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You are a product of your parents, and so is your relationship with money. Take a moment to think about your parents and their experiences with money. Did they grow up wealthy? Poor? Middle class? What was that like for them? Were they satisfied with their socioeconomic status as kids? Were they dissatisfied? Did they feel shame about having too little or too much money compared to those around them? Were they raised knowing that they would have family financial support when they needed it, or were they cut loose at an early age knowing they had to sink or swim on their own? What lessons did your grandparents teach them? What cultural and/or historical events impacted their relationship with money? How would you rate their satisfaction with their financial status in adulthood? Were they happy with their achievements? Did they feel remorse or despair?
Don’t be surprised if you don’t know the answers to these questions. After all, money is a taboo topic in our culture. Many of us feel shame around money, and it can be difficult to think about, let alone talk to your children about. However, your parents’ experiences around money have had a dramatic impact on your relationship with money. Shedding light on their experience can help you make sense of your own financial beliefs and behaviors. If your parents are still alive, just sit down with them and interview them about their relationship with money. If not, try to interview aunts, uncles, or cousins. Ask them questions about your grandparents and any stories about your other ancestors. In terms of understanding and mastering your own financial psychology, uncovering the details of your family history is pure gold.
What about You?
Now think in terms of how your parents raised you around money. How was money handled in your home? How was it talked about? Did your parents agree on financial matters? Was money a topic of disagreement or conflict, or was it avoided altogether? What did your parents teach you about money, either openly through instruction or by example?
Key Points Covered
- The strong connection of childhood with your financial life
- Mechanism to understand this phenomenon
- Way ahead for you & your next generation
When you take the time to explore your parents’ experiences around money, you will make better sense of your own financial beliefs and decisions. As a child, you watched them closely. They created the universe in which you were raised; they created the initial structure on which you built your money mindset. Their beliefs about money have had a powerful impact on your own financial psychology—for better or worse.
“The habit of saving is itself an education; it fosters every virtue, teaches self-denial, cultivates the sense of order, trains to forethought, and so broadens the mind.” -T.T. Munger
Influence of Parents
As you think about your parents, their relationship with money, and what you learned, what feelings emerge? Our relationship with our parents is complicated, made up of a mixed bag of feelings and experiences over the years. Due to the nature of our species, we rely on the care, feeding, and protection of our parents longer than any other animal. As a result, we are more influenced by our parents than any other species. This is also where we get most of our socialization—how we make sense of relationships, our sense of self, and the various roles we play. For better or worse, you entered the world as the socialized and behavioral result of what you saw your parents say and do when you were very young. Typically, by the age of 7, your personality, behaviors, and social beliefs are fairly well cast.
Money Scripts
When it comes to our beliefs and behaviors about money, research has supported a similar pattern of learning. What we see, hear, and overhear about money and relationships can influence us for our entire lives. These early childhood experiences create our money beliefs, which are hardwired into our subconscious. Our money beliefs drive our financial behaviors, and in many ways, determine our level of success. The subconscious representation of your financial beliefs, which greatly influences your money behaviors, decisions, and relationships, is known as Money Scripts. They are what informs our day-to-day interactions, decisions, discussions, relationships, filters, and behaviors regarding all things financial.
Since Money Scripts are so integral to our financial outcomes, it makes sense to know as much as we can about them. Your financial beliefs and behaviors have sprung directly from your experiences in your childhood. Essentially, it could be fair to blame your financial problems, and possibly your relationship problems, on your parents. But at the same time remember, that your parents were also not aware of this phenomenon. If they were, then they would have not created an environment of limiting beliefs about money around you.
Research on Money Scripts and their influence on financial outcomes is one of the fastest-growing areas of research in financial psychology. Financial professionals realize that understanding financial behavior is the future of helping clients with their financial needs.
Become Your Own Anthropologist
You should become your own anthropologist. Anthropology is the study of human societies and cultures and is a fascinating field. In studying a culture, anthropologists often immerse themselves into the culture, spending months or years living among the inhabitants. There, they both participate in the culture and observe the inhabitants, looking for insights into people’s behavior from a cultural perspective.
Since you probably can’t afford to hire an anthropologist to live with your family for a year to study you, you need to do your own research. This is where interviewing your parents, siblings, and other family members can be so valuable. In this process, it is not uncommon to discover stories you have never heard. Sometimes these stories shed light on your parents’ behaviors around money.
Take the opportunity to interview your family members, asking some of the following questions:
- What was it like for you growing up around money?
- How was money handled by your parents?
- What was it like for grandparents growing up?
- How did you feel about your socioeconomic status?
- What beliefs about money were passed down to you?
- What were your biggest financial mistakes? Successes?
- Do you have any memories that stand out?
Way Ahead
Often, these prompts will start an extended dialogue about their money memories. This is a good opportunity for you to listen. Take the time to let them share their memories and experiences around money. You might want to record the conversation and/or take notes. After your interviews, take some time to see if you can see any patterns. Did you notice any recurring themes? What beliefs did they have about money? Did you notice any differences between the childhood experiences of your parents? How did this impact their relationship with money? Do you recognize any of these beliefs passed down to you? How did their upbringing impact the development of your relationship with money?
This type of study can be quite valuable and will give you tremendous insight into your own psychology of money. You might begin to better understand why your parents raised you the way they did. Your parents are as much a product of their parents and early environment as you are a product of yours. Keep in mind that your children are the next in line to inherit this family financial legacy. The great news is that it is not too late to make “edits” to your family legacy. (Excerpt is from “Money Mammoth” by Brad Klontz).
