One of my favourite films is The Pursuit of Happyness, starring Will Smith. Based on the true-life story of travelling salesman Chris Gardner, it chronicles his struggle to build a decent life for his family in the early 1980s.
As Gardner’s life gradually unravels due to a catalogue of financial mishaps, his wife leaves him and their 5-year old son. Gardner is finally evicted from his apartment for non-payment of rent, making him and his son homeless.
A chance encounter with a wealthy stockbroker leads to an internship with a major Wall Street firm and, against all the odds, Gardner eventually lands a full-time position at the firm.
The film is a classic hero’s journey in which the protagonist embarks on an adventure, faces a crisis along the way, achieves a decisive victory and returns home a changed person.
While this narrative is highly seductive, it perpetuates the idea that we can only achieve great things and live a good life if we make significant career breakthroughs and win big financial rewards. The alternative — finding meaning in life and building up financial resources through daily actions, responses and habits — doesn’t strike the same dramatic chord.
The deep-seated human need for security and connection to others can be quite abstract. But because money is easy to identify and measure, it becomes a proxy for determining whether one is living a good life.
In my weekly podcast guests often tell me that, to them, money represents freedom, security or choice. The implication is that without it one can never have these things, or at least not at the desired or ideal level.
This perspective can enslave people to spending, earning and lifestyle habits that don’t serve them well and are out of tune with their values and priorities. Money doesn’t deserve to be imbued with such a hold over anyone’s life.
We form most of our core beliefs about money in our childhood. How our parents and other family members speak about, earn and spend money all influence our money beliefs. Sometimes their views are helpful and sometimes not.
Evidence and facts can underpin our money beliefs. But more often than not, they are based on stories we tell ourselves based on our memory of the past. Research suggests that our memories are not always to be trusted, however.
Every time we relive the past event or experience, and as our own perspectives change, our perception of the memory changes. It’s a bit like a jazz musician playing their favourite piece. Each performance is different.
Brad Klontz, a US psychologist, has done a lot of work on how money beliefs influence our behaviour and happiness in the form of certain stories that we tell ourselves, which he terms “money scripts”. He contends there are four core money scripts and one tends to be dominant.
Those with the “money avoidance” script think money is evil. They might believe they don’t deserve it or that wealthy people are greedy or on the make. They usually try to avoid dealing with financial issues and can be overly generous. A significant proportion of well-educated people involved in caring professions tend to have this script.
The “money worship” script encourages people to think more money will solve their problems. Adherents can often be overachievers and show an obsession with wealth accumulation, a reluctance to spend and difficulties in building and maintaining close personal relationships.
Those under the sway of the “money status” script equate their net worth with their self-worth, and tend to believe success and wealth is determined by outward signs of consumption. As such, they tend to overspend, are more likely to accrue debt and are more easily influenced by marketing and the views of others.
Under the influence of the “money vigilance” script, people tend to be aware, intentional and diligent about their financial situation. They live a more frugal lifestyle, favouring saving over spending. Personal financial matters are a private matter but they can also suffer from anxiety and worry about money that makes it hard for them to enjoy their wealth, with negative implications for their health and wellbeing.
The key about money scripts is first to be aware of them (Mr Klontz offers a test), and second to think about how you can adapt your habits to daily situations to match your priorities.
When I was in my 20s, for instance, I was working primarily from a “money status” script. I racked up debt, was a heavy drinker and led a shallow existence based on consumption and status even though I was broke. I now work from a vigilance script and I have few desires to consume or spend, despite having the means to do so.
Vigilance is probably the most helpful script because you respect money and use it wisely. The danger is you become so reluctant to spend money you stop yourself getting the most out of life. I realised recently that though I hate gardening and have the means to pay a gardener, my wife and I have spent years maintaining a three-quarter acre garden by ourselves. We have now decided to call in the professionals a few times a year to tackle the big jobs.
Having enough money to afford essentials avoids the misery of absolute poverty and those with higher income or wealth are happier, but it’s not a linear relationship. Those earning £80,000 a year, for example, aren’t twice as happy as those earning £40,000, research has found.
The majority of people in developed countries have “enough” to meet their essential needs and therefore are generally happy on a day-to-day basis — known as emotional wellbeing. But when they compare themselves to other people — known as life satisfaction — they are less happy.
With rising wealth inequality we can expect increasing levels of unhappiness when measured on a life satisfaction basis. In a digitally connected world, we are constantly reminded that there is always someone who has more than us.
Defining yourself and your life by how much you earn, have accumulated or spend is a loser’s errand. Mastering money is about being a mindful earner and spender and knowing how much is enough. It’s also about making money your servant and stripping it of the hold it has over you on a day-to-day basis.
Many people live their lives as if financial wealth is scarce, but they have plenty of time left before they will die. The reality is that true abundance, including financial wealth, is unlimited but we all have only a finite amount of time ahead of us.
Research shows that the best investment we can ever make is in cultivating and nurturing meaningful human relationships. So, living a life of purpose and minimising regrets when our time is up are within our grasp, whatever our financial situation.
When it comes to your dreams and ambitions, just make sure that money isn’t calling the shots. You need to respect money, you need enough to meet the essentials, but that’s all.
When you find yourself comparing your lifestyle, wealth or income with others in the future, don’t feel smugness if you have more or envy if you have less. Instead, think about the people you have in your life. The chances are if you focus on that, you’ll be rich in every sense of the word.
This article has been amended to say the author followed the “money status” script in his twenties.
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