child saving money in glass jar at home
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Your relationship with money may seem haphazard, but an expert says it holds clues about your childhood — and understanding it can help overcome toxic spending habits.
Vicky Renal, financial psychiatrist and author of “Money on Your Mind,” told CNBC Make It that there are psychological reasons behind our spending habits, and many of these attitudes stem from childhood experiences.
“Our emotional experiences as we grow up will determine what we become,” he said.
For example, someone who felt secure in childhood may feel that they are entitled to good things, and may be more likely to negotiate a higher salary or enjoy the money they have later in life. Yes, said Renal. Whereas someone who experienced neglect in childhood may grow up with low self-esteem and may do so through money behavior.
This may include feeling guilty when spending money because they feel they don’t deserve nice things, or spending cash to impress because they feel worthy of attention.
“That little kid who goes to their parents and shows them their handwriting — how they respond to it will give them a message about how the world will respond to them,” Renal said.
scarcity or wealth
“The lessons we learn about money as we grow up depend largely on whether we grew up in an environment of scarcity or wealth,” Renal said.
“To give you an example, growing up in deprivation, it’s quite common for people who manage to extricate themselves from that economic reality, and perhaps accumulate considerable wealth in their adult lives, to struggle. Call it a scarcity mentality,” Renal said.
It’s a pattern of thinking that’s based on the idea that you don’t have enough of something like money. A scarcity mentality means a person may struggle to enjoy the money they earn and may be worried about spending it, Renal said.
Alternatively, there are people who grew up with very little money but became rich, and are now very careless with money.
“They’re giving themselves everything they wanted when they were younger so they can go to the other extreme and start spending it quite recklessly, because now they want to give all that stuff to their kids Which their parents could not give them,” added Raynal.
stop self-sabotaging
According to Renal, the key to overcoming toxic spending habits is to stop self-sabotaging—a common behavior.
“There are often deep emotional reasons behind patterns of financial self-sabotage, and these can range from feelings of anger, feelings of worthlessness, to perhaps even fear of independence and autonomy,” he said.
To identify these, you first need to determine what your financial habits and discrepancies are, Renal said, giving the example of someone who may overspend in the evening.
“Is it boredom? Is it loneliness? What is the feeling you might be trying to address by spending more?” He said.
“This is already giving you an indication of what you can do differently. So, if it’s boredom, what can you replace this terrible financial habit with?”
Renal said he had a young client whose money always ran out in the first two weeks of the month. She asked them: “What if you had been fiscally responsible?”
The client revealed that he was afraid of jeopardizing his relationship with his mother because every time he ran out of money, he would call his mother to ask for more.
“His parents were divorced a long time ago and he only spoke to his mother to ask for money,” Renal said. “He had a vested interest in becoming bad with money, because if he were to become good with money, he had this problem: ‘I’ll have no excuse to call mom anymore and I don’t know how to make it. Relationship again.
The financial psychologist recommended being “curious and non-judgmental” when considering the root of poor spending behavior.
“So sometimes ask yourself: “What feelings would I have left if I didn’t really hurt myself financially, or if I wasn’t so generous to my friends?’ “This can start to uncover the reason why you might be doing it,” she adds.
