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Your relationship with money may seem random, but one expert says it offers clues to your childhood, and understanding this could help you overcome toxic spending habits.
Vicky Reynal, financial psychotherapist 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 come from childhood experiences.
“Our emotional experiences growing up will shape who we will be,” he said.
For example, someone who felt secure during childhood may feel that they deserve good things and, later in life, may be more likely to negotiate for a higher salary or enjoy the money they have, Reynal said. While someone who experienced childhood neglect may grow up with low self-esteem and manifest it through money-related behaviors.
This could include feeling guilty about spending money because you don’t believe you deserve good things, or spending money to impress because you feel unworthy of attention.
“The little boy who goes up to his parents to show them his doodle: the way they respond to them will give them a message about how the world will respond to them,” Reynal added.
Scarcity or wealth
Reynal said that “the money lessons we learn growing up” depend largely on whether we grew up in an environment of scarcity or wealth.
“To give you an example, people who grow up in scarcity, who manage to get out of that economic reality, and perhaps in their own adult life manage to accumulate quite a bit of wealth, it is quite common for them to have difficulties with what we call scarcity mentality. “Reynal said.
This is a thought pattern that fixates on the idea that you don’t have enough of something, like money. A scarcity mentality means someone might have a hard time enjoying the money they’ve earned and be eager to spend it, Reynal added.
Alternatively, there are people who grew up with little but became rich and are now very careless with money.
“They are giving themselves everything they wanted when they were little to go to the other extreme and start spending it quite carelessly, because now they want to give their children everything their parents couldn’t give them,” Reynal added.
Stop self-sabotaging
According to Reynal, the key to overcoming toxic spending habits is to stop self-sabotage, a common behavior.
“Often, behind a pattern of financial self-sabotage, there are deep-seated emotional reasons, and they can range from feelings of anger, feelings of undeservingness, to perhaps fear of independence and autonomy,” she said.
To identify them, you first have to determine what their financial habits and inconsistencies are, Reynal said, giving an example of someone who might overspend at night.
“Is it boredom? Is it loneliness? What is the feeling you might be trying to address with overspending?” she said.
“That’s already giving you an idea of what you could do differently. So if it’s boredom, what can you replace this terrible financial habit with?”
Reynal said he had a young client who always ran out of money within the first two weeks of the month. She asked them, “What if they were financially responsible?”
The client revealed that he was afraid of risking his relationship with his mother because every time he ran out of money he called his mother to ask for more.
“His parents had been divorced a long time ago and the only time they talked to his mother was to ask her for money,” Reynal said. “They had a vested interest in being bad with money, because if they became good with money, then they had the problem of, ‘Maybe I don’t have an excuse to call Mom anymore, and I don’t know how to construct that excuse.'” relationship again.”
The financial psychotherapist recommended being “curious and non-judgmental” when considering the root of poor spending behavior.
“So sometimes we ask ourselves, ‘What would I feel like if I didn’t actually sabotage myself financially or if I wasn’t so generous with my friends?’ That can start to reveal why you might be doing it,” he added.
