How would you describe your relationship with money?
Like me, you can probably remember parents saying, ‘It’s rude to talk about money.’ (and yes the irony of my now making a living talking about money isn't lost on me ;) ).
But if we don't learn to talk rationally about our often irrational relationship with money, we’re likely to run the risk of failing to teach our children how to have a rational response to their future financial life.
What happens in childhood doesn’t always stay in childhood
We all begin our financial lives with our earliest exposure to our own parents' attitudes and behaviours about money (whether spoken or inherent), our own childhood interpretation about them and our need to make sense of the world around us.
Conscious or unconsciously, parental attitudes often lay the foundation of our very own financial behaviours. You might even say these are financial pre‑behaviours or what I like to call ‘moneyisms’.
The 4 Moneyisms are:
Without an understanding of these pre‑behaviours about money and what they mean to you, no amount of financial planning advice or education can change your attitudes and behaviours about money.
How they start
Unconscious attitudes, developed in childhood are usually passed down from one generation to another within families and cultures.
- These same attitudes are usually tied into the context of the day and can develop deep unconscious meaning for many of us.
- If they were formed during a family trauma like bankruptcy, divorce or addiction, they can be very hard to change as an adult.
Interestingly, our disorganised attitudes and behaviours around money actually make perfect sense, when understood in the context in which these strong beliefs first developed.
The problem of childlike attitudes towards adult money issues
The problem is they’re usually comprised of partial truths and profoundly unhelpful for our modern financial lives. You could say it's a perfect case of, ‘what you don't know can hurt you’.
Where do we start?
Financial psychology suggests misplaced childhood attitudes or traumas around money matters usually end up causing a person to retreat into one of four major beliefs (like the corners in a room), towards money.
These four extremes can sabotage people's adult money lives. Over time internal self-limiting statements and beliefs about our relationship with money can even be reinforced by social, family and psychological issues.
The telltale attitudes each moneyism creates
Avoidance moneyism's trigger beliefs like;
“Good people shouldn’t care about money because money is bad and bad people are greedy”
Guarded moneyism's trigger beliefs such as;
“You should only pay cash for something, otherwise you can never really afford to buy it”.
Idolise moneyism's trigger beliefs like;
“Money can buy you happiness if you just know where to shop; more money is the simple fix to all my problems.”
Status moneyism’ s affect self-worth and trigger beliefs like;
“Only buy the best, so if it's not the best, it's not worth buying.”
How do we get back to a more balanced view of our money?
We all become a little unbalanced in different parts of our life at times, but usually try and return to a more balanced centre when we can. But for those influenced by unconscious moneyism’s from childhood, it’s worth a second look to see whether your financial happiness is being held hostage by unseen forces.
Why should you bother?
Your thoughts and beliefs (both conscious and unconscious) have a significant impact on your financial health and your financial potential. Left unexplained, you’ll probably run the risk of passing these beliefs about money onto the children in your life. And so the cycle continues.
What are we doing about it?
In future articles, I’ll write more about moneyisms, how to spot them in your life and how you can change their seemingly irrational power over us.
The elephant in the room of financial education
For most of us, information alone is just simply not enough to change our behaviours. We all know we should save for the future and spend less than we make, but these basics of financial health, while actually quite simple, are for many people quite difficult to manage. Our money habits, disturbingly, have the power to overtake our goals and even derail the best of our plans.
So why is that?
It's like there's a stumbling block to putting financial knowledge into action. Until you confront this barrier, change is not likely to happen and no amount of financial advice or financial planning is going to be effective. (Yes I went there and said that.)
Leone is a quiet and confident person who as a child lived in the dominant village culture in Fiji, where personal effects were shared with the village. The Polynesian custom of kerekere meant any relative or neighbour could ask a favour or ask for something they need and it had to be willingly provided without any underlying expectation of repayment.
This meant as an adult Leone struggled to adjust to the personal ownership and responsibility of our capitalist economy and managing his personal ownership of property and his earned income.
"I always wanted to buy myself a pushbike but the reality was, if I did, it would be owned by everyone else in the village and I'll have to wait my turn to ride it. I just seemed like I was always working for someone else first and myself second so it was easier decide to do without.”
To this day Leone lives with his partner in an unusually modest set of circumstances even though his income is significant. He finds himself repeatedly being the financial goto person for their extended family and constantly has to contend with the regular family and extended family requests for money, use of vehicles and property.
"It's simply exhausting. It’s easier just to go without personally or to try and keep your financial life a secret”.
Over the years, Leone passed up significant job promotions with associated financial advancement. Whenever he receives a bonus, he seems to go on a spending spree to get rid of it so he can return to a normal state of affairs.
"I always felt I didn't deserve money when everyone else around me didn't have the same amount.”
Leone is now facing retirement in 19 years and realises he’s not prepared and his moneyisms have sabotaged much of his success.
After recognising the Avoidant moneyism mindset he learned during his childhood, Leone began to work on returning to a more balanced approach to his financial life. He’s quickly saving for a deposit on a home and has begun using a budget to better recognise what he’s able to achieve rather than returning to his default position of Avoiding money responsibilities and even, avoiding money.
So why don’t we talk more about this stuff?
Whether we were told it's rude to talk about money, whether we were possibly expected to be a parents financial confident or whether we internalised our parent's comments about rich people must be dishonest and greedy, we all absorb the thoughts, feelings and behaviours of the adults in our environment around us.
Crazy ideas from childhood I still wrestle with today
As a child, I learnt many of my parent's attitudes towards money and two strange and seemingly competing truths about strawberries.
Coming from a working-class single income family, strawberries were a luxury food that had the power to display your wealth to others. As a result, there were two rules about strawberries in my home.
The Rules about Strawberries
- Strawberries are always to be put on display in the fridge where you could see them easily.
- Strawberries must stay in the fridge on display for a least five days before being eaten.
- If you were to eat the strawberries on the same day they were purchased you would always hear the complaint, "I only just bought them today and now they’re gone. I won't buy them again”.
- If you were to wait five days before eating them you would risk their going off and you would hear the complaint, "What’s the use of buying strawberries again - because they’re only left in the fridge to go off and it's a waste.”
This damned if you do and damned if you don't approach was no doubt internalised to the point where even today buying strawberries for me is an uncomfortable experience. Putting them in the fridge and knowing just when to eat them is more difficult still.
So I simply freeze them and have them in smoothies. Now don't get me started on blueberries!
What you see as a child, you reason as a child
So how does a child attempt to make sense of the world around them, with their limited experience, limited ability to rationalise and limited ability to make up their own mind?
This is where our own moneyisms develop and until they’re identified and dealt with, when we become adults these seemingly benign and usually unconscious money attitudes interfere with our adult lives, interfere with our implementing learnings and play havoc with our financial plans.