Child saving money in a glass jar at home
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Your relationship with money may seem random, but one expert says it provides clues about your childhood, and understanding it can help you overcome toxic spending habits.
Vicky Reynal, a 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 become,” she said.
For example, a person who felt secure as a child may feel they deserve good things, and later in life may be more willing to negotiate for a higher salary or enjoy the money they have, Reynal added. However, a person who experienced neglect as a child may grow up with low self-esteem and express it through money-related behaviors.
This may include feeling guilty when spending money because they feel they don't deserve good things, or throwing money away to impress because they feel unworthy of attention.
“A young child who approaches his parents to show them his scribbles – how they react, gives them a message about how the world will react to him,” Reynal added.
Scarcity or abundance
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.
“Let me give you an example: people who grow up in poverty, manage to get out of this economic reality, and maybe manage to accumulate a lot of wealth in their adult lives, quite often struggle with what they experience. call it a scarcity mindset,” Reynal said.
This is a thought pattern that focuses on the belief that you don't have enough of something, such as money. A scarcity mindset means someone may have difficulty enjoying the money they earn and fear spending it, Reynal added.
Alternatively, there are people who grew up with little but became rich and are now very careless with money.
“They give themselves everything they dreamed of when they were little, only to go to the other extreme and start spending it completely carelessly, because now they want to give their children everything that their parents could not give them” – Reynal in addition.
Stop self-sabotaging
According to Reynal, the key to overcoming toxic spending habits is to stop self-sabotage, a common behavior.
“Behind the pattern of financial self-sabotage are often deep-seated emotional causes that may include feelings of anger, feelings of undeservingness, and perhaps even fear of independence and autonomy,” she said.
To identify them, you first need to identify your financial habits and inconsistencies, Reynal said, giving the example of someone who may overspend in the evenings.
“Is it boring? Is it loneliness? What feeling might you be trying to alleviate by overspending?” she said.
“That already gives you an indication of what you can do differently. So if it is boredom, what can you replace this terrible financial habit with?”
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 she was afraid to risk her relationship with her mother because every time she ran out of money, she would call her mother asking for more.
“Their parents were divorced a long time ago and the only time they talked to their mother was when he asked for money,” Reynal said. “They had a vested interest in being bad with money, because if they were going to be good with money, they had a problem: 'I may no longer have an excuse to call my mother and I don't know how to build that.' relationship again.”
A financial psychotherapist recommended remaining “curious and non-judgmental” when considering the causes of poor spending behavior.
“So sometimes we ask ourselves, 'How would I feel if I hadn't actually self-sabotaged myself financially or if I hadn't been so generous to my friends?' This might start to reveal why you're doing it,” she added.