Everyone has his or her own attitude about money. How did we get an attitude about money? There are reasons why each of us acts the way we do when it comes to handling our finances. The reason behind how we act is called our money history. The first step in discovering your money history is to think back about your childhood, how did your family manage the money, and what did you learn? To illustrate, let’s take a look at two families, the Perkins family and the Saunders family.
Perkins Family
Mr. and Mrs. Perkins had an average income from their own business. Mr. and Mrs. Perkins valued being debt free and being financially secure. To them being financially secure meant being able to provide for the needs of their family (as well as some wants), and having a savings for emergencies and retirement. In order to stay financially secure they had to be careful when budgeting or there wouldn’t be enough money to meet their needs. Mr. and Mrs. Perkins tried to include the kids; they thought that if their children knew how to budget and save, it would be helpful for them when they were out on their own. Because of this, the Perkins children were able to better manage their money when they got older because they had become used to making sound financial decissions. However, the Perkins children also grew up thinking that they were a poorer family, when they compared themselves to other families in the neighborhood, because they didn’t do some of the things that their friend’s families did like regularly eating out, and big summer vacations.
Saunders Family
The Saunders also had an average income, but their financial attitudes differed from the Perkins. Mr. and Mrs. Saunders valued having fun with friends and family, they felt that the best way to accomplish this was though various outings like the circus, swimming parks, and other various vacation spots. Having fun like this often meant putting such outings on their credit cards. Due to their high spending, they did not have any form of savings, and found themselves with large amounts of debt; making the minimum payments was often difficult. The Saunders did not include their children when it came to financial decision making. The children grew up thinking that fun came on plastic, and never knew how difficult things were on their family financially. The children learned that getting what they wanted in life came though credit. As a result, when the children were older they also relied on credit cards and found themselves juggling large debts, and not having anything left over to save.
There are many more examples of how a family’s values directed the way they managed their finances. It is not always the case that children adapt the money traits and values of their family. Some children do not favor the way their family handled the finances and may handle their own finances very differently. Parents who grew up in the Great Depression experienced many hardships that required them to live very frugally. Many of these traits carried on into their own families. As a result, some children continue the idea of frugal living and others will spend their own income however and whenever they wish.
The second step in discovering your money history is to think back to the first years you were out and on your own. What was it like financially? How did you spend your money? How did your friends or roommates spend their money? How did that influence how you spent your money?
Factors such as how your parents were raised, how you were raised, and your experiences becoming an independent adult all play a role in your money history.
It’s time to discover your own money history. Here are some questions to spark your memory!
- Was it ok to ask mom or dad for money?
- How did your family feel about debt?
- How did your parents manage the family’s finances?
- How openly did your family talk about money?
- Did your family have insurance? What types?
- Did both parents work, or just one?
- Was it uncomfortable to bring friends over to the house?
- Did it ever feel as if everyone else always had better cars or clothes or food?
The key to understanding why we spend the way we do today, is to see where our spending habits originated. When a clear idea about your money history is formed, then it is easier to decide how to change or to maintain your financial habits.
How to Make a Change
Determine Values
“It is good to have money and the things that money can buy, but it’s good, too, to check up once in a while and make sure you haven’t lost the things that money can’t buy.”
– George Horace Lorimer
Every person values something different. What is important to you? Family, career, fame, stability, power, freedom… Your values are based on what you feel is important. Is there a correlation between your values and what you buy?
Here are a few more questions
- What drives you to spend money?
- What do you buy?
- When do you buy?
- How do you buy? (cash or credit)
- How do you feel when you spend money on: food, fun, savings, clothing, education, gifts, bills…
Do any of your answers reflect your money history?
Once your values are determined it is time to make the necessary changes. The key to change is knowing where you are and where you want to go. Re-evaluate your values and the reasons why you spend. Is it time to change?
Discuss these questions as a family, communicate together and see where each member stands, what are their money histories? Using respect for each other, step forward and make the changes that are necessary.
There is no right or wrong money history; it’s what you do with your money history that counts. Determine what needs to be done to change, set appropriate goals, and make it happen!
“The greatest success comes not from money, power or fame,
but from a happy marriage, a happy family and a happy home.”
– Robert Elkington Wood
Read more about it:
Understanding and Sharing Your Emotional History with Money
The Problem: Talking about Money
Information Adapted from: Marilyn K. Albretson,CFCS Utah State University Extension; Linda Skogrand Ph.D, Utah State University Extension; and “The 9 steps to financial Freedom” by Suze Orman