For most of my teens and twenties, I spent every cent I made. I wanted to live in the moment, splurge on the people I loved, and worry about figuring it all out later. You can imagine the outcome of this way of thinking - high debt, no savings and many, many disagreements with my partner.
The bright side for me, and for you too, is that our financial difficulties are not entirely our fault, according to Dr. Brad Klontz, an expert in financial psychology and co-author of Mind over Money. Dr. Klontz believes that our financial difficulties are not our fault and we're not "lazy," "crazy" or "stupid" if we can't seem to get it together. Our self-destructive financial behaviours are driven by psychological forces that are outside of our conscious awareness, and their roots are firmly planted in our childhood memories. Let's chew on that one for a minute.
Our early childhood ideas about money are showing up every day in the choices we are making, without us even realizing it. Dr. Klontz says if we want to take control of our money and fix our financial lives, we've got to figure out the underlying reasons for these self-defeating behaviours and be honest about our relationships with money.
How do we do this? Well, since most of our attitudes about money are developed from early childhood experiences and observations, the first step is to go back to the earliest money memories you can recall and determine what message you took from that experience.
If your mom took you shopping when you were sad to cheer you up, for example, you likely associate spending money with feeling better. Or, if your brother stole your allowance when you were little, then it might have planted the seed that unless your money is spent immediately, it will be gone. If you lacked nice and new things as a child, you might now overcompensate with your own children.
This might seem trivial, but our early encounters with money are more significant to our adult lives than we realize.
I never thought too much about this before speaking with Dr. Klontz, but I can now see that some of the ideas I hold about money as an adult stem from the ideas I developed as a child.
Some of the most vivid childhood memories: an Eaton's saleslady telling me I must be "very loved" if someone would buy me such an expensive pair of jeans; hearing a story of a wealthy, terminally ill patient who said he wished he had lived more and experienced more while he was healthy; and my mom buying me M&Ms with her credit card because we didn't have any cash. These three little messages played a big part in my dysfunctional money mantra.
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Not so surprising, mine revealed that I was engaging in financial enabling, and that I often put myself at financial risk in an effort to help others. It also revealed that I have trouble saying no to financial requests. (It's a weakness, so please don't e-mail me asking for money.)
You see, we all have a running dialogue in our heads about money. If you've never paid attention to it, it likely needs a rewrite.
Our internal dialogues might also explain our often irrational money choices. Our rational minds know we should be saving our pennies, and yet six out of 10 Canadians are living paycheque to paycheque. Our rational minds also know that we shouldn't be buying things we can't afford, and yet household debt is at an all-time high.
Do we like sabotaging our future, our security, or our beauty sleep? No, no and (as a single girl) definitely no. Yet, we continue to make crazy choices.
We can implement all of the information we take from personal finance blogs and books, but the truth is our emotions guide our money behaviours. If we truly want to make smarter choices, we have to figure out why we habitually make the same self-defeating ones in the first place. Once we figure that out, we have a better shot at building real wealth ... and getting a good night's sleep.