What Money Really Buys

There are four basic attitudes to money, according to Brad Klontz, a research associate professor at Kansas State University.  He calls them “money scripts”: money avoidance, money worship, money status and money vigilance.

The first three are rather simple to grasp.  Those who avoid money may believe that they do not deserve it or they fear the dangers of having it.  Either way, not surprisingly, they tend to have low incomes and net worth. Interestingly, they also tend to be younger, which probably reflects their inexperience.

Those who fall into the money worship and money status camps suffer in opposite ways:  They believe either that an increase in income or a windfall will solve all their problems, or they hunger after the status derived from the things money can buy.  According to Klontz, they easily get into debt, as they see money as the key to life.

All in all, the best script to have is “money vigilance.” “People with this disorder,” writes Klontz,  “do not like to share information about their income or wealth, but they also do not spend foolishly.”  He warns: “excessive wariness about spending can keep these people from enjoying the benefits of what money can buy. On the other hand… they paid off their credit card bills each month.” (See, “Net Worth, Self Worth, and How We Look at Money.”)

“Maybe some anxiety and vigilance around money is good for your bottom line,” Klontz concludes. Looking at his research, however, we can reach two other conclusions.

For one thing, we shouldn’t expect that money will make us happy.  This is not a new idea, of course, but the extent to which so many people succumb to believing that it can get them what they most want in life is alarming.  The best we can expect to feel is reasonably comfortable and secure – but the price of that security is continual vigilance.

The second point is how truly important money has become in our society.  This, too, is not an original point.  But we can easily forget how money can dazzle us with false expectations and cause us to lose perspective.  It is not merely a medium of exchange, as economists tell us.  It has become our dominant value, with the power to arouse false beliefs.  The credit bubble we are still recovering from and the continuing rampant greed of investors are both illustrations of this.

Klontz, who published his research in the Journal of Financial Therapy, notes how difficult it is for people to change their financial behavior:  “most people will treat financial change the same way they do lifestyle changes after heart surgery: only about 10 percent maintain healthier lives two years after the surgery.”

That’s how deep a grasp it has on our minds.