Chapter 5
Financial Behaviors and Outcomes

Our financial behaviors are a result of our instincts, our financial flashpoint experiences, and our money scripts. Some financial behaviors have a positive impact on our financial health, while others make it difficult to achieve our financial goals. Through education and the use of communication and counseling techniques, financial planners can have a positive impact on shaping a client's money behaviors. Although they are not in the business of diagnosing or treating money disorders, it is important for financial planners to know what to look out for in the event that a client needs a referral to a mental health professional. What follows are two assessments that can be used with clients to examine their financial behaviors and outcomes.

Exercise 14: Financial Health Scale

Financial health is more than just net worth. It includes having a plan in place for the future to protect you and your family. Good financial health is having a sense of comfort and confidence around financial matters, low levels of financial stress, and good financial communication with your spouse/partner and family members. Conversely, poor financial health is associated with a host of physical and emotional problems, which is why it is a critical aspect of our overall well‐being. According to the American Psychological Association's annual Stress in America™ survey, one of the top stressors in the lives of Americans is money.1

The following test has been used in measuring changes after a financial therapy intervention and is currently being used by many financial planners to take a quick snapshot of their clients' financial health.2 It can be a useful assessment for measuring improvements in financial health as clients progress through the financial planning process. As such, it can be helpful to revisit this assessment three to six months after clients have had time to put things into action. A free online version of this test with an automatically generated custom report is available to the readers of this book at: http://www.bradklontz.com/financialhealthtest.

Financial Health Scale

Circle the number that best describes the extent that you agree or disagree with each of the following.

1 Strongly Disagree2 Disagree3 Disagree a Little4 Agree a Little5 Agree6 Strongly Agree
1.  My spending is under control.123456
2.  I understand my financial goals.123456
3.  I am saving for my goals (e.g., school, car, house, etc.).123456
4.  I have a spending budget.123456
5.  I consistently follow my spending budget.123456
6.  I have clear financial goals for the future.123456
7.  Financial issues do not depress me.123456
8.  I am proud of how I handle money.123456
9.  I do not avoid thinking about money.123456
10. I rarely buy things in an attempt to make me feel better.123456
11. The way I manage money is consistent with my values, goals, and dreams.123456
12. I do obsess about financial matters.123456
13. I have money set aside for emergencies.123456
14. Financial issues do not confuse me.123456
15. I do not spend more money than I can afford to.123456
16. I do not have many fears or insecurities around money.123456
17. I am taking the steps necessary to meet my financial goals.123456
18. I do not have trouble controlling my impulse to buy things.123456
19. I do not let others take advantage of me financially.123456
20. I am comfortable talking about money issues.123456
Total score:__________________

Scoring Instructions

Add up your total score. Scores on the financial health scale range from 20 to 100. The higher the financial health score, the better your financial health.

20–39: Poor Financial Health It is likely that you are in a significant amount of pain in your relationship with money. You may lack clear financial goals, have difficulty saving, and your spending may be out of control. It is likely that you experience conflict in your relationships around money and it may also be a significant source of guilt, shame, depression, and confusion. Your financial behaviors do not correspond with your values. You may lack important financial information, and you would benefit from assistance in discovering and working through emotional blocks around money that are keeping you stuck.

40–59: At‐Risk Financial Health It is likely that you are experiencing some pain in your relationship with money. You may lack clear financial goals, have difficulty saving, and you may be spending in ways that are not consistent with your values. You may be experiencing some conflict in your relationships around money and you may have some difficult emotions related to finances, including guilt, shame, depression, or confusion. It is likely you would benefit from further financial education and possible assistance in discovering and working through emotional blocks around money that may be keeping you stuck.

60–79: Fair Financial Health While there may be some positive aspects in your relationship with money, it is likely that you are not realizing your full emotional and financial potential. While not causing you overwhelming distress, your financial behaviors may not be fully consistent with your values and goals. Further financial education and possible assistance in exploring your historical relationship with money may help you better reach your financial goals, strengthen your relationships, and improve your emotional functioning related to money.

80–100: Good Financial Health It is likely that you have a relatively healthy relationship with money. You have clear financial goals, are taking steps to achieve your goals, and are effectively executing a savings and spending plan. You are likely open and honest with those close to you regarding financial issues and have found ways to successfully negotiate financial issues in your relationships.

Exercise 15: Klontz Money Behavior Inventory (KMBI)

The KMBI was designed as a quick measure of financial behaviors. It is not designed to “diagnose” a behavioral problem in clients, but rather, as a quick screener to flag potential concerns. The KMBI is an example of a psychology of financial planning tool that would not be used in the majority of financial planning engagements, and is best suited for financial planners who have been formally trained in the psychology of financial planning and the administration, scoring, and interpreting of the test. However, we have included it here for educational purposes and encourage our readers to take it to see the areas that are covered to help determine if and when such an assessment might be appropriate depending on their specialty and area of practice. A free online version of this test with an automatically generated custom report is available to the readers of this book at: https://www.bradklontz.com/moneybehaviortest.

Klontz Money Behavior Inventory (KMBI)

Please indicate how strongly you agree with the following statements using the following scale:

1 = Strongly Disagree, 2 = Disagree, 3 = Disagree a Little, 4 = Agree a Little, 5 = Agree, 6 = Strongly Agree

1 Strongly Disagree2 Disagree3 Disagree a Little4 Agree a Little5 Agree6 Strongly Agree
1.My spending feels out of control.
2.I obsess about shopping.
3.I buy more things than I need or can afford.
4.I feel irresistible urges to shop.
5.I shop to forget about my problems and make myself feel better.
6.I feel guilt and/or shame after making purchases.
7.I often return items because I feel bad about buying them.
8.I have tried to reduce my spending but have had trouble doing so.
9.I hide my spending from my partner/family.
10.I feel anxious or panicky if I am unable to shop.
11.Shopping interferes with my work or relationships.
Signs of compulsive buyingSum =Divided by 11= Score: ______
12.I have trouble controlling my gambling.
13.I gamble to relieve stress or make myself feel better.
14.I have to gamble with more and more money to keep it exciting.
15.I have committed an illegal act to get money for gambling.
16.I have borrowed money for gambling or have gambled on credit.
17.My gambling interferes with other aspects of my life (e.g., work, education, relationships).
Signs of problematic gamblingSum =Divided by 6= Score: ______
18.I have trouble throwing things away, even if they aren't worth much.
19.I feel irresponsible if I get rid of an item.
20.My living space is cluttered with things I don't use.
21.Throwing something away makes me feel like I am losing a part of myself.
22.I feel emotionally attached to my possessions.
23.My possessions give me a sense of safety and security.
24.I have trouble using my living space because of clutter.
25.I hide my need to hold onto items from others.
Signs of hoardingSum =Divided by 13= Score:
26.I often feel an irresistible drive to work.
27.My family complains about how much I work.
28.I feel guilty when I take time off of work.
29.I feel a need to constantly stay busy.
30.I often miss important family events because I am working.
31.I have trouble falling or staying asleep because I am thinking about work.
32.I have made promises to myself or others to work less but have had trouble keeping them.
33.It is hard for me to enjoy time off of work.
34.People close to me complain that I am so focused on my to‐do lists that I ignore them or brush aside their needs or concerns.
35.I have trouble saying “no” when asked to work extra hours or take on extra projects.
Signs of workaholismSum =Divided by 10= Score:
36.I feel like the money I get comes with strings attached.
37.I often feel resentment or anger related to the money I receive.
38.A significant portion of my income comes from money I do nothing to earn (e.g., trust fund, compensation payments).
39.I have significant fear or anxiety that I will be cut off from my nonwork income.
40.The nonwork income I receive seems to stifle my motivation, passion, creativity, and/or drive to succeed.
Signs of financial dependenceSum =Divided by 5= Score:
41.I give money to others even though I can't afford it.
42.I have trouble saying “no” to requests for money from family or friends.
43.I sacrifice my financial well‐being for the sake of others.
44.People take advantage of me around money.
45.I lend money without making clear arrangements for repayment.
46.I often find myself feeling resentment or anger after giving money to others.
Signs of financial enablingSum =Divided by 6= Score:
47.I avoid thinking about money.
48.I try to forget about my financial situation.
49.I avoid opening/looking at my bank statements.
Signs of financial denialSum =Divided by 3= Score:
50.I feel better after I talk to my children (under 18) about my financial stress.
51.I talk to my children (under 18) about my financial stress.
52.I ask my children (under 18) to pass on financial messages to other adults.
Signs of financial enmeshmentSum =Divided by 3= Score:

Scoring Key

  • Scores lower than or equal to 3: Suggest you do not exhibit significant signs of the money behavior.
  • Scores between 3 and 4: Suggest you exhibit some signs of the money behavior.
  • Scores higher than 4: Suggest you exhibit many signs of the money behavior.

Exercise 16: Mindfulness Meditation

Often we act out financially, or in other ways, in response to a feeling of loneliness, isolation, or emptiness. Although temporary, financial behaviors can offer immediate relief or distraction, but their consequences compound our difficulties. In our financial therapy programs, we include daily mindfulness exercises.3 The goals of these exercises are to enhance body awareness, reduce anxiety, and facilitate a feeling of connection and wholeness. Creating a sense of connection to self and/or a greater whole will decrease our temptation to fill a psychic or emotional hole with self‐destructive financial behaviors.4 It is important to note that mindfulness, essentially nonjudgmentally focusing on the present, has been found to have detrimental effects on our financial health, given that focusing on the rewards now is associated with investing less for the future.5 However, most of our suffering comes from worrying about the future or regretting the past so there are a multitude of psychological benefits that can come from mindfulness.

Instructions

Set aside time in the coming days for three mindfulness meditation sessions. These sessions start at just five minutes. Here are several mindfulness exercises you can try.

  1. Sitting meditation. Set an alarm for five minutes. Find a comfortable seat. Close your eyes. Focus on your breathing. You could count to 10 with each inhale and exhale and then start over, or repeat the words “in” as you inhale and “out” as you exhale. It doesn't really matter how you do it. As you are occupied with this activity, observe what is going on in your mind. At first there will likely be a jumble of thoughts and concerns. Don't try to fight them or push them away. Just observe them with curiosity, say to yourself, “Oh, there is a thought,” let it go, then return to focusing on your breathing.
  2. Eating meditation. The Vietnamese Buddhist monk and mindfulness meditation teacher Thich Nhat Hanh was once asked for his advice on how to lose weight. He said, “Eat half as much.” The individual then asked, “Well, what do you do if you are still hungry?” He said, “Eat twice as slow.” Mealtime is a great time to practice mindfulness, even if for just a few minutes. Instead of gulping down your food mindlessly while watching television, take some time to be present while you are eating. Take a bite of food and put your fork down. Chew it slowly, 30 times, before you swallow. Focus on the taste, the smell, and the texture of your food.
  3. Fill‐in‐the‐blank meditation. The great thing about mindfulness is that you can engage in the practice while you are doing other things. The key is to stay in the moment; to focus on the experience – the physical sensation, the sounds, the smells, the sights. When your mind wanders, you simply note it and return your attention back to your experience. The following are just a few of the activities you can do mindfully. Even if you practice mindfulness for just a few seconds or minutes throughout the course of these activities, you will begin to notice benefits.
    • Washing dishes
    • Playing tennis
    • Going for a walk
    • Swimming
    • Folding laundry
    • Vacuuming
    • Mowing the lawn
    • Playing with a child

Notes

  1. 1. American Psychological Association. (2022). Stress in AmericaTM infographics: March 2022. https://www.apa.org/news/press/releases/stress/2022/infographics-march
  2. 2. Klontz, B. T., Bivens, A., Klontz, P. T., Wada, J., and Kahler, R. (2008). The treatment of disordered money behaviors: Results of an open clinical trial. Psychological Services, 5(3), pp. 295–308.
  3. 3. Ibid.
  4. 4. Klontz, B., and Klontz, T. (2009). Mind Over Money: Overcoming the Money Disorders That Threaten Our Financial Health. New York, NY: Broadway Books.
  5. 5. Bazley, W., Cuculiza, C., and Pisciotta, K. (2021, October 24). Being present: The influence of mindfulness on financial decisions. Available at SSRN: https://ssrn.com/abstract=3921871 or http://dx.doi.org/10.2139/ssrn.3921871
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