A CFO’s Guide to Understanding Financial Behaviors
We all tend to feel certain ways about money. Some worry about it, some worship it, others have a great respect for it, and still others fear it. But what most don’t understand is that these perceptions, regardless of where they fall on this scale, are not random. Rather, they are our money scripts—core beliefs about money that were developed in our childhood and influence financial behaviors throughout our lives. These beliefs are typically unconscious, yet they have the ability to profoundly shape our financial decisions and attitudes. For CFOs, understanding not only their own money script, but also those of their teams, is crucial to ensure their financial leadership style aligns with the organization’s goals.
Formation and Types of Money Scripts
Several factors contribute to the formation of money scripts. In most instances, children learn about money by observing their parents or caregivers. This can include anything from their family’s financial practices to discussions about money and parental attitudes. Parents’ words and even implicit attitudes toward money are often internalized by children in various ways. Additionally, any positive or negative experiences with money, along with financial hardships or windfalls experienced either individually or by the family, such as economic downturns, job loss, or significant financial gains, will also shape money scripts.
Money scripts are categorized into types based on these beliefs. The following are some common scripts:
- Money Avoidance: Fears financial stress.
- Money Worship: Believes wealth brings happiness.
- Money Status: Ties self-worth to financial success.
- Money Vigilance: Cautious about money.
- Money Indifference: Downplays money’s importance.
- Money Control: Seeks control through money.
- Money Inhibition: Fears managing money.
- Money Power: Sees money as a tool for dominance.
Each of these scripts can have a lasting impact on our beliefs about money—none of which are left at the office door when we walk into work each day.
How Money Scripts Impact Business Decision Making
In business, just like in personal matters, these scripts will impact financial decisions. Consider the following examples of how an individual with one type of script will react to a situation differently than someone with another type of script:
Investment and Spending Patterns
Money Avoidance Scripts: May be hesitant about making necessary investments or spending money on initiatives crucial for business growth because they fear financial stress.
Money Worship Scripts: May prioritize spending on extravagant ventures with the belief that substantial investments will lead to greater success and happiness.
Money Vigilance Scripts: May be risk-averse, preferring conservative financial strategies to ensure security and avoid potential losses.
Money Power Scripts: May take greater risks, believing that financial dominance and control can be achieved through bold and ambitious ventures.
Money Control Scripts: May seek to tightly manage and control financial resources, leading to a preference for detailed budgeting and strict oversight.
Money Inhibition Scripts: May be hesitant to allocate resources, leading to delays in financial decision-making and potential missed opportunities.
Money Avoidance Scripts: May be overly cautious in taking on debt, even when strategically beneficial, due to a fear of financial stress.
Money Power Scripts: May leverage debt aggressively, viewing it as a means to exert control and influence.
In these ways, and countless others, an individual’s money script can greatly influence their decision-making. Understanding this influence allows CFOs to better identify potential biases and influences for more informed and balanced financial decision-making that aligns with the organization’s goals and values.
Navigating Money Scripts in the Workplace
To properly navigate money scripts in the workplace, CFOs must start by identifying their own. Reflecting on childhood experiences and family attitudes toward money and identifying recurring financial patterns, emotions, and reactions is a powerful way to start. From there, engaging in open conversations about money with trusted individuals and utilizing self-help resources, quizzes, or assessments designed to reveal money scripts are also effective.
Once CFOs understand their own money script, it’s crucial to understand those of their team members to develop strategies for managing diverse financial behaviors. By establishing a culture of empathy and non-judgment and recognizing that everyone’s financial journey is unique, a collaborative environment where team members are more open to sharing insights and supporting each other is fostered. This encourages transparent discussions about individual financial goals, preferences, and attitudes that can be tapped into even further with tailored financial education programs and resources to address varying needs and learning styles. As always, regular self-assessment and awareness will undoubtedly contribute to a more financially conscious and informed team and relationship with money.
Leveraging Money Scripts for Better Financial Leadership
For CFOs, the real magic is learning how to leverage these money scripts to drive better budgeting, forecasting, and investment decisions. By recognizing how personal money scripts influence business decision-making, CFOs can adapt their financial leadership style to align more closely with organizational goals. They can use this understanding to craft inclusive financial policies, accommodate varied financial behaviors, and build a culture of trust and support. Ultimately, integrating awareness of money scripts into leadership practices contributes to more effective financial decision-making and team cohesion.
At Agile Planners, we provide strategic guidance and outsourced CFO services to companies of all sizes. We can help provide the strategy your organization needs for the growth you want. We understand that no two organizations are the same. And with our experience and financial knowledge, we can help develop the right strategic plan for your business to grow and reach its goals. Simply, we’ll be your trusted partner, so you can focus on running your organization. Contact us today to learn more about how we can help.