A child saves money in a glass jar at home
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Your relationship with money may seem random, but one expert says it offers clues about your childhood – and understanding this could help overcome toxic spending habits.
Vicky Reynal, financial psychologist and author of “Money on Your Mind,” told CNBC Make It that there are psychological reasons behind our spending habits, and many of these ideas come from childhood experiences.
“Our emotional experiences growing up will shape who we are,” she said.
For example, someone who felt secure during childhood may feel entitled to good things, and later in life may be more likely to negotiate a higher salary or to enjoy the money they have, said Reynal. Although someone who had childhood neglect may grow up with low self-esteem and act this out through money behavior.
This could include feeling guilty when they spend money because they don't feel they deserve good things, or spending a lot of money because they feel they don't deserve attention.
“The little child who goes up to their parents to show them their scribble – how they get an answer gives them a message about how the world will treat them,” Reynal said.
Scarcity or wealth
Reynal said that “the money lessons we learn growing up” are largely shaped by whether we grew up in an environment of scarcity or wealth.
“To give you an example, growing up in poverty, people who are able to move themselves out of that economic reality, and maybe in their adult life manage to accumulate some wealth, it is very common for them to struggle with what they are. contact a scarcity mindset,” Reynal said.
This is a thought pattern that sets up the idea that you don't have enough of something, like money. A scarcity mindset means someone may have trouble enjoying the money they've earned and be anxious about spending it, Reynal said.
On the other hand, there are people who grew up with very little but became rich, and are now very careful with money.
“They give themselves everything they wanted when they were little until they go to the other extreme and start spending recklessly, because now they want to to give the children everything that their parents could not give them,” Reynal added.
Stop self-sabotaging
The key to overcoming toxic spending habits is to stop self-sabotaging — a common behavior — according to Reynal.
“Often behind a pattern of financial self-destruction, there are deep emotional reasons, and it could range from feelings of anger, feelings of unworthiness, and perhaps fear of independence and autonomy,” she said.
To identify these, you must first find out what your financial habits and inconsistencies are, said Reynal, giving an example of someone who might spend too much in the evening.
“Is it boredom? Is it loneliness? What emotion might you be trying to cope with the rest?” she said.
“That already gives you an idea of what you could be doing differently. So, if it's boring, what can you replace this terrible financial practice?”
Reynal said she had a young client who always ran out of money within the first two weeks of the month. She asked them, “What would happen if you were financially responsible?”
The client revealed that they were afraid of jeopardizing their relationship with their mother because every time they ran out of money, they asked their mother to ask for more.
“Their parents had divorced a long time ago, and the only time they talked to their mother was to ask for money,” Reynal said. “They were interested in being bad with money, because if they were going to be good with money , their problem was: 'I might not have an excuse to call my mother again and I don't know how to build that relationship again'.”
The financial psychologist recommended being “inquisitive and non-judgmental” when considering the basis of bad spending behavior.
“So sometimes we ask ourselves: “What feelings would I have left if I didn't self-sabotage financially, or if I wasn't so generous with my friends?' That can start to show why you might be doing it,” she said.
