If you've been struggling to break certain financial habits, the
problem may not be your budget, but rather your childhood.
"Financial flashpoints are early experiences we have around
money, and very often they're in our childhood," says Brad Klontz,
a financial psychologist and author of "Mind Over Money: Overcoming
the Money Disorders That Threaten Our Financial Health
Once we have these experiences, we come up with a way to make sense
of them, Klontz says. This becomes our money script -- our beliefs
around money and the way it works. However, sometimes those beliefs
lead us financially astray.
Take Joan Sotkin, a business and money coach who chronicles her
discovery of the link between her childhood and her finances in the
book, "Build Your Money Muscles: Nine Simple Exercises for
Improving Your Relationship With Money."
Sotkin remembers getting advice from her father about the value
of taking out loans. "You have the ideas and the bank has the
money," he would say, but he failed to tell her she'd have to pay
the money back. That became Sotkin's introduction to living in
debt. "My father was a debtor so I learned that pattern," Sotkin
Another lesson Sotkin learned from childhood was that debt keeps
people connected since the debtor is beholden to the creditor. That
lesson played out with Sotkin constantly having financial crises so
that a family member would have to rescue her. "I'd borrow the
money and pay it back over and over again," she recalls.
Lessons from childhood
Children pick up money habits from their parents and other family
members by observing them and modeling their behaviors, says Denise
Kautzer, a financial therapist in St. Paul, Minn. In fact, the
National Foundation for Credit Counseling's
2013 Financial Literacy Survey
(FLS) found that 33 percent of Americans learned their financial
skills at home.
While two people can respond differently to the same childhood
experience, some money scripts are common, experts say.
- Children who felt deprived because there was no money could
grow up determined not to deprive themselves, Kautzer says. That
could lead someone to overspend, live paycheck to paycheck or
even run up massive credit card debt. A child who grows up in
poverty could also go to the other extreme and hoard money,
Klontz says. Neither behavior is healthy.
- Children who grow up up in a poor family or poor community
may fear that they won't have anything in common with their loved
ones anymore if they accumulate a lot of money. That could lead
someone to subconsciously overspend -- in effect, ridding
themselves of money because they think, "lf I get money, I'm
excluded from my family," Klontz says.
- A child who watches the family teeter on the brink of
financial disaster only to have another relative swoop in and
save the day could take from that experience the lesson that you
don't have to worry about money because someone will always bail
you out, Kautzer says. As an adult, this person may borrow money
excessively or get into financial trouble regularly.
- A child who watches one parent hide purchases from another
can learn that it's OK to keep secrets from a partner or a spouse
about money, Kautzer says.
- A child who watches a parent splurge when they're having a
bad day can grow up learning that buying something when you're
unhappy can cheer you up -- even if it's not in the budget,
Changing the behavior
Many people are unaware that childhood experiences are dictating
their financial behavior until they experience a financial crisis
and look more closely at their money habits, Kautzer says. They may
realize, for example, that they're making the same mistake they saw
a parent make.
To discover which childhood patterns lurk behind your money
habits, Klontz recommends that you ask yourself:
- What are your earliest memories of money?
- What were your most joyful and painful memories surrounding
- What lessons did you learn about money from those
- Have those lessons been helping you or hurting you?
"If they've been hurting you, then you need to go back and see
if there's a better way to think about money," Klontz says. For
example if you believe that someone will always save you when
you're financially reckless, think back to a time when someone did
not save you and remind yourself that you must help yourself in
order to avoid financial ruin. "That's the process of re-scripting
because you've got these money scripts and you need to make them
more accurate," Klontz adds.
Once you change your thinking, you can take steps to change your
Become financially literate.
If you come from a family that made a lot of financial missteps or
one that never talked about money, there may be a real need for
financial education, Kautzer says. That may mean taking a class or
getting credit counseling.
Prioritize your changes
. You can't change everything at once. Instead decide what areas
you want to tackle first, Kautzer says.
Avoid your triggers.
Once you realize that certain things lead to an unwanted financial
behavior, remove the trigger, suggests Richard Reeve, education
coordinator and counselor for Consumer Credit Counseling Service of
Savannah. When one of Reeve's clients realized she spent money
whenever she passed a Target store, she started taking a different
way home from work every day to remove the temptation. "Doing so
helped her to reprogram her mind," Reeve says.
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