Understanding Your Money Beliefs


More often than not, the way in which we handle our money has more to do with what our underlying beliefs are than the knowledge we have about how we should be handling it.

After all, many of us know logically that it makes sense to have an emergency fund, that retirement is necessary to save for, and that spending more than we earn doesn’t really work out mathematically in the long run.

What we rarely tap into are the messages we received about money as children and how we molded that experience into how we think, feel, and act today.

My Story and How I Discovered My Money Beliefs

Growing up, I always sensed that my parents were extremely careful with money. I didn’t see the big picture decisions – how much they were investing or saving for retirement – but I noticed the things that were tangible to me at the time.

I knew that I was always expected to split meals with my sister when we went out to eat and I was on a fairly strict budget when it came to back to school shopping. Then, when I was 16, my dad used a large library fine that I had managed to ignore as a tool to teach me about credit.

My takeaway? Money was something you had to be very careful with, and if you messed up, your entire life could be affected.

The messages were right, the way I internalized them, on the other hand, were less than helpful. This planted seeds of fear that took years to uproot.

Throughout my early 20’s, I dealt with extreme anxiety over the idea that there was never enough money and I needed to hoard it in order to feel some sense of security. The problem was, there wasn’t a magic number that could zap my anxiety. I always felt a sense of lack.

The way that I handled my money as a result – ruled by fear, not knowledge – deeply affected my actions. I was extremely risk adverse and nervous about the hows of handling money.

In reality, the biggest thing that needed reconstructing was the belief base I had built.

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How Our Past Shapes Our Current Financial Reality

Who we are today and the decisions we made to get there are shaped in large part from our past – our families, our environment, our genetic makeup. Money might appear to be just a form of currency, but there’s no denying what an emotionally charged subject it is.

Whether money was physically present or undeniably absent from our childhood, these different realities shaped how we thought about a variety of subjects – consumption, work, risk, security. In turn we consciously – or subconsciously – decide how we would go about dealing with it later on.

If we never revisit these beliefs or conclusions we came to as children or young adults, we could use them as operating points for years to come.

For example, you grow up in a family that doesn’t prepare financially for the future and you, in turn, don’t see the purpose of planning and adopt the same habits — or you become over-vigilant and scared of not planning for the future.

The belief might be that you can’t control the future, therefore there’s no use in planning for it. Or, perhaps you feel completely out of control unless you exert your control over financial matters.

Either way, the beliefs stemmed from a past situation and could positively or negatively affect your current financial reality.

How to Change the Cycle

The first step to changing any negative belief is first determining what it is and why it’s there. Simple awareness about any type of belief you might have can do wonders in changing the behavior.

For me, getting organized and creating a plan helped me to see the monetary abundance that was already in my life. I didn’t need to create a budget to curb spending – I already had that under control – I needed to create a budget so that I could curb the guilt I felt when I did spend.

I also needed to recognize when money was serving me better in my account, and when it was serving me to spend it on a life experience (i.e. traveling). Because, in reality, money is a form of currency – it’s meant to flow in and out of your life. The flow doesn’t need to be haphazard and reckless, but it needs to flow all the same.

Start to recognize when your actions are in response to what actually is your current reality or what was your reality years ago. That determination alone can provide a clear picture of what changes you need to make.

Final Thoughts

Changing negative money habits is a lot like getting physically fit: you can commit to exercising, or getting on track financially, but if you don’t change your habits — or, in this case, the thoughts and beliefs you feed yourself — nothing will change. You might make some progress, but then you lose focus. The same can be true for finances. It’s all about getting back to basics. And your beliefs are as basic as it gets.

Image Credit Brandon Christopher Warren

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