The things we see, hear, and learn about money when we are children can stay with us for a very long time. They help us decide what to do with money when we grow up. In this article, we will talk about how your money habits begin in childhood and how they affect your life. We will use simple words so everyone can understand. Let’s see how your early years shape your money mindset and every financial choice you make.
The things that we observe or hear or learn about money in our childhood years tend to stay in our minds for a very long time. They help us make decisions regarding money in our adulthood years.
CHILDHOOD MONEY HABITS
These are habits you build when it comes to money in childhood. A money habit might involve saving, spending, sharing, or maybe even worrying about money. Children begin to learn money habits by being given pocket money to save every week. Children might see their parents saving money in a savings jar. Children might see their parents spending money on something enjoyable. Consider these questions:
• Did you use a piggy bank for saving as a kid?
• Were you given money by your parents for helping in the house?
• Did you witness your family saving up for something special, like a vacation or purchasing a toy?
These are all childhood experiences and money. They teach you how to handle money. The habits that you form when you are young will last a very long time. They will become part of what is called your money mindset.
Financial Psychology
Financial psychology is all about how we think and feel about money. It’s not all about numbers. It’s about our feelings and concerns, and dreams about money. This is referred to as “the psychology of spending.” When you are young, you observe and listen to the people surrounding you. You see how your relatives and friends handle money. You can learn things from them even if you don’t know it. For example, if your parents are frugal about money, you might be frugal too. If they can easily spend money, you will do the same thing. Some examples:
• If your family members were happy while purchasing gifts, then you could also think about buying gifts.
• You may learn to save for those things if your parents showed you the habit of saving.
All these teachings are part of your emotional connection with money. They assist you in determining how to handle money in the current and future moments.
Money Beliefs Begin with Childhood Influences
Money beliefs are the thoughts you think about money. They are often formed in childhood. Some people believe, “Money is hard to get.” Others believe, “Money is very easy to spend.” Such thoughts are formed from what you see and hear in your childhood. Examples are:
• If your family was always concerned about not having enough money, then you might think money is always a problem.
• In your family, there could have been discussions on the importance of saving for the future. Based on that, there could be the belief that it is highly important
• If you have seen your parents giving people money in order to help them, you may feel that sharing is a good practice.
These become your money habits. These money habits influence you to do certain things with money. Should you save it? Should you spend it? Should you give it to others? The answers to these questions will depend upon your money beliefs.
Effects of Childhood Trauma on Money Mindset
There are also times when childhood can be tough. Childhood trauma refers to difficult or sad experiences that occurred when you were a kid. You can end up being anxious or fearful of money when you grow up. These kinds of childhood traumas related to money include:
• Your parents often argued about finances.
• Your family did not have adequate food or clothing.
• You moved a lot as your family could not afford rent.
These experiences may give you the idea that money is frightening or difficult to obtain. For example:
• All your money and you never spend any because you are afraid that you will run out.
• Spends money quickly because they are afraid that it will disappear.
• Feel sad or guilty when you purchase an item for yourself.
These feelings are known as the psychological roots of financial behaviors. They begin in childhood. But you could experience them for your entire life. They influence every financial choice that you make.
Influencing Financial Choices
How our childhood influences our finance choices is evident if we examine our own behavior. Perhaps you remember seeing your parents save money, and you choose to save money too. Maybe you noticed your parents were spenders, and you choose to spend money too. Maybe your parents complained about money, and you worry about money too. Your finance choices involve more than addition and subtraction. They involve how you feel and remember your childhood. Some examples are:
• A person who never received toys growing up may buy many toys as an adult.
• A person whose family members always discussed the importance of saving may always save.
Each financial decision reflects your past, whether or not you are consciously aware of it.
Why People Spend Money the Way They Do
Consider this: Have you ever wondered why people spend money the way that they do? The answer often lies in childhood. If you had very little money growing up, maybe you were frugal when you spent money. Perhaps if you had enough money, you probably never thought twice about spending it. Your childhood informs you that:
• What to do with money.
• How to feel about saving or spending.
• How to plan for the future.
These lessons form your money habits in childhood. They remain with you throughout your life. They help explain why people spend money the way they do.
The Emotional Connection With Money
This is how you feel about money. Do you feel happy when you spend money? Do you feel worried when you save money? These feelings usually begin when you are a kid. For instance:
• “If your parents were excited about saving for a holiday, then you might feel happy about saving money too.”
• Perhaps if you saw your parents get angry when bills came due, you now feel scared when you pay for things.
Notice your feelings related to money. They can help you understand your actions. They can also help you understand why you act the way you do with your money.
Changing Your Money Mindset
Not all childhood experiences with money are easy. Some children grow up in homes with financial stress. This can include lack of food, unpaid bills, or constant worry.
These experiences can cause emotional pain. This pain is called childhood trauma.
• Attempt to set aside some money every week.
• Record where your expenses are going.
• Discuss finances with friends or relatives.
Your attitude toward money will change. You will choose different beliefs and different behaviors. You will make better decisions for your life.
Establishing Positive Money Behaviors
Positive financial practices give you a sense of pride in your financial decisions. To develop good habits:
• Start by keeping a small amount away each week or each month.
• Prepare a list before going shopping so that you will not purchase too many things.
• Discuss with family members or friends techniques for saving.
Try setting up some goals for how you can save, how you can spend, and how you can share your dollars.
Conclusion
Childhood is the foundation of every financial choice you make in your life. Every time you choose to spend, save, or use money, it is more than just figures and statistics. It is about your emotions, thoughts, and experiences in childhood. Money is a critical part of your life, but the relationship is in your hands, and you are the first component of that equation.