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🧠 Mental barriers

How we think about money as adults is often influenced by how our families deal with financial issues. According to a study by the University of Cambridge, children typically develop some basic understanding of “finance”-related behaviours by the age of seven. These lessons are imparted when children observe or are guided by their parents on money issues, such as when they are given pocket money or brought to the bank, which influences their financial habits. 

In my experience, money was always a highly sensitive topic in my family. The topic was rarely discussed candidly and mostly avoided at all costs. 

This felt quite unhealthy, and for a long time, my understanding of money and my family’s financial situation felt incomplete. Growing up, I often oscillated between splurging on different items and saving intensely for months afterwards. There was an underlying fear that my family could sink into a difficult financial patch (which we experienced once before) but I couldn’t be sure how justified this fear was since we never openly talked about it. Instead, my parents emphasised how talking about money hurts people’s relationships. 

But that isn’t accurate, right? Open and honest conversations on managing finances benefit the whole family. It’s when conversations only circle around money or are calculative that things get toxic. 

“Whether your parents speak to you about money or whether it was a taboo topic at home, you will pick up these beliefs about money from your parents,” shares Dinah Poehlmann, finance coach and founder of Your Finance Mind, in an interview with Thrive. 

Poehlmann adds that other common issues include constant refrains about things being “too expensive” and pointing out things that “can’t be afforded,” which can create fear and scarcity mindsets in children.

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“Often, conversations around money can be difficult because they can trigger many negative emotions,” she says. This is especially the case in families that have experienced serious financial issues, such as bankruptcy, job loss or even falling for a scam. 

However, discussions about money can be conducted in a measured manner or reframed to celebrate the material things we have, and bring about positive emotions instead, Poehlmann notes.

Family influences are not the only thing that can shape one’s money narrative. School environments and the way we grow and adapt to them can affect our habits regarding money. 

Darren (not his real name), 26, an auditor at a multinational corporation in Singapore, says his school experiences moulded his relationship with money. 

“As a child, I did feel the pressure to have the coolest sneakers, bags and gadgets just to maintain a ‘cool factor’ among my peers,” he says. “Even as I grew older, having certain material possessions was a priority to me so I splurged on branded goods and going out with friends.” 

While he now recognises that his extravagant spending patterns were unhealthy, Darren feels there was a silver lining to these pressures. “I had to learn to save and make sacrifices to afford what I liked from an early age,” he explains. He adds that he took on part-time jobs while in polytechnic and university in order to be self-sufficient in affording the things he wanted. 

According to Poehlmann, it’s important for young adults to recognise their excessive spending habits. 

“Instead of getting into bad debts, such as credit card debt or personal loans, you can write down your desires, then intentionally work and save towards them,” she says. “Delayed gratification can bring a lot of satisfaction in the long run.”

🥦 Building a healthy money mindset

While everyone’s relationship with money is unique, there are some things to ensure your money narrative is on the right track 🛤️ and healthy: 

• Be clear about what is important to you and how you choose to manage your money around these priorities. It’s important not to succumb to peer pressure when it comes to spending preferences and to stand firm in your choices. If need be, remove yourself from environments where you could be easily influenced to take on poor money habits such as overspending or overborrowing 😢.

• It’s good to save, but remember also to spend intentionally. While saving can be a passive form of building one’s reserves, knowing what you want to spend on and setting positive boundaries around your expenses can help you achieve your financial goals without having to cut back on things for the sake of it. For example, if you wish to portion a larger sum of money for exercise classes every month, that’s okay! You may simply have to de-prioritise other things – like luxury goods 🛍️ or eating out – that your budget may not be able to accommodate.

• Develop a habit of tracking your expenses regularly. If you haven’t created your personal budgeting spreadsheet – this is your sign to do so. Alternatively, you can use expense tracker apps such as Money Manager and Spendee. Remember to remain disciplined and stick to how much you budget for each category of spending.

• Find positive role models with similar financial goals to yours and emulate them. Try to surround yourself with people who are pursuing similar financial goals or have already achieved what you dream of having financially. You definitely will be able to pick up a tip or two from them!

No one has a perfect money mindset, so it’s important to be on the lookout for any unhealthy attitudes you may have adopted that could adversely affect your relationship with money. It may not be easy to unwind some deeply entrenched beliefs, but it’ll likely be worth the effort for the sake of your long-term financial well-being 🍞.

TL;DR

• It’s normal to be influenced by your family’s beliefs and attitudes towards money as a child 👧🏻

• However, you should build awareness of any unhealthy patterns you may have adopted along the way, such as scarcity mindsets or overspending 💸

• Spending intentionally is just as important as saving – you want to be clear about what you prioritise spending on and have good boundaries on those fronts too 

• Look towards positive role models to understand how they achieved their financial goals in order to follow in their footsteps 👣