A psychological approach to member financial wellness
Photo by Cottonbro Studio
Money, according to historians, has been in use since 5,000 B.C. It is deeply entwined in society, shaping our beliefs, behaviors, and overall well-being. We talk, write and even sing about money, making it a topic that has likely occupied our minds and hearts just as much as love and the meaning of life, for about the same length of time.
When financial psychologists Brad Klontz and Sonia Britt delved into how modern society views money, they identified a set of core beliefs that they coined as "Money Scripts." These scripts describe the fundamental beliefs about money shaping our financial behaviors. Behaviors which are often rooted in childhood experiences and generational and cultural influences.
Understanding these behavioral scripts is crucial for comprehending and explaining how adults manage their finances, but especially for those in roles pivotal to helping individuals manage their money and financial well-being—credit unions being a case in point.
Klontz and Britt identify four principal money scripts:
Money avoidance Money avoiders harbor the belief that money is inherently bad or undeserved, leading to fear, anxiety and spending avoidance. This script is prevalent among individuals with lower incomes and from younger demographics.
Money worship Those subscribing to the money worship script believe that an increase in income or a financial windfall would solve all their problems. Despite research showing a limited correlation between happiness and income, money worshippers often accumulate high levels of debt.
Money status Money status seekers are driven by the belief that acquiring wealth elevates social status. Contrary to this belief, research indicates that an excessive focus on financial success and materialism is associated with lower well-being and increased anxiety.
Money vigilance Individuals with the money vigilance script tend to be both highly secretive and anxious about their finances. While financial prudence is beneficial, excessive anxiety can hinder the enjoyment and security that money can provide.
How can your understanding of money scripts improve member wellbeing?
Recognize and understand there’s a problem
Acknowledging the existence of money scripts is the first step in understanding why a significant portion of adults struggles with money. Research indicates that about half of all North Americans struggle with financial knowledge. In their annual study, TIAA Institute-GFLEC Personal Finance Index found that only 50% of US adults can answer a basic financial test. In Canada, similar research from Maru Public Opinionreveals that around 40% of Canadian adults rate their personal financial knowledge as poor.
Take corrective action
The next step is to address the issue. Credit unions, already and deeply committed to empowering their membership and community, can make a positive impact by providing access to financial education. A good financial literacy program will reshape member financial knowledge and turn negative financial beliefs into positive financial behaviors.
Understanding and addressing negative financial behaviors is crucial for improving the financial well-being of members and credit unions. And the tool to assist is a comprehensive financial education program. If you're interested in such a program, start by exploring ours. It’s a Money Thing is a digital library of professionally developed financial topics designed to educate and entertain member and community audiences.
Tim McAlpine is the Founder & CEO of Currency Marketing. He is best known for developing the It's a Money Thing Financial Education Program that credit unions from around North America are using to connect with new young adult members. He is also a driving force behind CUES Emerge, an emerging leader program that combines online learning, peer collaboration and an exciting competition component.
