliefs that no longer work for you, you can relieve your financial stress!  What money scripts do you have?  Do they stress you out or help you stay on track emotionally and financially?

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5 Tips for Fighting Fair Financially

Below are five tips for discussing money with your partner. The goal is to learn to fight fair financially or in other words, to learn to effectively communicate about money so you can skip the conflict and make sound financial decisions together.

Learn your partner’s money scripts
We all have thoughts and beliefs about money, called money scripts. These scripts impact our saving, spending and investing decisions daily. Take time to interview your partner about his or her money scripts. By doing so, you can understand why you may disagree on a particular financial topic and find some common ground without it blowing up into an argument. Remember, there are no right and wrong money scripts just different ones.

Schedule financial meetings regularly
Make sure these meetings are scheduled at a time where you will not be interrupted by children, the phone or other commitments. Start off with a 30 minute meeting once a month. If it goes well and you have more to discuss you may want to extend it to an hour. At the end of every meeting, make sure you build in a reward for taking positive action to discuss money in your relationship. A nice romantic dinner at home, a movie or simply a walk together are wonderful, low cost experiences that will reinforce financial meetings as positive events in your couple hood.

Practice Active Listening
Active listening is vital to effective couple communication when it comes to money discussions. The idea is to let one person in the couple talk uninterrupted while the other one listens. When the first person is done sharing his or her thoughts and feelings, the listening partner reflects back what is heard by saying the following: “What I hear you saying is…” Make sure you stick to the facts, use your partner’s exact words when necessary and don’t insert your judgment on what was said. Now switch roles and complete the exercise again. The goal is to really understand your partner’s viewpoint, not to prove your point or make your case.

Have patience and laugh together
Talking about money can be difficult. Demonstrate patience with your partner and realize that he or she may not have had the benefit of having money conversations growing up. Yes, money can be a serious topic but lighten up every once and a while and laugh together. Remember you want to make talking about money as a couple fun.

When in doubt, consult a professional
It is okay to consult a financial advisor, wealth manager or a wealth coach on how to talk to each other about money. Having a third objective party in the conversation can be a great place to start and soon enough you will have the skills to talk about money and fight fair financially on your own!

Note:
If you live in New Jersey and want to hear more, contact Joseph Falbo at Falbo Wealth Management. He is hosting a teleconference on January 27, 2010 at 2 pm EST and I will be the guest speaker on this topic. Email him at joseph.falbo@genworthrr.com to sign up.

If you are not from New Jersey, stay tuned as I will be posting the recording on the blog following the call.

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Bigggest Roadblock to Earning Your Worth

I recently conducted a survey on <a href=”http://linkedin.com/”>Linked In</a> about the common roadblocks to earning your worth. The results were interesting as the responses varied greatly for the men versus the women.  For men, the biggest roadblock to earning one’s worth was “not knowing what I am worth” which came in at 80%. For women, the results were mixed. Twenty percent stated it was “fear of rejection”, another 20% stated it was “not knowing what I am worth”, the next 20% indicated it was the “belief that I am blessed to have a job.”

It seems to me that for men it is an intellectual exercise of figuring out how to value their work and their performance and for women it is more about managing the emotions and potentially the lack of self worth around their work.

If you want to see the complete breakdown, visit the poll by <a href=”http://www.polls.linkedin.com/p/57961/zzqqf”>clicking here</a>. Feel free to answer the survey and/or leave a comment here answering the question:

What is your biggest roadblock in getting paid what you are worth?

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Coaching as an Alternative to Therapy – The Boston Globe

Coaching as an alternative to therapy – The Boston Globe

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The Female Advantage: Women as Financial Advisors

This is an excerpt from an article I wrote in the fall of 2009 about women and their competitive advantage as females in an industry dominated by men. Enjoy!

According to G. Scott Budge, Ph.D, the author of the new book The New Financial Advisor: Strategies for Successful Family Wealth Management, the new competitive frontier for financial advisors is centered on building and managing client relationships. Active listening, building trust and understanding what a client needs both emotionally as well as financially are paramount in this new world. And who better to do this than female advisors. But nature, women are relationship oriented and excel at helping others. Never before has the softer side of finance been more important and according to some lady advisors a real advantage to growing a successful practice.

“I love to hear people’s stories,” says Eileen Burkhart, CFP, Principal of Eileen Burkhart & Company. She uses these stories to learn more about her clients, their values and what makes them tick. Kim Zwick, a CPA turned Personal Financial Specialist and owner of Full Circle Financial believes women are good at gathering information and multitasking and in an industry with some many bits and pieces this goes a long way toward being an effective financial advisor. Kim believes that in this field you need to sweat the small stuff.

Keys to Success
Being female is no guarantee when it comes to being competitive in the industry. It takes intellectual curiosity, a desire to learn and grow and a little bit of gusto to be able to speak up and offer an opinion. “It is not about predicting the future it is about being able to articulate what is going on (in the world),” according to Carrie Coghill-Kuntz, CFP with D.B. Root & Company. In the current environment, women need to speak up at meetings and risk holding a position on a particular issue. While this may be challenging for new female advisors, those who are seasoned realize that having a thick skin and learning to take calculated risks is what got them to where they are in the field.

Flexibility and a desire for work life balance inspire many women to go into this profession and to stay when the times get tough. While money may be motivator for some financial service professionals, many female advisors really desire a career that empowers them to choice their work hours, their ideal clients and define success in a more holistic way. “You don’t have to do this job like a guy”, states Bridget DeMartino, CFP and Principal of Andrews DeMartino Wealth Strategies Firm, LLC. She is a third generation advisor who took over the company recently and made a conscious decision to run the practice differently than her father who she watched work long hours and miss out on many family activities. Bridget, pregnant with her first child, is determined to continue to be successful and make time for being a mom.

What advice do experienced advisors have for their female counterparts? First and foremost, start with the end in mind. Hire a coach or talk to a mentor about what is important to you both personally and professionally. Once you develop a long term vision, write down short term goals for getting there on a quarterly, monthly and daily basis. Second, be a curious student of the market and of human behavior because the job involves both. Take advantage of the training your company and outside sources provide. Lastly and most importantly, listen to your clients. Listen to what they are saying and what they are not saying. Their stories will tell you a lot about how to help them reach their financial goals and how to make a client for life.

Would you prefer a female advisor? Why or why not?

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Life Looks Good over 70


This week I am traveling with my dad who just turned 79 years old and the 70+ Ski Club. I am in Lake Louise at the Chateau Lake Louise enjoying the luxury of the hotel, the beauty of the mountains and time with my dad. As I sat around the 4 course dinner last night over looking the lake, I thought “Life looks good over seventy!”

It is common knowledge that saving for retirement is a prudent thing to do financially. But seeing these 70 plusers in action, I more motivated to fund my retirement account in a new way. My advice to you is to find someone in their seventies or eighties that is living the life you want to live and have a conversation with them. Here are three questions to get the dialogue started:

1. What was the best financial decision you made in your younger years?

2. What type of retirement planning did you participate in and what is the result of saving in this way in your life now?

3. What does it feel like from an emotional perspective to be able to have enough money to do what you want in retirement?

According to my dad, a routine savings program was his best financial strategy and having one has made this and other ski trips possible. Furthermore, he shared that your senior years can be stressful with medical concerns and family issues, but with money not being one of them you can breathe more easily and enjoy life to its fullest. I would say I have to agree as this dad-daughter trip is on him!

What did the senior citizen in your life share with you? Please post in the comments as their wisdom is priceless.

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KBK’s Top 5 Favorite Books on Wealth and Money Psychology

Over the last several years, I have read many books on the topic of wealth and money psychology. Here are my top five favorites in no particular order. I encourage you to put them on your 2010 reading list.

Raising Financially Fit Kids by Joline Godfrey
Joline Godfrey is a wonderful writer who has dedicated her career to helping parents teach children about money. This book is a great resource for parents, grandparents, teachers, aunts or uncles, and financial advisors interested in helping young people become fiscally responsible adults. The chapters are broken down by age groups and activities and learning modules are geared to each particular developmental stage. Godfrey’s background in social work shows in her keen understanding of childhood development and her effective ways of assisting parents in engaging their children. This book is a required text book for my graduate course at Bentley University on The Psychology of Financial Planning. Raising Financially Fit Kids is a must have resource for financial service professionals and a great client gift as well. Check it out and then let me know what you think.

Your Client for Life by Mitch Anthony
Mitch Anthony does a great job of applying the medical model of treatment to the financial services profession. Why is this important? The medical model of treatment has many aspects that when applied to financial services benefit both the profession as well as the client. One example is the team approach to treatment. When I worked in the medical profession I firmly believed and actively practiced the team approach which means I used a variety of professionals with different specialities to support a client and meet all of his or her needs more effectively then trying to treat the person alone. The same is true for working with clients around money and Anthony does a nice job explaining this with the credibility and insight of a long time financial advisor. This book also teaches the reader how to focus on the client first, how to communicate about money effectively and how to build customer loyalty by really understanding and exploring the human side of the business. Your Client for Life is an older book and Mitch has come out with many other great resources. If you work in financial advising or wealth management, this is a must read.

Secrets of a Six Figure Women by Barbara Stanny
Barbara Stanny is one of the leading authorities on women and money in the United States. In her first book, Prince Charming Isn’t Coming she inspired a generation of women to stop relying on men to rescue them financially and started to teach women to take care of themselves financially. Her specialty is under earning and she has dedicated her career to figuring out how to inspire and motivate women of all ages to speak up and ask for what they are worth in life. Secrets of a Six Figure Women is a great read for anyone who is entrepreneurial or career oriented interested in breaking through the glass ceiling. About a year ago, I interviewed Barbara on the topic so if you want to get a gist of her work before purchasing the book, click here. Barbra is a mentor to me and I truly believe her work in the 1980’s has made my work today at KBK Wealth Connection with men and women possible. Thanks Ms. Stanny!

It’s Not about Money by Brent Kessel

If you love yoga, like alternative medicine or have an open mind to Buddhist teachings than this book is for you. Brent Kessel is both the C.E.O. of Abacus Portfolios and President and co-founder of Abacus Wealth Partners, named one of the “top 250 wealth management firms in the U.S.” by Bloomberg Wealth Manager. A cutting-edge firm, Abacus focuses on the inner dimensions of money as a critical component of the financial planning process and is widely acknowledged within the wealth management industry as a national leader in this niche. Brent’s passion for exploring the spiritual side of money will enlighten you. While some financial advisors, wealth managers and business people will be turned off by his work, many more will be inspired. I enjoyed the book and recommend it often to the yogis in my life!

The Financial Wisdom of Ebenezer Scrooge by Ted Klontz, Brad Klontz and Rick Kahler
I love this book! It is the book that got me thinking about how my two decades of experience specializing in helping people make lasting behavioral change could be applied to the world of finance. A fun read based on Dickens’s Christmas Carol, the authors take you on an entertaining and enlightening trip into the world of money psychology. Since writing this book, all three men have been highlighted in the media including 60 Minutes and the Today Show. There is a lot more to come from this trio.

What is your favorite book on the psychology of money and why?

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  • “Kathleen’s presentation at NSA New England was stellar. Her expertise and passion about earning your worth was contagious! Her talk gave me a new perspective and approach to my own relationship with money. If you want to rebound from the current economy quickly, Kathleen Burns Kingsbury is the speaker that must be top of your list!” Fran Goldstein, Former NSA New England President & Principal, Gold Staff Consultants

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