No script is perfect on first draft. Even iconic films like Casablanca underwent several changes – it was originally a play called Everybody Comes to Rick’s when Warner Bros purchased it in 1940. We wouldn’t have one of the most famous lines in cinematic history. “Here’s looking at you, kid” would not have existed, had Humphrey Bogart not veered off from the original “Here’s good luck to you, kid” while filming.
When we talk about behavioural scripts, generally it’s in reference to the way people package information about certain situations as a shorthand for how to behave when that situation occurs. We subconsciously pick up cues on how this script should go based on cultural or familial practice. If your family always placed the cutlery together and to the right of the plate when setting the table, that will seem more logical to you than placing the fork on the left and the knife on the right.[i]
The same applies to what we learn about money management, and how we create ‘money scripts’ for ourselves. Often, ideas around wealth – spending and saving – are generational. It also can depend on how open your household is about money; if there’s not visible behaviour to pick up on, the script gets formed by other learnings.
Many different money scripts exist, and they generally fall into four categories:
Avoidance: Some form of belief that money is bad, evil, or can corrupt.
Worship: Money is the ticket to happiness, and having more money will make things better.
Status: Pursuing money for external reasons, as a way to show how successful someone is.
Vigilance: Those with these beliefs are careful and often secretive with their money, becoming nervous if they don’t have savings.[ii]
Understanding which one you instinctually follow can be very helpful to overcoming any pain points the long-term behaviour could cause. Self-awareness can help you reframe any upcoming money decisions. For example, say you’re saving within your means for a newer car, but you’re having trouble figuring out where to trim from your usual expenditure. A status script might hold you back by demanding you keep up with the Joneses in the meantime, and a worship script might lead you to think that it doesn’t matter how much you save because you’ll never have ‘enough’ – both of which aren’t productive when it comes to reaching your goals.
One way to work around your own money biases and behaviours is to create SMART goals. When you set your goals, make sure they are:
Specific: With an actual and stated goal in mind.
Measurable: So you know when you have achieved your goal or how much is left to go.
Achievable: If you’ve never saved more than $200 per pay cycle, it’s probably not going to be achievable for you to save $600 without changing other behaviours.
Realistic: Make sure it fits your needs and makes sense… if you have a Nissan Leaf budget, maybe don’t set your sights on a brand-new extended range Tesla with extras.
Time-bound: Set an end date for when you want this to happen by, so you have to commit to saving a certain amount by that time.
Another way is to use the ‘jars’ system. I recall vividly as child seeing my paternal grandmother’s jars on the kitchen shelf – this method splits your money into different accounts for different uses, which can help you visualise exactly how much money you have available for saving or spending. This is a good way to keep track of your money, as you would set any bills and essential spending up as the first ‘jars’ to fill. It also may make you think twice before you reach into another source of money, should you go beyond what you have set out for yourself on payday.
Knowing your script is particularly valuable at the moment with the cost of living outpacing wage inflation. The inflation rate on New Zealand is still sitting at 6.9% currently, with the next update expected 18 July. Wage inflation, however, was only at 3.0% during the same time period – so the cost of living is out-stripping wages quite significantly.[iii]
Changing or being more conscious of your money scripts can help with immediate financial needs, and it can also help set up your whānau for the future. The script you pass down can be different to the one you learned as a child, if need be.
A recent survey of 1000 school leavers found the majority of them had learned nothing, or only a little, about money. This means a significant amount of money knowledge is coming from the home, as there is an absence of structured financial literacy in many schools.[iv] Teaching children financial skills early is easier than it might sound – from getting them to help find cheaper options while grovery shopping, to giving them pocket money to teach the value of saving small amounts to get bigger or better stuff, there’s options you can easily integrate into everyday family life.[v]
Much like Casablanca’s long-lasting triumph, a successful financial plan can be a slow burn as it builds. Just making the thing doesn’t guarantee success, but sticking to it as much as you can certainly help. If you’re not sure where to start, we suggest sitting down with a trusted financial adviser for a chat.
Ultimately the ball is in your court when it comes to rewriting your script. Here’s looking at you, kid.
Nick Stewart is a Financial Adviser and CEO at Stewart Group, a Hawkes Bay and Wellington-based CEFEX certified financial planning and advisory firm.
The information provided, or any opinions expressed in this article, are of a general nature only and should not be construed or relied on as a recommendation to invest in a financial product or class of financial products. A disclosure statement can be obtained free of charge by calling 0800 878 961 or visit our website, www.stewartgroup.co.nz
[i] http://psychology.iresearchnet.com/social-psychology/control/scripts/
[ii] https://www.thenationalnews.com/business/money/2022/06/24/why-our-money-scripts-can-put-our-financial-security-at-risk/
[iii] https://www.stats.govt.nz/indicators/consumers-price-index-cpi/
https://www.stats.govt.nz/news/annual-wage-inflation-rises-to-3-0-percent/#:~:text=Annual%20wage%20inflation%20measured%20by,quarter%2C%20Stats%20NZ%20said%20today.
[iv] https://www.stuff.co.nz/business/money/300618403/top-tips-for-teaching-children-and-young-people-about-money
[v] https://www.stuff.co.nz/business/money/300618403/top-tips-for-teaching-children-and-young-people-about-money
