105: How to pass on mental wealth to your child

Think about your parents. Now think about money. What kinds of ideas, images, and feelings come to mind? Do you recall any discussions about money - or were these hidden from you? Was there always enough to go around - or were you ever-conscious of its absence? What little incidents do you recall that ended up becoming defining 'money scripts' of your life? Perhaps it won't be a shock to learn that just as we learned how to raise children from our parents, we also learned how to think about money from them.  And as we will raise our children the way we were raised unless we choose a different path, we will also pass on our ideas about money - unless we decide differently. Today we hear from Dr. Brad Klontz, co-author of the book Mind over Money: Overcoming the Money Disorders That Threaten Our Financial Health (Affiliate link), who helps us to think through the money scripts we want to pass on to our children - and how to adjust course if we decide we need to do this. Find more information from Dr. Klontz on his YouTube channel.   Other episodes in this series This episode is the first in a series on the intersection of parenting and money.  You can find other episodes in this series: 038: The Opposite of Spoiled 107: The impact of consumerism on children 112: How to Set up a Play Room 115: Reducing the Impact of Advertising to Children 118: Are You Raising Materialistic Kids?   [accordion] [accordion-item title="Click here to read the full transcript"]   Jen: 01:36 Hello and welcome to the Your Parenting Mojo podcast. Today's episode kicks off what I'm hoping is at least going to be a miniseries on issues related to money and economic privilege, although I'm still in the process of figuring out exactly where we're going with this. So, quite a long time ago now, we talked with New York Times columnist, Ron Lieber about money and we got a high level overview of some of the problems we can face when we're thinking about how to talk with children about money. So, things like from what information to give at what age and what to do when your child nags you to buy something that they want at a store. But a friend recommended that I read the book that our guest today co-wrote with his father. His father is Dr.Ted Klontz and the book is called Mind over Money: Overcoming the Money Disorders That Threaten Our Financial Health. So our guests, Dr. Brad Klontz holds a Doctorate in Psychology. He's a certified financial planner. He co-founded the Financial Psychology Institute and he's an Associate Professor of Practice in Financial Psychology at Creighton University Heider College of Business. So, we're here today to take our conversation on money to the next level by thinking through how our own relationship with money will impact our children's relationship with money. Welcome, Dr. Klontz.   Dr. Klontz: 02:45 I'm so happy to be here and I'm really happy that hopefully I can get some parenting mojo and a conversation too.   Jen: 02:51 Do you have children?   Dr. Klontz: 02:52 I do. I have 2 children.   Jen: 02:53 How old are they?   Dr. Klontz: 02:54 I've got a 6-year-old and a 2-year-old.   Jen: 02:57 Oh, okay.   Dr. Klontz: 02:58 And it's sort of amazing what they're already reflecting back to me on what I'm sort of unconsciously teaching them around money.   Jen: 03:03 I can imagine. Okay. So, you should know that it's perfectly fine to share personally learned lessons with us.   Dr. Klontz: 03:09 Okay, I'll do my best.   Jen: 03:11 All right, cool. So, let's dive right in. I wonder if you can kind of get to the crux of your book, which I think is about this idea that you call money scripts. What is a money script?   Dr. Klontz: 03:20 Yeah, so I got really curious. I grew up myself in a, my mom likes to say we were middle-class except lower. And I said, well, they have words for that, but we don't have to say what those are.   Jen: 03:30 Yeah. We need to say them.   Dr. Klontz: 03:32 Right. But I became really curious at a young age, I was surrounded by a loving family of real hard workers who never seem to really get ahead financially. And so I sort of had that inquisitive mind, I think as a child. And so going through my adolescence and then later on professionally, I was always really curious about how people look at the world differently, whether it's different religions or different sort of socioeconomic backgrounds. We all sort of have this worldview and it sort of collects around people who are similar to us. So, I became really curious. That's sort of the framework.   Dr. Klontz: 04:04 And so a large part of my research into the realm of financial psychology has been looking at what we call money scripts, which are these beliefs about money that are passed down to us, typically from our parents, our grandparents, our culture, society at large. You know, these are things that sort of get into our subconscious mind around what money is, what's possible, how the world works. And then my research has really been focused and by now we've done research with thousands and thousands of people on how these beliefs predict things like your income, your net worth, your financial behaviors, and a whole host of other financial outcomes.   Jen: 04:43 Okay. And so what are some of these money scripts?   Dr. Klontz: 04:47 So, we found four main categories and what we did is we collected basically beliefs around money that we worked with people around. And so we had some tools that you saw in the book Mind over Money to sort of draw these to the surface. So, we collected all of these and then we put them into a test. And as I mentioned, we've given it to thousands of people thus far. And we found some patterns and so we found four main patterns. The first one is what we would call money avoidance and this is where we have a negative association with money and in true for all of these money scripts, they come from really valid experiences that have happened to you as a child or your parents or grandparents or sometimes even further back in your family history, but it's a negative association with money, so things like rich people are greedy, money corrupts or there's virtue in living with less money.   Dr. Klontz: 05:33 Now, no big surprise, and this is true with the next couple of categories I'm going to describe to you, if you have those beliefs around money, it's going to be damaging to your financial health and sure enough, what we found is that people with this belief pattern tend to sort of undervalue themselves financially at least. They end up having lower net worth and they engage in some self-destructive financial behaviors, which makes sense. If you have this negative association with money, chances are you're probably gonna to repel it or try to get rid of it when it does come into your life. The next category we found is what we would call money worship beliefs. And this is sort of, I would say, ubiquitous in our culture. This belief that money is going to somehow magically make my life better, take away all my problems and finally get me to the place where I can be happy in this world.   Dr. Klontz: 06:20 And of course this leads to a lot of consumerism. So, what we've noticed in our studies, people have a tendency to overspend, spend more than they make, really be attached to stuff because we sort of make that belief money and stuff will make us happier. And of course there's been a lot of research done on this and it's certainly true. It's absolutely true that money will make you happier up to about middle-class. And that's sort of where we feel like, okay, so we're okay. Above that, there’s really no significant correlation between money and happiness, a bunch of studies that's been done all over the place. And so for many people, again, like if you’re trying to climb that socioeconomic ladder to get to stability for your family, a roof over your head, clothes, taking care of your children. Absolutely. But above that, there's really no significant correlation.   Jen: 07:07 It's kind of amazing, isn't it, considering how we still pursue it beyond that point?   Dr. Klontz: 07:12 Yes. Yes. Right. So, this is something that I keep studying because I'm like, of course not. Come on. So it's one of those things that I think confuses researchers.   Jen: 07:20 Yeah.   Dr. Klontz: 07:21 But you know, I work with a lot of people who are, have money and have means and it's totally true. Like wherever you go, your humanity follows you and whatever you're worried about in terms of health and...