What happens if you unconsciously equate money with Status?

Are you still living up to your parent's expectations of your own money?

Below are four questions we ask our clients to help them consider could their adult relationship with money today, be unconsciously influenced by their parent's money attitudes from childhood.

• Growing up, can you recall your happiest memory involving money?
• And what about your most painful memory involving money?
• Is there a money mindset you see in your children you also see in yourself?
• And do you see any of your parent's attitudes toward money in yourself?

What happens if you unconsciously equate money with status?

Read in this article

Childish attitudes toward adult concepts

Children interpret what they hear about money in childlike ways, so as adults until we reconsider our childhood attitudes, they can often continue to operate unconsciously in our lives directing many of our financial behaviors.

For example Children whose parents constantly talked about their worries about money, can often grow up to be insecure and constantly anxious about their own finances - believing this is the expected normal state of mind for an adult.

Unchecked, they risk passing this same limiting belief onto their children.

Hows and Whys are different

While financial advisers are usually focused on practical hows, we’ve found if you don't help people address their behavioral whys, no amount of financial advice will make a significant difference.

Many people face a mental block to putting their newfound financial knowledge into action.

Until people see what that emotional barrier is, no matter how great your financial plan maybe it won't deliver the promised results.

History repeats itself

Surprise! People are not perfectly rational with money and financial decisions. Who’d have thought?

For decades, Financial Advisors have followed a six-step process - now enshrined in legislation - when preparing advice for clients.

But this formulaic process fails to consider the psychological aspects of money.

Clients have strong emotions about their money (and I know I do too), yet there’s a tendency to focus solely on the economic aspect of a client's financial well-being.

How to approach money stress

While money stress is a major concern for the majority of Australians, helpful discussion about managing it is in the minority.

We’ve found people can get blocked by one of four unbalanced money mindsets.

The 4 Moneyisms

Unbalanced thinking about money often polarises a person's behaviour into one of four approaches toward money:

Some call them a limiting belief, perhaps an obsession or a money mindset - we call them 'moneyisms' - an often unbalanced obsessive narrow belief about an otherwise healthy issue.

The 4 Moneyism mindsets

• Avoiding money
• Idolising money
• becoming Excessively Guarded about money, and
• Confusing Money with Status

The 10 Easy steps to good financial health  (so they say)

The basics of good financial health are pretty straightforward no matter if you’re a family or a business or both.

The ten steps are:

1. Spend less than you earn and learn how to budget
2. Invest the surplus for your future
3. Save an emergency fund
4. Transfer the major risks away from your family to an insurance company to deal with, eg: health insurance, home insurance, life insurance and income protection cover
5. Be prepared to spend a reasonable amount of money to enjoy your life and achieve your goals
6. Beware anything that seems too good to be true
7. Learn how to regularly get specific financial advice and learn from the expertise of others
8. Protect and provide for your family and never risk what you can't afford to lose
9. Live your life so you can leave a legacy to the children in your life, so their life can be better than yours.
10. And, teach your children to do the same with their children.

Sounds simple. (You think?)

So why do so many of us struggle with the 10 points above? Human nature or human nurture - or perhaps a bit of both?

What does the 'Status Moneyism' look like?

People with the status moneyism mindset often equate their self-worth with their net worth.

Owning the latest and greatest anything affirms their core money belief of ‘people are only as successful as the amount of money they earn’.

Over time this becomes a constant low-level torment.  They become overly aware of their appearance and very concerned about always appearing wealthy and therefore successful, individuals.

What behaviours can the Status Moneyisms create?

• People with money status beliefs often pretend to have more money than they do.
• They’re at risk of habitual overspending and usually carry large amounts of revolving debt on credit cards, so they can give the impression they’re financially successful.
• They’re more likely to be secretive overspenders and persistently financially dependent
• They often lie to their partner or spouse about the extent of their spending
• Are vulnerable to compulsive gambling in an attempt to prove their financial worth to others
• Tend to come from families with lower socioeconomic status and have lower income and lower net worth

Interestingly, the status moneyism mindset may also believe 'if they’re good and do the right thing the universe will take care of their financial future'.

Many are hurtling towards a bleak retirement on a hope and a prayer and not much else.

When you equate the acquisition of material things with your value or status as a person, you set yourself up for failure.

How a Status Moneyism mindset affects Investor's behaviours

Pro Tip: People who think money and status are closely related are usually more loss averse than the general population because they perceive a loss of social status is associated with lower levels of wealth. (Engelberg & Sjoberg 2007).

You don't have to go far to see many people don't make rational decisions with their money but rather rely upon emotional associations of money, often established in childhood.

Until you’re willing to consider whether you need to upgrade your childhood thinking about money, your adult financial life may be more tied to your past than is good for you, your self-worth or your net worth.

Drew Browne is a specialty Financial Risk Advisor working with Small Business Owners & their Families, Dual Income Professional Couples, and diverse families. He's an award-winning writer, speaker, financial adviser and business strategy mentor. His business Sapience Financial Group is committed to using business solutions for good in the community. In 2015 he was certified as a B Corp., and in 2017 was recognised in the inaugural Australian National Businesses of Tomorrow Awards. Today he advises Small Business Owners and their families, on how to protect themselves, from their businesses.  He writes for successful Small Business Owners and Industry publications. You can read his Modern Small Business Leadership Blog here. You can connect with him on LinkedIn.  Any information provided is general advice only and we have not considered your personal circumstances. Before making any decision on the basis of this advice you should consider if the advice is appropriate for you based on your particular circumstance.