What do you tell yourself about money? Are you a saver, or a spendthrift, or do you avoid thinking about it at all costs?
As Amanda Steinberg, the founder of Daily Worth, writes in her book Worth It, the personal narratives we tell ourselves form who we are and what we do — especially our money stories.
"Your money story is all your unconscious beliefs you have about money, how you should earn it, what it means to want it, and what it means to have a lot or a little," she writes. "It reveals a lot about yourself and what you believe is possible."
Often our stories are negative. They can be excuses for not taking our financial health seriously, which can lead to bad behaviours and lots of stress. You become the story you tell yourself.
But money doesn't have to be the source of so much anxiety. It can instead be a source of freedom, power, and choice. Steinberg herself changed her story, from being someone who earned and spent a great deal of money, and was constantly chasing the next status symbol, to someone who saved and invested in herself.
"I knew I had to deconstruct and rebuild my life anew," she writes. For her, that meant leaving her husband and moving into a smaller house, cutting and dying her own hair, and all manner of radical downsizing.
Here's how she did it.
How to Change Your Money Story
Steinberg recommends writing down one sentence that tells your current money story. "Condensing your story into a one liner makes you think carefully about the major arc of your story and what you believe about yourself and the way you engage with money." For example,
- "Money lets me buy whatever I want."
- "No matter how hard I try, I can't save."
- "Someday my prince will come."
- "Capitalism is evil, so I don't get caught up in it."
- "If I'm good, the universe will give me what I need."
- "Money makes me valuable."
What Steinberg's book drives home is that we don't need to follow the money story we've been telling ourselves our whole life — it's completely editable. For example, you may think you're a spender and there's no way to change that, or that you know nothing about money and so you let your spouse handle the finances.
Most importantly: stop waiting for someone else to come around and magically change your situation — you need to do it for yourself. Even acknowledging that your story needs to change could be helpful.
One way to do so is through story prompts: little edits that you can make to negative narratives in your mind to change your thinking, as Steinberg defines them (for example, she says she started called herself a "saver" each time she put change into a jar).
There are a few other exercises you can do.
Write Your Money Beliefs in Two Short Lists
Take out a piece of paper, or open a Word doc and make two lists: the first list is for your current beliefs about money and why you hold them; the second is beliefs you would like to have and how you maintain them.
"Don't think," Steinberg writes, "just write what first strikes you." You don't even need to write in complete sentences. Here are some prompts:
- What's your earliest memory of money? Who had it? Who didn't? Where did it come from?
- Were you raised in a saving or spending mentality? Explain.
- Where do you think money should come from today? (Work, spouse, family, inheritance, investments)
- How confident do you feel with the following aspects of managing your money: saving, spending, investing, earning, giving.
- How much money do you think you have in relation to your friends and family? Is that how much you think you deserve? How does that make you feel?
Write Down Your Negative Money Ideas
To get from the first list to the second list, flip to a new page and write down as many negative things as you can think of that you often tell yourself about money.
For example, one of mine is, "I'm not sure I'll ever have enough to retire, no matter how hard I work." Some other examples from Steinberg's book:
- Managing money is someone else's job.
- Managing money is something only men enjoy.
- I don't know what I'm doing with money and never will.
- I can't be spiritual and care about money, they're opposites.
- If I just stop spending, I'll have more money.
- The economy is bad so nobody can afford to pay me what I deserve.
Look at your list and underline the ones you want to change.
Expand on the Negative Beliefs That Most Impact Your Life
Identify the one or two beliefs from your list that most affect your day-to-day life, and write them down in complete sentences. Then take some to flesh out what these beliefs are, in what ways they affect you, and in what ways you'd like to change them.
For example, here's how my cynical thinking about retirement affects me.
"I'm not sure I'll ever have enough to retire, no matter how hard I work."
With stagnated wages and ever-increasing rising living costs (particularly health care), I'm not sure how I'll ever be comfortable enough to truly retire or even cut back on my work. Day to day, I'll buy a dinner out I don't need or an extra glass of wine, because saving that small amount of money seems futile anyway. I contribute to a 401(k), but I know I could save more. Yet with rent so high and working in an industry where I'm simply lucky to have a full-time job, it often seems like I'll never have enough to set aside or the ability to ask for more money than I currently earn.
I'd like to become more optimistic about the future: My salary will increase as I get older, I will be able to cut down on extraneous spending, there are other avenues of employment and money-making available to me. Social Security will still be there for me. If I'm smart and a little bit lucky, I can make my money work for me.
Write Down As Many Positive Money Ideas As You Can
Now that you ended on a (hopefully) positive note, write down more positive ideas about money. You don't necessarily hold these beliefs now — rather, think about the ways you'd like to think about your finances. Ways of changing your money story. Especially rewrite the negative ideas you have in a positive way. Here are some examples from Steinberg's book,
- Money can be a force for good.
- The growth of my savings account reflects how well I value myself.
- Money is a spiritual expression.
- It's totally fine to ask for what I want and need.
Repeat these new, positive statements — this could then change your behaviour, and change your story. You could go from someone who "just doesn't get money," to someone who "actively engages with her financial future."
Instead of thinking "No matter how hard I try, I can't save," change your story to "It's easy to save because I value my future self."
Being disengaged from your finances will just cost you more money. Instead of sitting idly by, reframe your money story in a positive way, and get in control of your finances.