The Way You Think About Money and Your Finances

What is your earliest memory of money? The first thing that pops into your mind may give you a significant clue as to what your financial future holds. My first memory of money still has an impact on how I approach my finances today. (For related reading, see: What's at the Heart of Your Financial Plan?)

Past Experiences Shaping the Future

It was a Saturday morning, and my older brother and I had just finished our soccer game. My father, not known for allowing us sugary treats, splurged and bought my brother and me a donut. Overwhelmed by excitement, my brother quickly gobbled his up. I, on the other hand, decided to save half of mine for later. I remember the thrill I got when I pulled the second half of my donut out of the bag later that day and I got to enjoy something my older brother didn’t have.

This experience was the first time I remember feeling the reward of saving something. Years later, I still get great pleasure from saving for the future. The question becomes, how has that memory shaped my financial future? Was I destined to be a saver because of that memory?

I have a client whose most remarkable memory of money was on her 11th birthday. She received a lot of money for an 11-year-old and excitedly put the money in her safe place. To her horror, when she woke up the next day, the money was missing. Although she never found the culprit, she suspected it was someone she trusted. All these years later, she admits that she has trouble saving money because she has an urge to spend it quickly when she has it.

How to Deal With Preconceived Notions About Money

The experiences we have growing up can shape the way we behave in the future but that doesn’t have to be a bad thing. We first need to understand what those experiences were and then assess how they are influencing our financial plan. At that point, we can begin to take control of our financial habits.

In an effort to move forward, it is helpful to define what we want to accomplish financially over the next three years. By creating this vision, we begin to understand why money is important to us. Money becomes more than just a tool to derive quick satisfaction. We have a much better chance of saving, or in some cases spending, money if we know that the choices we make will help us achieve something more important in the future. (For related reading, see: 10 Things to Do Before Retirement.)

Communicating Your Memories

Now that you are beginning to understand how your early experiences have shaped your view on money, it’s time to share them with the people who are influenced by the financial decisions you make. Money can be a great cause of stress. By sharing the beliefs and lessons you learned growing up, the people close to you will be able to understand you better. Communication—especially about finances—is an essential part of any successful relationship. By having a clearer picture of where the other person is coming from, you can better maneuver stressful financial situations or decisions. Here are some discussion questions you can use to get started:

  1. What was your first memory of money?
  2. The first time I earned money, I felt ...
  3. In my youth, my biggest concern about money was ... 
  4. Today, my biggest concern about money is ...

The fact is, the more stress we are under, the easier it is for us to make bad financial decisions. By understanding your partner’s money memories, you’ve opened the lines of communication that can help you break through in times of stress. The key to making successful financial decisions is to take as much emotion out of the process as possible. If you understand where each other’s feelings come from, you have a better chance of making the right decision.

Remember, while your early memories of money may influence your current and future decisions, you don’t have to be ruled by them. By being proactive and intentional, you can create new habits and establish a plan that will help you reach your financial goals. (For related reading, see: 6 Life Events That Call for Professional Financial Advice.)