Latest / The Wealth Cafe / Money Mindset Explained: The Hidden Patterns Driving Your Financial Decisions

Transcript

Money Mindset Explained: The Hidden Patterns Driving Your Financial Decisions · The Wealth Cafe

• 0:16
  SPEAKER_00: I want to tell you about two women I've sat across from during my career.
• 0:20
  SPEAKER_00: One of them had$8 million in her portfolio.
• 0:22
  SPEAKER_00: She called me up all panic because the night before she had spent$600 on a birthday dinner just for herself, and she couldn't stop thinking about whether that was too much or just the right amount for that big birthday.
• 0:34
  SPEAKER_00: The other woman, she had about$800,000, give or take.
• 0:38
  SPEAKER_00: She had a solid financial picture, but she had some real constraints, and she was planning a$40,000 two-week European vacation, putting it fully on credit and expecting the entire thing to just kind of work itself out.
• 0:51
  SPEAKER_00: The number in your account and your relationship with money, they are two completely separate things.
• 0:57
  SPEAKER_00: And here's what I've learned: the women who build and are keeping lasting wealth aren't necessarily the ones that have the highest salaries or even the best investment returns.
• 1:06
  SPEAKER_00: They are the ones who have done the work to understand how they actually think about money and where those thoughts are quietly running the show.
• 1:14
  SPEAKER_00: You know, the ones that are sitting in the back of your mind and sometimes keep you up at night.
• 1:18
  SPEAKER_00: Today, we're going to talk about money mindset and not in the woo-woo manifest abundance way you might have heard before, but in a real grounded, here's what the research actually shows kind of way.
• 1:29
  SPEAKER_00: Because your relationship with money has a direct impact on every financial decision that you are making and will make into the future.
• 1:37
  SPEAKER_00: And if we don't name it, we can't work with it.
• 1:41
  SPEAKER_00: So, what actually is your money mindset?
• 1:44
  SPEAKER_00: It is typically referred to as a set of beliefs, assumptions, or even emotional patterns that you carry about money.
• 1:50
  SPEAKER_00: It's all around how it should be earned, spent, saved, lost, even given away, and also how you talk about it.
• 1:56
  SPEAKER_00: Now, these beliefs were formed long before you even had a dollar of net worth.
• 2:00
  SPEAKER_00: Most of them were formed during your childhood and watching how the adults around you related to the money that they had or didn't have.
• 2:07
  SPEAKER_00: And it's something a lot of us never consciously examined.
• 2:11
  SPEAKER_00: This isn't self-help territory, this is real behavioral science and research.
• 2:16
  SPEAKER_00: For those of you who know Brad Klantz, he is a financial psychologist and he has identified the four primary money scripts.
• 2:23
  SPEAKER_00: And these are the unconscious beliefs that drive financial behavior.
• 2:27
  SPEAKER_00: And his research has found that these scripts are actually statistically linked to net worth, financial anxiety, compulsive spending, and also the avoidance of financial planning.
• 2:37
  SPEAKER_00: Now, these aren't exactly your personality quirks, these are more so measurable and identifiable patterns.
• 2:43
  SPEAKER_00: So let's talk about what these four money scripts actually are.
• 2:47
  SPEAKER_00: Now, the first one is money avoidance, and this is money is bad, dangerous, corrupt.
• 2:52
  SPEAKER_00: There's the money worshipper, which is more money is gonna come and save everything.
• 2:55
  SPEAKER_00: There's money status, which is your net worth equals your self-worth, and there's money vigilance, which is that constant anxiety and scarcity around money.
• 3:03
  SPEAKER_00: Now, most people carry a dominant money script, and a lot of high-achieving women carry a complex combination of one or two of those money scripts in their lives.
• 3:13
  SPEAKER_00: Now, money mindset is not about positive thinking and affirmations over and over again.
• 3:18
  SPEAKER_00: It is about telling yourself that you deserve wealth.
• 3:22
  SPEAKER_00: It's about understanding the specific identifiable patterns that are driving your financial decisions and often underneath conscious awareness so that you can make choices that actually align with your values, your goals, not your fears.
• 3:38
  SPEAKER_00: Now, the American Psychological Association identifies money as the number one stressor for Americans in the US, and especially for high earners.
• 3:48
  SPEAKER_00: I know that sounds crazy, but the amount of money that you have does not eliminate that anxiety.
• 3:55
  SPEAKER_00: It actually suppresses a lot of things because we think, well, I'm earning well, therefore, why should I be stressed about money?
• 4:02
  SPEAKER_00: And just continues to let things bubble under the surface.
• 4:06
  SPEAKER_00: As executive women, you face a set of money scripts and pressures that are so specific to your experience.
• 4:12
  SPEAKER_00: You have spent so much of your career in environments where money and performance were so tightly linked.
• 4:18
  SPEAKER_00: Now, your compensation was a direct reflection of your value, your negotiation status, and also a lot of the skills that you had.
• 4:25
  SPEAKER_00: Now, that creates a very particular relationship with money that doesn't just turn off when you retire or transition out of the corporate world.
• 4:34
  SPEAKER_00: The three scripts that are most common in the clients that I have and that I see time and time again is they haven't earned the right to enjoy their money yet.
• 4:44
  SPEAKER_00: Now, this is a really common pattern I see in executive women, and it is persistent and tied to wealth that they have accumulated, and it doesn't fight quite feel real and it doesn't really feel deserved.
• 4:55
  SPEAKER_00: And they need to feel validated or they need one more milestone until they can actually enjoy it.
• 5:00
  SPEAKER_00: And that goalpost keeps moving.
• 5:02
  SPEAKER_00: The retirement savings target, the business exit, the number that will finally make things feel like enough.
• 5:07
  SPEAKER_00: And it never arrives because the belief it's never about a number, it's about worthiness.
• 5:12
  SPEAKER_00: If I stop being vigilant, that money will just disappear into thin air.
• 5:16
  SPEAKER_00: Many of the women who I work with, they grew up in households where financial security was a bit uncertain or money was a big source of tension or anxiety.
• 5:25
  SPEAKER_00: And even after they've built a significant amount of wealth, that vigilance doesn't just turn off.
• 5:30
  SPEAKER_00: They watch every single account, they feel guilty about their spending, and they can't fully enjoy what they've built because some part of them is still waiting for it all just to be taken away.
• 5:40
  SPEAKER_00: Now, this script doesn't protect your wealth.
• 5:43
  SPEAKER_00: It quietly diminishes it and it diminishes your quality of life and sometimes your financial decisions too, because fear-based decisions are rarely the best ones.
• 5:53
  SPEAKER_00: And talking about money feels uncomfortable or dangerous, as is another script that I commonly see.
• 5:59
  SPEAKER_00: Women are far less likely than men to talk about their wealth with friends, with family, sometimes even with their own financial advisors.
• 6:06
  SPEAKER_00: Now, this isn't modesty.
• 6:08
  SPEAKER_00: It is deeply ingrained in a cultural script that says women who talk about money, they're bragging or they are inviting an envy, or they're stepping outside of a role that they are supposed to occupy.
• 6:19
  SPEAKER_00: The consequence of this is that they make financial decisions in isolation.
• 6:23
  SPEAKER_00: They don't negotiate as effectively as they could, they don't seek advice until a crisis or something is made avoidable.
• 6:30
  SPEAKER_00: And I don't want that to be you, which is why I'm glad we are diving into and you are taking the time to listen all about your money scripts today.
• 6:37
  SPEAKER_00: So, what is it that most people know about their money mindset?
• 6:41
  SPEAKER_00: And that is if you think negatively about money, you make worse financial decisions.
• 6:46
  SPEAKER_00: Now, the typical advice is go and work on your mindset.
• 6:48
  SPEAKER_00: And that's where a lot of people stop.
• 6:50
  SPEAKER_00: They're like, Yeah, yeah, great, I will go and do that.
• 6:52
  SPEAKER_00: What does that framework actually look like?
• 6:55
  SPEAKER_00: I'm gonna break this down for you into the different sections of financial planning.
• 6:59
  SPEAKER_00: In estate planning, I've had clients who couldn't bring themselves to execute their financial plan for years, not because they didn't understand it, but because signing the documents made the idea of death feel too real.
• 7:10
  SPEAKER_00: This is the avoidance mindset combined with the status script.
• 7:13
  SPEAKER_00: As long as I haven't signed the papers, I don't have to confront my own mortality.
• 7:17
  SPEAKER_00: And the consequence is that your family is going to be left to sort out this mess.
• 7:20
  SPEAKER_00: Let's talk about on the investment decide and making investment decisions.
• 7:24
  SPEAKER_00: Money Vigilance script that some of the most expensive and investment mistakes I see people is that they are selling at the market when there is a bottom or there is a downturn, like we've had recently, because of the anxiety of watching their portfolio drop, it is unbearable.
• 7:39
  SPEAKER_00: Almost every financial advisor will tell you that is the wrong move, but knowing it intellectually and being able to act differently in that moment, they are two completely different things.
• 7:50
  SPEAKER_00: The script wins and the emotion is high, and people just purely panic and they are left not making any decision.
• 7:58
  SPEAKER_00: When it comes to retirement, women who carry the I haven't earned it yet script, they often struggle deeply with the transition of moving away from earning.
• 8:06
  SPEAKER_00: Not because they aren't financially ready on paper, most times they are, but because their sense of self has been so tightly coupled with their professional identity and their stepping and income that when they step away from this, there is so much grief and financial anxiety that shows up.
• 8:21
  SPEAKER_00: So they keep one foot in the door longer than they need to, sometimes to the detriment of the next chapter of their lives, their families, or their health.
• 8:30
  SPEAKER_00: So what does this all mean for you?
• 8:32
  SPEAKER_00: At your wealth level, the money script conversation doesn't just affect whether you buy that nicer BMW or the Audi.
• 8:38
  SPEAKER_00: It affects whether you execute your estate plan, whether you fund the SLAT, or whether you're going to have a conversation with your children about building generational wealth.
• 8:48
  SPEAKER_00: It could also look like giving to causes that you actually believe in and could make a difference through your giving.
• 8:55
  SPEAKER_00: The stakes are a lot higher for you, but a lot of those financial script and patterns can be the same.
• 9:01
  SPEAKER_00: Now, there are financial implications and patterns that so many people do not discuss.
• 9:06
  SPEAKER_00: A comprehensive financial plan that doesn't account for your money scripts is that it's essentially incomplete.
• 9:12
  SPEAKER_00: So if you are to build retirement income for a client, if I'm doing this and I know they have deep vigilance, anxiety around money, and I'm not addressing that, this person's going to be second-guessing all of the distributions that they are taking.
• 9:25
  SPEAKER_00: She's going to call me every time the market drops, and they she may never really feel financially secure, regardless of what the numbers actually say.
• 9:33
  SPEAKER_00: And don't get me wrong, I've had clients who have come and do this, and we have to have deeper conversations.
• 9:39
  SPEAKER_00: Now, what do we do in this situation?
• 9:42
  SPEAKER_00: The biggest thing is addressing it and setting the patterns and tones from the beginning.
• 9:47
  SPEAKER_00: Now, this is a lot of work that my clients need to do on their side.
• 9:50
  SPEAKER_00: And I'm so glad you are listening to this podcast and this portion of things because you can address it and address those money scripts.
• 9:58
  SPEAKER_00: No matter what financial advisor you are working with, it's never going to change the money scripts that you have.
• 10:03
  SPEAKER_00: And this is something that you are then going to pass on from one generation to the next.
• 10:07
  SPEAKER_00: Now, this is not one of those conversations where you sit here and you say, you know what, I'm going to pause and I'm going to wait and do this when I have more time, like when I retire.
• 10:17
  SPEAKER_00: This is something that you should make time for now.
• 10:19
  SPEAKER_00: You need to understand your money scripts.
• 10:22
  SPEAKER_00: I really encourage you, pull out a journal, take some time as the weather is getting nice wherever you are, and take some time to write down what did life looked like when you were growing up?
• 10:31
  SPEAKER_00: How did your parents talk to you about money?
• 10:34
  SPEAKER_00: How did it feel whenever there were different financial times that impacted?
• 10:39
  SPEAKER_00: Think about different financial events that occurred while you were growing up.
• 10:42
  SPEAKER_00: Maybe for you that was the great tech wreck.
• 10:45
  SPEAKER_00: Maybe it was a world war, maybe it was 2008.
• 10:50
  SPEAKER_00: How were you affected and how has that changed your mindset around money?
• 10:54
  SPEAKER_00: What are some of the common themes for you that come up around money?
• 10:57
  SPEAKER_00: Is it scarcity?
• 10:58
  SPEAKER_00: Is it, oh, the paycheck comes in and you're like, well, there it goes.
• 11:01
  SPEAKER_00: Let me spend it while I have it.
• 11:03
  SPEAKER_00: What are some of those common themes that replay in your mind?
• 11:06
  SPEAKER_00: And I don't want you to stop there.
• 11:08
  SPEAKER_00: I want you to actually journal about why those things are coming up.
• 11:12
  SPEAKER_00: Was it a life event?
• 11:13
  SPEAKER_00: Was it something that someone had always told you growing up?
• 11:17
  SPEAKER_00: You need to do this work because no matter what financial professional you are working with, if you aren't doing this work personally, there is nothing that person, that financial professional, the CPA, the estate attorney, the financial advisor can do to help you get on the right track.
• 11:31
  SPEAKER_00: And this is a great thing to communicate with your financial advisor.
• 11:35
  SPEAKER_00: And hopefully they are picking this up from you as well.
• 11:37
  SPEAKER_00: It's something that I always look for in my clients.
• 11:40
  SPEAKER_00: Are they getting nervous?
• 11:41
  SPEAKER_00: Do they have anxiety?
• 11:42
  SPEAKER_00: What type of background are they coming from?
• 11:44
  SPEAKER_00: Not in a sense of judgment, not in a sense of trying to figure out their story, but to understand how can I best serve them and work with them and communicate with them in a way that they are going to understand.
• 11:55
  SPEAKER_00: I want to thank you for joining us on this episode.
• 11:58
  SPEAKER_00: I know it can be hard to take the time to actually step back and do a lot of this work, but it is going to pay dividends for you in the long run.
• 12:06
  SPEAKER_00: I'll see you next time for another episode of The Wealth Cafe.