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EXPLORING INTERIOR FINANCE


Drawing of your money story wanting the best for you

❝The more you explain it, the more I don't understand it.❞ -Mark Twain

Interior finance is less well-known than its sibling, exterior finance. Interior finance is how you relate to money. It includes your Money Scripts, your Money Story, and other subconscious rules you have regarding money.


Understanding your interior finance is a good first step to implementing good exterior finance.


INTERIOR FINANCE


When people think about money, they almost always think about exterior finance. Exterior finance is the nuts and bolts of money. It’s the math behind the time value of money and other related concepts, as well as the optimal solutions for people to use.

Interior finance, on the other hand, is your ability to implement exterior finance. It includes things like your relationship with money, values, sources of meaning, financial purpose, and Money Scripts.

Drawing of interior finance

Exterior finance is important. However, it can’t be implemented without first addressing interior finance. Interior finance is the foundation upon which exterior finance sits. In other words, the best exterior financial knowledge is useless if we are unable or unwilling to put it to use.

Drawing of exterior finance sitting on a foundation of interior finance

RELATIONSHIP WITH MONEY


Growing up, we developed beliefs about money, sometimes called Money Scripts. A Money Script is effectively a belief about money or a rule we follow. It indicates how we believe money should or shouldn’t be used, who is and isn’t worthy of it, how it should and shouldn’t be made, and so on. If you take your collection of Money Scripts together, they start to form a narrative, and this narrative is your Money Story.

Drawing of your money story

We all have a relationship with money which can be thought of as our relationship with our Money Story. It's the stories that we tell ourselves about money or the narrative by which we live our lives. Everyone has a relationship with money, even if they don’t know it.

Drawing of your relationship with your money story

As you look back on your life, you had a particular life journey which is one life journey that was available to you it’s. There are nearly infinite life journeys that are not available to you; the past can’t be changed and is what it is. The past is where you developed your Money Story.


Nobody has seen what you’ve seen or experienced exactly what you’ve experienced. Based on your experiences, you’ve developed core beliefs about how the world works, including how money works.

Drawing of your life journey

There were times in your past when undesirable events happened. When these events were emotional enough, your subconscious mind created a “rule” to help prevent that from happening again or to shelter you from the effects if you can help it from happening again. Your Money Story has your best interest in mind. It creates all these rules to help you.

Drawing of your money story creating rules for you

Potential issues can arise when we carry those same beliefs and rules when we are much older. If we don’t challenge and change our beliefs, we are operating on outdated beliefs. This happens underneath conscious awareness.

Drawing of your money story telling you what to do

Routinely understanding what story we're telling ourselves can help us determine whether or not our narratives are helpful or unhelpful in the present.

Drawing of your money story being outdated



Money Scripts® are subconscious beliefs we have about money that we learn these we are growing up in our family systems. A Money Script can be anything, but they tend to fall into four categories. Learn what categories your Money Scripts fall into.




MONEY MEANINGS


Money is just a thing. It is inherently worthless and can only be used as a tool to trade with other people. Nonetheless, we all assign different meanings to money that money was never designed to have.

Drawing of your money story giving you the meaning of money

This will be different for everybody. People who assign different meanings to money may struggle to get on the same page because of their differing views on what money means.


For example, for some people, money means freedom. To others, it means security. These are almost like opposite ends of the spectrum. For those who believe money means freedom, it is about being able to do what you want when you want. To those who believe money means security, it’s about not struggling or suffering.


Those are just two meanings. To some people, money means love. Some people believe that money is power. Money could also be fear, envy, status, and so on. It depends on what each individual has experienced, but the main point is that everybody assigns a different meaning to money.


Drawing of everybody having assigned a different meaning to money

CHECK AUTOMATIC THOUGHTS


These beliefs, thoughts, narratives, stories, and meanings happen underneath conscious awareness. They stay hidden from conscious awareness unless we deliberately look for them. This proves difficult because we have what author Rick Hanson calls a negativity bias. According to Hansen, our minds are like Velcro for negative experiences and Teflon for positive experiences. Our minds have developed to recognize and remember negative events more easily than the good. We are wired to take our lives for granted.

Drawing of negativity bias

Think about, for example, your last employee review. Your boss may have told you many things you are doing well, but then that one thing comes up for you to work on, and that’s what you remember for the rest of the weekend.


Drawing of negativity bias


The first step towards overcoming our negativity bias and checking in with our automatic thoughts is to examine our thought process through the ABC model developed by psychologist Albert Ellis. With this model, we think about the relationship between adverse events (or activating events), our beliefs, and emotional and behavioral consequences.

Drawing of ABC model

As you start to investigate the nature of your mind, the consequences are the first thing that you will notice.

Drawing of consequence

These consequences are either emotional or behavioral in nature. That is to say that we will feel something (emotional consequence) or do something (behavioral consequence).


There are insights to be had at each step because if you just became more aware of how you acted and felt, you would have more self-awareness.

Drawing of emotional and behavioral consequences

Next up, after understanding what you did or felt, is to ask yourself what just happened. This is the activating event, but for most people, it's a negative event, so you can think about it as an adverse event.

Drawing of adversity

An adverse event is basically a trigger. If you did or felt something unusual, you can ask yourself what happened just before that.


The insight at this stage is to become more aware of the types of things that trigger us.

Drawing of adversity triggers

Experientially it feels like that would be it. Something happened that made us do something or feel something. However, this is an illusion.

Drawing of our perception that adversity leads to consequences

The insight from this model is that there is a belief that lies in between the adverse event and the thing that we did or the emotion that we felt.

Drawing of beliefs

These beliefs include Money Scripts, stories we tell ourselves, narratives, and other schemas. Effectively, this is our Money Story when it’s about money.

Drawing of our beliefs being stories, narratives, and scripts

So the reality is that something happens, then we tell ourselves a story about what happens, and the feelings and actions stem from our belief, not the event itself. These ideas date back to ancient philosophers. Notable Stoic philosopher Epictetus has said that people are not disturbed by things but by the views they take of them.

Drawing of the reality is that belief lies between an adversity and a consequence

The insight is that the same thing can happen to ten different people, and it’s likely that there will be ten different reactions because everybody has a different interpretation of the event.

Drawing of investigating automatic beliefs

Investigating your thinking patterns like this creates space between impulse and action, or stimulus and response. It helps us live more intentionally and less likely to do something impulsive that we may regret.

Drawing of intentionality putting space between impulse and action

Checking in with the stories that you tell yourself isn’t about trying to disprove your story. It’s simply about checking in to see if it’s helpful.

Drawing of challenging our money story

Interior finance involves our relationship with our Money Story, values, and other schemas. For most people, this is buried deep in our subconscious minds, but we can train ourselves to become more aware of the narratives that we tell ourselves. And by doing so, we can live life on purpose.


You get one life; live intentionally.


 

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Related Reading
References and Influences

Ariely, Dan & Jeff Kreisler: Dollars and Sense

Clements, Jonathan: How to Think About Money

Dunn, Elizabeth & Michael Norton: Happy Money

Haidt, Jonathan: The Happiness Hypothesis

Hanh, Thich Nhat: You Are Here

Hefferon, Kate & Ilona Boniwell: Positive Psychology

Housel, Morgan: The Psychology of Money

Ivtzan, Itai, Tim Lomas, Kate Hefferon & Piers Worth: Second Wave Positive Psychology

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

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

Klontz, Brad & Ted Klontz: Mind Over Money

Krueger, David: A New Money Story

Krueger, David & John David Mann: The Secret Language of Money

Lindsay, James: Life in Light of Death

Newcomb, Sarah: Loaded

Reivich, Karen & Andrew Shatte: The Resilience Factor

Steger, Michael & Pninit Russo-Netzer: Meaning360

Wagner, Richard: Financial Planning 3.0

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.


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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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