Excerpt: 'The Financial Wisdom of Ebenezer Scrooge'

How to improve your relationship with money.

ByABC News via GMA logo
October 6, 2008, 11:53 AM

Oct. 6, 2008 — -- Through the process they've used successfully with their clients, Ted Klontz, Brad Klontz and Rick Kahler have penned "The Financial Wisdom of Ebenezer Scrooge: 5 Principles to Transform Your Relationship With Money" to help with your financial woes.

Hailed by the Wall Street Journal as "an innovative effort that combines experiential therapy with nuts-and-bolts financial planning," the book provides a practical plan for achieving financial wellness.

While Scrooge may seem to be an odd source of financial wisdom, the book focuses on your relationship with money and how to improve your money behaviors by using the five essentials of financial prosperity.

Read an excerpt of the book below.

As warped as Scrooge's behavior may seem, his actions make perfect sense when viewed in the context of his beliefs about money. Several hidden beliefs are at the root of Scrooge's misery. For example, Scrooge believed "You can't trust anyone with your money." He didn't even trust his loyal clerk, Bob Cratchit. We can see this clearly in the first chapter of A Christmas Carol:

Scrooge also believed that you "Don't spend money on yourself or others." He lived this belief to the extreme. He barely heated his office and lit his sparse apartment with a single candle:

These and other similar behaviors certainly appear severe, but not when you look at his perspective of the world. In view of these underlying and mostly unconscious beliefs, Scrooge's actions are perfectly logical, at least from his perspective. In our work, we have come to believe that every financial behavior, no matter how seemingly illogical, makes perfect sense when we understand the underlying beliefs. Scrooge's excessive behaviors merely reflected what he believed to be true.We call these powerful beliefs money scripts.

Very early in life, people begin to internalize messages about money's purpose—how it works, what it promises, its overall significance—and develop their relationship to it. Since children can't fully grasp adult reality, they translate what they see and hear into unconscious rules about life, including any internalized messages about money. These messages about money, or money scripts, don't necessarily reflect reality from the adult perspective. Instead, they may represent only a distorted or partial truth as seen through the eyes of a child. As children grow into adulthood, they often behave as though these partial truths are absolute truths. They may find themselves unable to change destructive behaviors that, at a very basic level, somehow feel right and make perfect sense.

Think of a money script like the script for a play with several roles in it. The script is written by one person, and a specific role in the script is memorized by another person—an actor who plays one character in that particular play. If the actor memorizes the script and executes his lines well, the result will be exactly what the playwright intended. However, if the actor attempts to use the same script for any other role, or in any other play, the results will be disastrous. It is the same with money scripts.

To learn their lines, actors must repeat them over and over. Few actors, no matter how talented, can read a script once and then deliver a flawless performance. They must practice frequently. In a similar way, the depth of any money script depends on the frequency and intensity of the original event or financial trauma. A child who hears his mother voice concern once about how the family business may fail and that they may not have money for food will probably not internalize a damaging money script. However, if the child hears his mother voice that fear monthly, weekly or daily, the result could be a deeply held belief that will influence the child's behavior well into adulthood. Our deepest, most ingrained money scripts are often formed by such examples of financial trauma.

For example, when Brenda was eight years old, she, unlike the rest of her siblings, saved her money. When the rest of the family needed money, they robbed her piggy bank.

Sounds sad but innocent enough, right? But little Brenda internalized the same message that Scrooge internalized: "You can't trust anyone with your money." This worked for both Scrooge and Brenda as children. However, as adults, the results of this money script didn't work for either of them—although the results for Brenda were very different from Scrooge's.

As an adult, Brenda earns $250,000 a year. She needs only $100,000 to support her preferred lifestyle, but she spends the entire amount each year. She doesn't use many of the things she buys. She spends all of her money rather than saves or invests it because of an unconscious fear that others will take it away. This old belief is reinforced when her parents and siblings frequently call and want her to bail them out of some financial dilemma. By never having any money in the bank, she can say no when her siblings ask her for money. Unfortunately, spending money as quickly as she gets it makes her just like them—always broke.

Brenda's belief, originating from a child's perspective of an experience, created a money script that is still affecting her today. Brenda's subconscious belief is keeping her from achieving success. She neglects to save for her future. So, while she is enjoying the fruits of her labors, her inability to say no to her family and her failure to save jeopardize her financial future. Worse, because it is mostly unconscious, Brenda isn't even aware that this money script is sabotaging her career goals and dreams for her own family. Instead, she feels a vague sense of dissatisfaction and failure because she knows she should be saving and investing for her future, but can't.

When we met Brenda, she thought the answer to saving money was to earn more; then she could save. The problem was that she had been saying the same thing to herself as she moved up the salary scale from $50,000 to $100,000 to $150,000 to $250,000. To us, it was obvious that the solution lay elsewhere, in her basic money script.• As a child, Scrooge spent the holidays alone at the warehouse. As an adult, Scrooge spends the holidays alone in his rooms.

• As a child, Scrooge was poor. As an adult, Scrooge lives a meager existence, eating sparingly and barely heating or lighting his tiny dwelling.

Scrooge's Money ScriptsAs we observe Scrooge's behaviors, we can begin to see the money scripts that drove them. These are just a few of

• You can't trust anyone with your money.
• People only want you for your money.
• You must work hard for money.
• You can never have enough money.
• Don't spend money on yourself or others.
• Money will give you meaning in life.
• The more money you have, the happier you will be.
• You can never be happy if you are poor.
• Giving to the poor encourages laziness.
• If you had more money, things would be better.

Scrooge was living in harmony with what he believed to be true. Unfortunately, many of his beliefs about money were distorted half-truths. As a result, he was living a life full of pain and loneliness and devoid of love.

Similarly, your money scripts could be the reason you are in debt, facing bankruptcy and living in deprivation. Your money scripts could be sabotaging your quest for the American dream, your retirement, your children's education and your financial security. Even if you have significant wealth, your money scripts could be destroying your peace of mind, relationships, happiness and sense of fulfillment.

One could argue that Bob Cratchit, Scrooge's loyal clerk and father of Tiny Tim, was a victim of circumstance. He was trapped in an abusive socioeconomic system that didn't allow the less fortunate individual to advance. On the other hand, we would argue that Cratchit's unconscious money scripts contributed to his poverty. He didn't truly appreciate his own talents and skills. He undersold himself. He spent impulsively when he could have bought medicine for his son. He didn't know what steps to take to plan for his own future. In effect, it's possible that Cratchit made an unconscious decision to be poor.

Bob Cratchit is often characterized as the eternal optimist, always finding the silver lining in a bad situation. But careful analysis of his behavior reveals there's far more to his personality.

Bob Cratchit also has his share of money scripts. Although Dickens never tells us the nature of Tiny Tim's illness, we know that it is treatable. Yet Cratchit spends his money on a goose for Christmas dinner instead of buying medicine for Tiny Tim—a classic example of binge spending.

In today's dollars, Bob Cratchit's Christmas dinner would have cost about $500. His spending for Christmas dinner was considered so extravagant that in some early stage adaptations, the goose becomes a surprise gift from Scrooge's nephew, Fred.

Cratchit stays in a minimum wage job working for Scrooge when he might have found better employment elsewhere. Rather than even thinking about improving his situation, Cratchit stays stuck and unaware of his choices. Even when his family mocks Scrooge, Cratchit defends and protects him. He accepts his miserable existence as his destiny.

Let's look at a few of Bob Cratchit's possible money scripts:

• There will never be enough money.
• Money is to be spent, not saved.
• You'll be paid what you are worth.
• You can never be happy if you are rich.
• If you are good, the universe will supply your needs.
• You don't deserve money.

It's easy to see how Cratchit's unconscious money scripts, as we have defined them, keep him stuck in the role of a victim, trapped in poverty. His family supports this belief by reinforcing that Scrooge was the problem, not Bob.

One reason that some money scripts are so difficult to change is that, like the broken clock that's accurate twice a day, a money script that is dysfunctional in one situation can be functional in another. The fact that most scripts are valid part of the time makes it harder for people to recognize that they may be applying the same money scripts inappropriately. In other words, sometimes "true" is not always true.

For example, if you were approached by a con artist promoting a get-rich-quick scheme, a money script of "trust no one" would prevent a disastrous money mistake. The problem arises when you apply that same script to a scrupulous financial planner, attorney, accountant or even your spouse. That's like an actor playing the same role, regardless of whether the movie is a comedy, drama or adventure. The role needs to change to fit the situation. It's the same with money scripts.

Paul, for example, believed that "being in debt is like being in prison." Understanding that debt is a significant obligation is important. Because this script was so entrenched within him, however, Paul was never able to buy a home for his family because he could never save enough to pay cash for it. As a result, he and his family had lived in a series of rented apartments and homes for over twenty years, actually spending more on rent payments than he would have on house payments if he had taken out a loan. Even when loan rates were the lowest they had been in over fifty years, Paul could not take advantage of this favorable financial opportunity because he "didn't want to go to prison."

Of the eighty or more money scripts Kate identified for herself, the one that was "absolutely true" was "the only thing a parent can give a child that can't be taken away is an ­education at a private school." The tuition to send Kate's children to private elementary and prep schools consumed over 20 percent of her family's income. Still, Kate was driven by this money script, although the public schools in her area were above average, her children said they would prefer to go to public school and her graduating son had received a full scholarship to a state university. Kate and her husband were spending so much on the children's education that there was no money left for them to save for their retirement or even pay the interest on their mortgage. Kate's dream of improving her employment situation by obtaining a much-needed master's degree was completely shelved.

While it appears obvious to you and me that Kate could not afford private schools and that Kate's children would probably not suffer significantly by attending public schools, she was unable to see it any other way.

You'd think that the same money script held by two different people would lead to the same behaviors for each person. Interestingly, as we saw in Brenda's case, it does not. Behaviors can vary widely depending on how a money script manifests itself. For example, consider the money script "If only I had more money, I would be happy."

To obtain money, and thus happiness, some people might turn into workaholics. Others might become obsessive underspenders or hoarders. Some might turn to unethical or illegal actions. Some might turn to gambling. Others might take excessive risks with their money, chasing get-rich-quick schemes. Others, sensing they will never be able to have enough, may become chronically underemployed and feel hopeless and depressed. Whatever is desired—fulfillment, happiness or security—will always remain just out of reach.

On the other hand—and only up to a point—having more money can open up more opportunities and create more happiness and fulfillment in someone's life. Research has shown that there is a direct correlation between income and happiness until a person reaches an income of $50,000 annually. Above that threshold, however, there is no significant increase in happiness as earnings rise.

Unconscious money scripts and the behaviors they engender are sabotaging the goals and dreams of many.

Walk through a mall on any weekend. You'll see people buying things they really don't need and they probably can't afford. Others stay in jobs they hate because they convince themselves "It can't get any better than this for me." Consider Charles.

Charles has worked in public education for thirty-five years and complains about the lack of personal challenge and mistreatment by the system. Though he grumbles constantly, he resists all opportunities to understand his options and alter his fate. This resistance is unconscious on Charles's part. He cannot see how the skills he's developed over his thirty-five-year career are transferable to other careers. He thinks others can make such a transition, but he cannot. When we suggested that such a change would be possible, and that, in fact, one of us had done so coming out of the same profession, his response was "Maybe you can, but not me."

Nor is wealth an inoculation against destructive money scripts. We consistently see wealthy people who are trapped by their money scripts. One common mistake they make is trying to buy fulfillment, whether by buying the newest luxury car or fashion, or by giving too much to friends, relatives or children. Another of the wealthy's self-destructive money scripts involves guilt over having wealth when others don't. One of our client couples told us that they feel shame when they are around peers who are wealthier, because they haven't done well enough, and they feel guilt around people who have less than they do. The only people that they feel comfortable with are those who have about the same amount as they do, giving them a relatively small and limited number of choices.

People acting on their unconscious money scripts are ubiquitous. Look at how your parents, your friends and even your own children behave around money. You'll see obvious mistakes. Why do people continue behaviors that are so harmful to themselves and their loved ones? Why can't they see their mistakes? Why do they behave so irrationally? What drives these obviously destructive behaviors? Why are these money scripts so powerful? To find out, let's analyze some common money scripts.