Latest news with #BradKlontz
Yahoo
20-05-2025
- Business
- Yahoo
Want to save and make more money? You might need to look inward. How to do it.
When Dr. Brad Klontz' maternal grandfather went to his bank one day, he discovered all of his money was gone. His bank was one of the thousands of financial institutions that failed during the Great Depression. He was so traumatized that he never put a dollar in a bank again. His daughter carried some of that risk aversion into her life, investing only in certificates of deposit, or CDs, and she felt ashamed of being poor. Growing up, Klontz internalized some of that shame and wanted to be wealthy. To get there, he decided that instead of being extremely cautious like his mother and grandfather, he'd go in the opposite direction. Staring at his $100,000 in student loan debt in his 20s, he sold his truck and used the money to buy a $500 car and invest the rest in one asset class in the stock market. Then the dot-com bubble burst and he watched that money fade away. 'I went from the most risk averse to the riskiest possible approach,'' Klontz, a certified financial planner and psychologist, said. "That's dysfunctional. It's not moderation.' Klontz says that he was following a "money script," a term he coined for the unconscious beliefs, often rooted in childhood, that affect your financial behaviors as an adult. 'For many of us, it's like a script that was written by somebody else and you're just reading it,' Klontz said. But just because financial habits are often first molded by things out of your control, it doesn't mean you can't change them. The first step to having a healthier relationship with money is understanding where you currently stand. Klontz's story is just one example of how people's attitudes toward money are passed down through generations and shaped by experiences or trauma. He calls his personal experience a 'dysfunctional pendulum swing.' It's something you often see when alcoholism runs in a family, he said. If a parent is an alcoholic, their child will either also become one or never drink a drop of it in their life. Helping people uncover their money scripts and rewrite them, Klontz said, has led to improved mental health. One study he conducted found people's savings rate increased 73% when they became more aware of their psychological relationship with money. The four main money scripts are Money Avoidance, Money Focus, Money Status, and Money Vigilance. Klontz offers a free diagnostic test to help determine yours. Some lead to better financial outcomes than others, but no matter your script, there are tips to help you build a healthier relationship with money. More: What to prioritize when making a budget? Tips on creating and sticking to one Those who are money avoidant tend to believe money is inherently bad or corrupting, according to Klontz' framework. Money avoidants might avoid thinking or talking about money, ignore financial statements, financially enable others, or overspend. Jack Howard, head of financial wellness at Ally Financial, discusses 'money stories' — a concept similar to money scripts — in her financial education workshops. She said she often sees parents hesitate to have conversations about finances with their children because their own parents avoided the subject. 'I'm hearing that in a lot of our classes. 'We didn't talk about money. It was taboo. It was seen as disrespectful,'' Howard said. Klontz' advises the money avoidant to schedule periodic money check-ins, financially support people and causes they care about, and to identify a role model who uses wealth to do good, to strengthen their overall relationship with money. Money vigilant individuals are cautious and concerned about their financial well-being. They save for the future, avoid unnecessary debt, and believe hard work pays off. 'The average American needs to get way more money vigilant,' Klontz said. 'That's just the bottom line.' But identifying with this script can lead to missing out on experiences due to fear-based decision making. Klontz said as a financial adviser, he's seen wealthy people struggle to spend their money even in retirement because they are used to being so vigilant. 'People who are really high on money vigilance may end up with the highest net worth,' Klontz said. But 'Are they happy? Can they sleep at night? Are they so vigilant around money that they can't spend it?' If that sounds like you, he advises you create a 'fun money' budget, check in with an adviser who will set your mind at ease, and set limits on how often you monitor your finances. Money focused individuals often believe money is the key to happiness and a solution to life's problems but also that no amount of money is enough, according to Klontz' framework. Klontz himself identifies with this script, but he also scores high in the money vigilance category. It's a duality he sees a lot in business professionals. 'The two go hand in hand,' he said. 'Why would you be so conscientious and concerned about it if you didn't want more of it?' But unchecked money focus can actually lead to lower net worth and higher levels of debt, as people try to buy happiness and prioritize work over relationships, research shows. Tips for the money focused include pausing before making a purchase to determine if you need it and realizing money can buy comfort but not connection. Giving both money and time to causes and people that matter to you can also help those who identify with this script. If you often tie your self-worth to your net worth, you may find the money status script familiar. Individuals who fall into this category may be a fan of outward displays of wealth and see them as a way to gain respect, according to Klontz' framework. Klontz said he likely would've scored high in this category when he was younger. When he started making six figures for the first time, he bought himself a luxury watch and a gold bracelet for his mother, even though he still had a significant amount of student loan debt. 'I don't know why I did it. I mean I did it because I heard there's a whole club when you're making money now and it's about luxury watches,' Klontz said. 'It's a signal, you know? 'Hey, I've made it.'' Howard said as a mom to a Gen Z child, she sees the younger generations buying things to showcase and achieve status on social media. Those social networks' influencers and ads can also lead to more impulse buying, she said. To avoid the most negative outcomes including overspending, compulsive gambling, and financial dependence on others, money status seekers should take a step back. Klontz advises them to pause before they purchase, schedule money check-ins, and take care of their overall health instead of only chasing financial goals. Reach Rachel Barber at rbarber@ and follow her on X @rachelbarber_ This article originally appeared on USA TODAY: Financial wellness benefits from self reflection. How to do it.
USA Today
20-05-2025
- Business
- USA Today
Want to save and make more money? You might need to look inward. How to do it.
Want to save and make more money? You might need to look inward. How to do it. Show Caption Hide Caption How to control your finances on a tight budget Living on a tight financial budget? That doesn't mean you can't take control of your finances. When Dr. Brad Klontz' maternal grandfather went to his bank one day, he discovered all of his money was gone. His bank was one of the thousands of financial institutions that failed during the Great Depression. He was so traumatized that he never put a dollar in a bank again. His daughter carried some of that risk aversion into her life, investing only in certificates of deposit, or CDs, and she felt ashamed of being poor. Growing up, Klontz internalized some of that shame and wanted to be wealthy. To get there, he decided that instead of being extremely cautious like his mother and grandfather, he'd go in the opposite direction. Staring at his $100,000 in student loan debt in his 20s, he sold his truck and used the money to buy a $500 car and invest the rest in one asset class in the stock market. Then the dot-com bubble burst and he watched that money fade away. 'I went from the most risk averse to the riskiest possible approach,'' Klontz, a certified financial planner and psychologist, said. "That's dysfunctional. It's not moderation.' Klontz says that he was following a "money script," a term he coined for the unconscious beliefs, often rooted in childhood, that affect your financial behaviors as an adult. 'For many of us, it's like a script that was written by somebody else and you're just reading it,' Klontz said. But just because financial habits are often first molded by things out of your control, it doesn't mean you can't change them. The first step to having a healthier relationship with money is understanding where you currently stand. What's your money script? Klontz's story is just one example of how people's attitudes toward money are passed down through generations and shaped by experiences or trauma. He calls his personal experience a 'dysfunctional pendulum swing.' It's something you often see when alcoholism runs in a family, he said. If a parent is an alcoholic, their child will either also become one or never drink a drop of it in their life. Helping people uncover their money scripts and rewrite them, Klontz said, has led to improved mental health. One study he conducted found people's savings rate increased 73% when they became more aware of their psychological relationship with money. The four main money scripts are Money Avoidance, Money Focus, Money Status, and Money Vigilance. Klontz offers a free diagnostic test to help determine yours. Some lead to better financial outcomes than others, but no matter your script, there are tips to help you build a healthier relationship with money. More: What to prioritize when making a budget? Tips on creating and sticking to one Money Avoidance Those who are money avoidant tend to believe money is inherently bad or corrupting, according to Klontz' framework. Money avoidants might avoid thinking or talking about money, ignore financial statements, financially enable others, or overspend. Jack Howard, head of financial wellness at Ally Financial, discusses 'money stories' — a concept similar to money scripts — in her financial education workshops. She said she often sees parents hesitate to have conversations about finances with their children because their own parents avoided the subject. 'I'm hearing that in a lot of our classes. 'We didn't talk about money. It was taboo. It was seen as disrespectful,'' Howard said. Klontz' advises the money avoidant to schedule periodic money check-ins, financially support people and causes they care about, and to identify a role model who uses wealth to do good, to strengthen their overall relationship with money. Money Vigilance Money vigilant individuals are cautious and concerned about their financial well-being. They save for the future, avoid unnecessary debt, and believe hard work pays off. 'The average American needs to get way more money vigilant,' Klontz said. 'That's just the bottom line.' But identifying with this script can lead to missing out on experiences due to fear-based decision making. Klontz said as a financial adviser, he's seen wealthy people struggle to spend their money even in retirement because they are used to being so vigilant. 'People who are really high on money vigilance may end up with the highest net worth,' Klontz said. But 'Are they happy? Can they sleep at night? Are they so vigilant around money that they can't spend it?' If that sounds like you, he advises you create a 'fun money' budget, check in with an adviser who will set your mind at ease, and set limits on how often you monitor your finances. Money Focus Money focused individuals often believe money is the key to happiness and a solution to life's problems but also that no amount of money is enough, according to Klontz' framework. Klontz himself identifies with this script, but he also scores high in the money vigilance category. It's a duality he sees a lot in business professionals. 'The two go hand in hand,' he said. 'Why would you be so conscientious and concerned about it if you didn't want more of it?' But unchecked money focus can actually lead to lower net worth and higher levels of debt, as people try to buy happiness and prioritize work over relationships, research shows. Tips for the money focused include pausing before making a purchase to determine if you need it and realizing money can buy comfort but not connection. Giving both money and time to causes and people that matter to you can also help those who identify with this script. Money Status If you often tie your self-worth to your net worth, you may find the money status script familiar. Individuals who fall into this category may be a fan of outward displays of wealth and see them as a way to gain respect, according to Klontz' framework. Klontz said he likely would've scored high in this category when he was younger. When he started making six figures for the first time, he bought himself a luxury watch and a gold bracelet for his mother, even though he still had a significant amount of student loan debt. 'I don't know why I did it. I mean I did it because I heard there's a whole club when you're making money now and it's about luxury watches,' Klontz said. 'It's a signal, you know? 'Hey, I've made it.'' Howard said as a mom to a Gen Z child, she sees the younger generations buying things to showcase and achieve status on social media. Those social networks' influencers and ads can also lead to more impulse buying, she said. To avoid the most negative outcomes including overspending, compulsive gambling, and financial dependence on others, money status seekers should take a step back. Klontz advises them to pause before they purchase, schedule money check-ins, and take care of their overall health instead of only chasing financial goals. Reach Rachel Barber at rbarber@ and follow her on X @rachelbarber_
The Spinoff
27-04-2025
- Business
- The Spinoff
Your brain isn't built for budgeting – here are three ways to outsmart it
What if you're not bad with money, you're just working with outdated software? If you've ever thought, 'why can't I just stick to a budget?', congratulations. You're just like the other 90% of us. Our brains were wired for survival in a hunter-gatherer world, which means they start throwing up error messages when we try to manage direct debits, optimise a KiwiSaver, or resist the dopamine hit of a weekend splurge. So how do you fix it? By understanding how your brain works and using that knowledge to build better systems. 1. You don't need more willpower, you need a better system Let's start with something that should feel like a relief: it's not that you're lazy. Or forgetful. Or bad with numbers. You're failing (if we even want to call it that) because you're human. 'Our brains are wired to do it all wrong,' Dr Brad Klontz said on the Making Cents podcast. 'To do well with money, you need to delay gratification, be future-focused… and that is completely at odds with our evolutionary wiring.' What does our evolutionary wiring crave? The instant happiness of a dopamine hit. That's also why the creators of Otto, a new gamified money app, decided the way to actually help people with their money was to use the dirty tricks of gambling and social media, and flip them, to boost good habits instead. 'There are more people who gamble regularly in New Zealand—2.7 million—than invest as retail investors,' said co-founder Tomas van Ammers. 'There's a researcher called BJ Fogg. He's known as a controversial figure in the States, as the person behind the dopamine cycle of a lot of the apps that come out of Silicon Valley. The reward mechanism of dopamine is used to get people to come back to apps, and often not in a good way. Gambling apps lean heavily on this kind of research.' What Otto does is use those same pathways, but for good. 'In practice, the closest analogy for our first game, is called Savings Quest, is Duolingo,' explained van Ammers. 'When you create a Savings Quest with Otto, you have a series of checkpoints that reward you with tokens if you meet your goals before those checkpoints. As you reach more checkpoints, you build a streak. And a streak is incredibly simple, but it's incredibly powerful for getting people to come back.' With Duolingo, van Ammers says, streaks are the single most powerful reward-making mechanism for getting people to come back and complete their five minutes a day. 'We're doing the exact same thing, but to get people to build and then maintain a habit of saving.' The lesson? Instead of trying to force yourself to 'be good' just because you should, find ways to make it fun. Create a sticker chart with mini goals. Create a streak, and see how long you can go putting something into your savings every day, even if it's just $1. Compete with your friends for who can keep their streak going the longest. Willpower is unreliable. Systems are not. Build a system that plays into your brain's reward circuitry. 2. Automate the good stuff Saving $20 a week might not feel like much. But creating these habits is important for two reasons. The first? Saving $20 is more than $0. Small amounts, regularly, build up surprisingly fast. Just look at how fast a little nest egg builds up in your KiwiSaver. The second reason? It's about more than the number. It's about creating momentum. 'People will gamble away hundreds on a Saturday night and call it fun,' van Ammers said. 'But saving $20? That's seen as a chore. That's not logic. That's dopamine.' So it's time to combine point one and point two. Everything that you need to think about, make it as fun as you can. Everything that you can automate? Assign it to the robots, so that you don't have to think about it, and fun won't matter any more. 'There's something that's really reinforcing about those little successes and decreasing friction, which is an important concept. That's what automation does,' Klontz said. 'It capitalises on the status quo bias, which is our human bias to just keep things the way they are. Gym memberships are really, really good at this. 'Essentially, you want to join a gym and they're like, OK, we're going to automatically take some money out of your checking account every month. And it's automated. You don't even have to think about it. 'It's 'so helpful' because you've already decided you want to go to the gym. You probably have a vision of this body you want to have or this experience you want to be having physically and all the admiration you're going to get as you're walking on the beach. 'So, what's it going to take for you to go cancel that subscription? Well, you're going to have to think of, well, all right, I guess I don't want that. I guess I don't want to be healthy.' The lesson? Decide what your goals are. Really get clear, and visualise them. Then automate everything you can to help you get there, whether it's a payment into savings, or even investments, set for the day after pay day. Even better, name the account that autopayment is going into. Then if you're tempted to break into your future fund, you're reminded of what you're aiming for. Do you want to sabotage that? Probably not. 3. Your money mindset is inherited, but not unchangeable Most of us think about money in the way we were taught. That teaching isn't usually explicit. It comes through watching how your parents behave, what your community values, even how people around you talk about wealth. Klontz calls these 'money scripts,' and they run deep. 'We can trace a lot of our problems with money to this ancient tribal brain,' he said. 'And then we layer on our own family patterns. If this [pattern] doesn't work, some people develop what we call 'learned helplessness' – they've tried, failed, and now they've stopped trying.' Except, we can change the ways we think about money, and the tactics we're ready to try. The key is often finding people you identify with, and looking for ways to copy their success. That's why it's such a relief that the financial industry is finally looking a little bit less… well, older, white, and male. There's more variety than ever before, of people from different backgrounds, who you can look to for lessons on how to build a financial life that works for you. ''If they can do it, I can do it',' said Klontz. 'That shift in mindset is huge. That's the gift of seeing someone like you succeed—it breaks the illusion that success is only for other people.' The lesson? If your money isn't working for you, take a step back, and be really honest about why certain things aren't working for you. Just because you've always done something a certain way, doesn't mean you have to keep doing it that way. Find people who you admire, and whose values match yours. Look for ways you can borrow from their success.
