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Your relationship with money may seem casual, but an expert says it offers clues about your childhood — and understanding this could 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 stem from childhood experiences.
“Our emotional experiences growing up will shape who we become,” he said.
For example, someone who felt secure during childhood might feel they deserve good things, and later in life they might be more likely to negotiate 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 act this out through money behaviors.
This could include feeling guilty when spending money because they do not feel that they deserve good things, or splashing the cash to impress because they feel unworthy of attention.
“The child who approaches his parents to show his scribble – how they respond will give him a message about how the world will respond to him,” Reynal added.
Scarcity or wealth
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.
“To give an example, growing up in scarcity, people who manage to distance themselves from that economic reality, and maybe in their own adult life manage to accumulate some wealth, it is quite common for them to struggle with what you call the scarcity mentality,” Reynal said.
This is a thought pattern that is fixated on the idea that you don’t have enough of something, like money. A scarcity mindset means someone might struggle to take advantage of the money they’ve earned and be eager to spend, Reynal added.
Alternatively, there are people who grew up with little, but became rich, and now they are very careless with money.
“They give themselves everything they wanted when they were little so they could go to the other extreme and start spending quite recklessly, because now they want to give their children everything their parents couldn’t give them,” Reynal. added
Stop self-sabotage
The key to overcoming toxic spending habits is to stop self-sabotaging — a common behavior — according to Reynal.
“Often behind a pattern of financial self-sabotage, there are deep emotional reasons, and it could range from feelings of anger, feelings of in-deservingness, to perhaps a fear of independence and autonomy,” he said.
To identify these, you must first determine what your financial habits and inconsistencies are, Reynal said, giving an example of someone who could spend more in the evening.
“Is it boredom? Is it loneliness? What’s the feeling you might be trying to cope with overspending?” she said.
“This already gives you an idea of what you can do differently. So, if you have it, what can you replace this terrible financial habit?”
Reynal said she had a young client who was still without money in the first two weeks of the month. She asked him, “What would happen if you were financially responsible?”
The client revealed that they feared risking their relationship with their mother because whenever they ran out of money, they would call their mother to ask for more.
“His parents had divorced a long time ago, and the only time they ever talked to his mother was to ask for money,” Reynal said. “They had a vested interest in being bad with money, because if they were to become good with money, then they had the problem of: “I might not have an excuse to call mom anymore and I don’t know how to build that . relationship again.”
The financial psychotherapist advised to be “curious and non-judgmental” when considering the root of bad spending behavior.
“So, sometimes we ask ourselves: “What feelings would I have left if I had not sabotaged myself financially, or if I had not been so generous with my friends?” That can begin to reveal the reason why I could do it” , he added.
