If you’re like most of us, you’ve made financial choices—based on your money maturity—that you later regretted. Overspending, shoot-for-the-moon investments and disempowering beliefs about money are all symptoms that a little more money wisdom might do you some good.
George Kinder, known globally as a thought leader in financial planning and the founder of the Life Planning movement, has much to teach us about money maturity. His book, The Seven Stages of Money Maturity: Understanding the Spirit and Value of Money in Your Life, was first published in 1999.
The book, which uses the framework of a well-known Buddhist teaching, spawned a movement of folks eagerly seeking financial peace of mind (and, after all, what could be better?). While it’s more than a decade old, Seven Stages’ insightful message is timeless.
Here are the Seven Stages of Money Maturity, see which one best describes you:
The Two Stages of Childhood
**The childhood and adult stages of life in the Buddhist text referred to by Kinder are metaphors for the stages we pass through on our way to money maturity. Thus it is entirely reasonable—common, even—for a 50 year old to find him or herself in “Innocence”.
In the Innocence stage of money maturity, we find ourselves clinging irrationally to childhood beliefs about money that we gleaned from our parents or other elders. Little objective analysis, such as budgeting, strategizing, or collaborating, is possible. Planning does not take place.
We aren’t thinking about aging, planning for children’s education, or retirement because our thoughts about money are dictated by simplistic beliefs such as “Your husband will take care of you,” or “Swing for the fences! You’ll be a millionaire someday,” or “There will never be enough money,” or “Live for today. Who knows what tomorrow may bring.”
Very little financial awareness is possible in this stage.
Clinging to innocent but faulty beliefs (and almost all of them are faulty) about money will eventually lead to pain. Pain can come in the form of a sudden realization that one’s life has been spent living hand to mouth, and now very little time remains to plan for a company-forced retirement. Pain can also come when we realize the social implications of the fact that no matter how much we have, we have more than someone and less than someone else.
According to Kinder, Pain can either lead us back to Innocence—imagine a 60 year old couple who realizes their $25,000 savings bond won’t pay for retirement (Pain) who cashes that savings bond in to buy lottery tickets (back to Innocence, likely followed by more Pain)—in a destructive cycle, or we can use Pain to wake ourselves up.
Kinder explains, “Pain can serve as the warning signal to the deep self that moves us toward Money Maturity.”
The Three Stages of Adulthood
This is the first stage that focuses on day-to-day financial virtue, integrity and behavior management. The stage of Knowledge is the first time when budgeting, prudent tax management and investing are possible. Kinder says, “The practical part of Knowledge is the financial planning process. It begins at the point where we translate our desire for freedom into concrete goals and commit ourselves to achieving them.
If Knowledge is the stage where first begin to consciously manage our plans and behavior, Understanding is when we gain the skills and wisdom to keep our plans in place no matter what curve balls life throws. We learn to achieve peace despite the suffering that arises from money issues.
For many, gaining Understanding involves acknowledging and moving past our very complex and sometimes negative feelings about money. Resolving underlying jealousy, anger, greed, shame, and humiliation, says Kinder, “..is the benefit of Understanding, makes it possible for us to act effectively in ways that earlier appeared incomprehensible.”
Once we have attained financial Knowledge and moved through unhelpful negativity into Understanding, it becomes possible for us to generate “energy, enthusiasm and Vigor” to pursue our goals for financial freedom.
Being in a state of Vigor includes an experience of self-sufficiency, excitement, clarity, and moving expeditiously toward achieving one’s goals.
Vigor exists in a state of having discovered one’s life purpose and aligning one’s energy around accomplishing that purpose. Vigor gives us the power to author our own lives.
The Two Stages of Awakening
I often say that we can only help others as long as our own cups are full. If you have achieved sustainability in your own life through Vigor, you will likely progress to Vision. Once your focus no longer needs to be on fulfilling your own needs, what will come into view for you is the perspective of the whole. Vision does not exclude personal gain, and it doesn’t need to be grand or global in scale.
Kinder describes, “We have produced as much as we personally need. We discover within us a capacity to reach out farther than we have ever imagined toward meeting the needs of our families and communities. We find no obstacle between what we want to accomplish and what we do.”
Aloha is divine generosity and wisdom. Those familiar with Hawaiian culture will recognize the term “Aloha” as not only a salutation meaning both hello and good-bye, but as a term with much deeper meaning. “Practice Aloha” is a common saying amongst Hawaiians, and it conveys an experience of community, joy, kindness, generosity and at-one-ness.
Kinder goes on to say, “When you encounter (Aloha), you know exactly what it is… Aloha does not arise from clinging to childhood messages about generosity. Rather, it is the natural consequence of facing the world as it is and connecting wholly, deeply, and truthfully with its reality.”
So, I’m eager to hear from you about this. What stage of money maturity do you find yourself in now and where would you like to be?