Most people have heard of psychology. But financial psychology? Not so much.
Two professors, a father and son team, Ted and Brad Klontz, are seeking to change that. “Behaviors regarding money are the leading cause of things like divorce,” says Dr. Ted Horowitz, the director of the Center for Insurance and Risk Management.
The Klontzes treat what they call “money disorders.” They believe that children learn “money scripts”—principles of handling money—that are handed down by their parents. These tenets are learned in childhood and inform financial beliefs and drive behavior.¹ These beliefs are often only partial truths, yet they impact financial outcomes. The Klontzes have even developed assessments that explain why one person may be more likely to be a saver, spender, hoarder, or gambler.
They note that financial wealth has often come with a stigma as being dirty, villainous, and even ugly. On the other hand, those who come from wealth are more likely to do well with wealth than those who don’t. In particular, they cite an athlete who came from a poor background who was wired to take care of his “tribe.” This meant giving to, loaning to, and supporting many of those in his past. Caring for the tribe was going to bankrupt him.
When the Klontzes stepped in, they addressed this cultural thinking and encouraged him to choose a single charity—a community center—and support that effort at a much lower cost. He could address his need to support the tribe without the financial baggage of supporting everyone.
So what do you think? Are you ready to learn your financial psychology?
¹Glenn Antonucci, “Money on My Mind: Fledgling Field of Financial Psychology Finds Foothold at Creighton,” Creighton (Summer 2017), 26.