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The ABCs of Changing Financial Beliefs

all behaviors follows Albert Ellis' ABC model
❝We suffer more often in imagination than in reality.❞ -Seneca

I pull up a podcast as I get into my car. I have some errands to run, and I listen to podcasts while I drive. I'm excited about this podcast because it's an interview with one of my favorite authors, Malcolm Gladwell.

Gladwell talks about a chapter in one of his books in which he tries to answer the question, Why are there many kinds of mustard and only one kind of ketchup? This talk of groceries prompted the host to ask Gladwell how he reacts to long checkout lines at the grocery store. The host explains that he goes berserk if he has to wait in a line for more than a couple of minutes, especially if he didn't choose the fastest line. It sounds like he's looking for a "misery loves company" companion.

Instead, Gladwell says that he is unaffected by the length of the checkout line. Confused, the host questions him, trying to understand how he can be unaffected by waiting in line. He wonders if Gladwell values his time.

In a rare case of events, Gladwell is lost for words. He simply replies, "You and I live in different universes, man.”

It strikes me that the exact same situation, long checkout lines, can lead to vastly different outcomes in two different people. The reason is that they have different beliefs about checkout lines.

It's the same reason we all have different reactions to financial events. We all have different Money Scripts.


Psychologist Albert Ellis developed a simple but profound view of behavior when he developed his ABC model. In the ABC model, the A stands for an activating event. In other words, something happens that we react to. The B stands for our belief about what just happened. The C stands for the consequence, or our behaviors, feelings, and emotions about what happened.

It's hard to imagine somebody else reacting differently to an adverse event. Experientially, it feels like something happens, and then we have a feeling about it. In other words, to us, it feels like the model goes from A to C. We can only experience the world from our own perspective. The way we think and act is how we believe others mostly think and act. This is why the host on the podcast couldn't understand why Malcolm Gladwell had a different response.

The beauty of the ABC model is the recognition that B sits in between A and C. The belief is how we interpret the events that happened to us. Holocaust survivor Viktor Frankl says, "Between stimulus and response lies a space. In that space lie our freedom and power to choose a response." Recognizing this B is how we can equip ourselves to choose how to respond.

The B in the ABC model is different for everyone and explains why two people have vastly different reactions to the size of a checkout line at a grocery store.

it feels like something happens and we feel something about it but we have a belief


Generally, the B in the ABC model is our mindset. It's how we think about the world around us and how we interpret events in the world. When we talk about personal finance, the B in the ABC model represents our Money Scripts.

Money Scripts are beliefs we have about money, and they drive all of our behaviors. Every financial behavior you can think of makes perfect sense if you know what the belief is, in other words, what the Money Script is, that is driving that behavior.

A Money Script can be any belief or rule that you've internalized, so there is an infinite number of Money Scripts that you can create for yourself. They tend to fall into 4 categories, though. Money avoidance is generally the belief that money is bad and should be avoided. Money worship is the belief that more money will make your life better. Money status is the belief that money should be used to indicate success. Finally, money vigilance is the belief that money should be saved and not spent.

money scripts are your beliefs about money


Nobody has seen what you've seen, been through what you've been through, experienced what you've experienced, or done what you've done. Everybody's had a different journey through life.

That's important because you are the sum of your experiences. As you're growing up, especially in your young years, you are piecing together how the world works. You first learned there was this thing called money, and then you went to work trying to figure out what the rules are about money. You try to figure out how it's used. You try to figure out how to talk about it. You internalize your beliefs about money and act on them as if they are true. And since everyone has a different upbringing, everyone has different beliefs.

However, they don't feel like beliefs. They feel like facts to us. And because they feel like facts instead of beliefs, we never challenge them.

you are the sum of your experiences


If you want to make better decisions, you have to become aware of the story you're telling yourself. You have to become aware of your financial beliefs that are driving your behaviors.

For this, we can add a D to the end of the ABC model. The D stands for disputing your beliefs.

Ask yourself if the story you're telling yourself is true. Try to see if you can come up with an alternate explanation. If your closest friend came to you with this exact same scenario, what advice would you give to your friend?

Once you challenge those beliefs, you can begin to open up to new perspectives.

challenge your beliefs to combat catastrophic thinking


Money Scripts limit our behavior. The stories that we make up subconsciously limit what we will and won't do in our financial lives. Learning to understand that we have these subconscious beliefs about money and challenging them to rescript them can expand our behaviors. It helps us choose our responses and live more intentionally.

becoming aware of your financial beliefs helps you expand your behaviors

The first step is awareness. Becoming aware that we have subconscious beliefs that drive our behaviors helps us become curious about the stories we're telling ourselves. Once we open up and become willing to ask ourselves what automatic thoughts and beliefs we have, then we can begin to challenge those beliefs and change our behavior.

Question: what financial behavior do you want to change? What story are you telling yourself that makes this behavior so hard to change?

You only have one life. Live intentionally.

With gratitude,


If you know someone else who would benefit from reading this, please share it with them. Spread the word, if you think there's a word to spread.

Related Money Health® Reading
References and Influences

Ben-Shahar, Tal: Choose the Life You Want

Delucca, Gina & Jamie Goldstein: Positive Psychology in Practice

Frankl, Viktor: Man's Search for Meaning

Hahn, Thich Nhat: You Are Here

Hanson, Rick: Hardwiring Happiness

Hanson, Rick & Richard Mendius: Buddha's Brain

Harris, Sam: Waking Up

Hefferon, Kate & Ilona Boniwell: Positive Psychology

Irvine, William: A Guide to the Good Life

Irvine, William: A Slap in the Face

Irvine, William: The Stoic Challenge

Kahneman, Daniel: Thinking Fast and Slow

Klontz, Brad, Edward Horwitz, & Ted Klontz: Money Mammoth

Klontz, Brad, Rick Kahler, & Ted Klontz: Facilitating Financial Health

Klontz, Brad, Rick Kahler, & Ted Klontz: The Financial Wisdom of Scrooge

Klontz, Brad & Ted Klontz: Mind Over Money Robertson, Donald: The Philosophy of Cognitive-Behavioural Therapy (CBT)

Scott, S.J. & Barrie Davenport: Declutter Your Mind

Wallace, David Foster: This is Water

Note: Above is a list of references that I intentionally looked at while writing this post. It is not meant to be a definitive list of everything that influenced by thinking and writing. It's very likely that I left something out. If you notice something that you think I left out, please let me know; I will be happy to update the list.



About the Author

Derek Hagen, CFA, CFP, FBS, CFT-I, CIPM is a speaker, writer, and coach specializing in financial psychology, meaning and valued living, resilience, and mindfulness.


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