Financial psychologist – that’s what Brad Klontz is. I chatted with him recently about why kids should fail financially, how our money problems stem from unconscious beliefs, and the money disorder test that can save us.

What is a financial psychologist? I’m trained as a clinical psychologist and in the last 10 years I’ve developed an expertise in personal finance. I created a treatment program for money disorders.

What is the most common money disorder? This will come as no surprise, but it’s overspending. We have a negative savings rate, credit card debt, and we’re modeling all these behaviors for our children.

So we’re teaching our kids bad habits? Yes. They watch what we do and model it. When kids see parents head down to the store, swipe plastic, and bring home a TV, what do they learn? One thing that I encourage parents to do is to break down the skills of money management. Even if you can afford to buy that TV, put a jar in the living room, put money in it. Talk to your kids about saving for it. 80% of college students have credit cards now. On average they have about $3,000 in revolving debt. Half of college students have four or more credit cards. (My emphasis.) We require kids to take a drivers ed class before they get behind the wheel, but there is no class to get a credit card.

What are three money lessons kids need that they are not learning in school?

We have to teach them self control. We have to talk about money with our kids. We need to model savings. The best way to involve kids in modeling is to use allowance purposely. Most parents give their kids allowance and then complain that it’s gone right away. Kids are impulsive. They want to feel now. Have structure around allowance. You can start this with a four year old. Have them save a dollar, have them spend a dollar, have them give a dollar away.

What’s the biggest complaint you get from parents? My teenager ran up a $1,500 cell phone bill! Get them on a prepaid card. There is a certain number of minutes and then it’s gone. The first month inevitably the minutes are gone in a week. You say, “Wow, you really burned through your minutes. You get 1,000 more minutes next month. Maybe there are ways you can stretch them out.” You can’t bail them out because you’re teaching them that if they are in trouble someone else will swoop in. You have to let them feel some of that pain. Help them fail.

Why would a parent want their child to fail? Because that is a really strong learning experience. Let them fail when the stakes are small. When it’s not repossession of a car or something big like that. Help them see the consequences of not delaying gratification.

You’ve won awards for your work money and wealth issues. Can you make me rich? Oh yeah, sure. Absolutely. Just start saving when you’re five. It’s interesting because if we all had a financial education when we were 18, there’s no excuse for all of us not to have a million dollars when we retire. It’s actually very simple. Save for the future. Don’t spend more than you make.

So are we all just really stupid? I think that we have not been educated. I remember economics form high school, but there was no applied economics, balancing checkbooks and managing money. The other thing is when we are engaged in destructive financial behaviors, which is always the result of money scripts.

What is a money script? A money script is a belief about money, typically unconscious, that drives all our financial behaviors.

Sounds powerful. They have a powerful negative impact. They are typically taught from our parents and they can go through generations. For example, my grandfather watched his family lose all their money in the Great Depression. Watching this he learns you can’t trust financial institutions. My grandfather died at 92 never having put a penny in the bank. He kept all his money in a box in the attic.

And he passed it down. My mother had an intense fear around money and not having enough. She wouldn’t invest in the stock market.

What are the other money scripts? Another is money avoidance: the belief that centers around anti-rich statements. Rich people are greedy. People get rich by taking advantage of others. Money corrupts people. I do not deserve to have a lot of money if others have less than me. You’ve associated having money with being bad so you subconsciously repel money. Or if money comes into your life you spend it or sabotage it in some way. You might be comfortable at a certain socioeconomic level. So you get rid of the money somehow.

The second pattern is money worship, what my family had. Things would get better if I had more money. Money is power. Money will solve all my problems. You either become a hoarder where you save religiously, or you spend money as soon as you get it. I’m never going to have money anyway, so get what you can when you can get it.

The third one is money status. Your self worth equals your net worth. People are only as successful as the money they earn. If you are good, your financial needs are taken care of. If you really believe that money is going to give you all these things, you take unreasonable risks in your business ventures or become a workaholic. You’re likely to overspend because it has to be new. You want everyone to see you in that car because it raises your status.

So if we could just uncover our personal money script? There are some questions you can ask yourself. I created a money disorder test. The assessment code to take it is mindovermoney.

Post-interview: I took Dr. Klontz’s 4-minute test and was told I had two issues:

• Your response style suggests that you are at-risk of developing a problem with workaholism.

• Your response style suggests that you exhibit one or more symptoms of financial infidelity.

I can certainly relate to the money avoidance script. I save intensely, but then am distrustful of financial institutions so I may be losing money by not properly investing it. What did your test say? Do you think it’s true?