Editorial Policy

Relearn childhood money lessons in 4 steps

Allie Johnson

April 2, 2014

Could your childhood money experiences be part of why you overspend, fail to save or practice other bad money habits?

Yes, and I’m a perfect example.

I never thought much about how my childhood shaped my ideas about money.

My mom tells a story about how once, when my dad was unemployed, she raided my piggy bank to buy a frozen potpie for dinner. That frugality continued even after my dad got a steady job and our money situation improved: We rarely went out to eat or on vacations.

In college, I racked up about $500 in credit card debt — while making about $17 a week as an editor for the campus newspaper. After months of stress, I managed to pay off the debt with funds from a summer waitress job.

But I didn’t learn my lesson, and I breezed through my early 20s spending my paychecks on books, clothes and nights out with friends. I paid my bills late — if I hadn’t lost them or accidentally thrown them away. I ran up more credit card debt.

My bad money habits caused me a lot of stress, but I couldn’t make changes stick. Finally, I went to a few sessions of therapy. With the psychologist, I talked about my childhood experiences with money and how I’d developed an image of creditors as authority figures who wanted to take all my money and prevent me from having fun. By not paying them, I was being rebellious. I learned that I was only hurting myself.

Almost immediately, I started paying my bills on time and started down the road to getting my financial life together.

If your past might be negatively affecting how you handle money, try these four steps:

  1. Identify your patterns. Assess your money-handling process: Is it working well for you? My problematic behaviors were failing to follow a spending plan and paying bills late. What are yours?
  1. Look at your past. How did your problem areas develop? Look to your past, and think about how your family handled money. The money lessons you learned in childhood probably are partly true, and partly false, financial psychologist Jeremy Shapiro writes in his Dr. GoodCents column. For example, a boy whose mother glows when his father gives her jewelry might grow up thinking that pricy presents are the key to making others happy, he writes. Or, a teen whose parents lost money on real estate in 2008 might decide investing money is a mistake.
  1. Rethink money lessons you learned in childhood. Now, it’s time to sort fact from fiction, according to Shapiro. As an adult, he writes, you have a lot more knowledge and life experience than you did when you formed certain beliefs as a kid. So, hold your old beliefs up and re-evaluate them. “You can decide what to keep, what to revise and what to toss,” he writes.
  1. Move toward healthy money habits. You might find that you hold some extreme beliefs that are contributing to destructive financial behaviors, such as rejection of money or compulsive spending, financial psychologist Brad Klontz writes in a blog post on PsychologyToday.com. In this case, you need to “challenge distorted money beliefs” and begin to practice healthy financial habits such as using a spending plan, saving and limiting debt, Klontz writes.

In my case, awareness and admitting that it wasn’t working for me provided the push I needed to change. Once I cleared that initial hurdle, it was simply a matter of learning better money habits — and practicing them so they’d stick.