money health weekly


Learn Your Money History


"Without understanding our past relationship with money, we cannot understand our current relationship with it."

-Ted Klontz


I'm sitting at my desk in my home office, scribbling onto a piece of paper. I feel sad. I'm exploring parts of my life that I haven't thought about for a LONG time.

I'm taking a financial psychology course, and the professor thinks it's important for us to learn about our money beliefs and money history. If we don't know about our own story, the idea is, how can we help clients understand theirs? It makes perfect sense when I think about it like that.

However, I think I'm fine. I don't need to do this stuff.

Then, I start doing the exercises. It quickly becomes uncomfortable. I'm remembering parts of my life I forgot existed. Things are starting to click. It now makes perfect sense why I'm taking Kung Fu classes; I was embarrassed as a kid in karate class and never got to learn any martial arts. I know why I didn't have a lot of friends growing up; because I was embarrassed to invite them to my apartment because everyone else lived in a house.

I get it now. Without understanding my money history, I would be ill-equipped to help anyone else with theirs.

No matter where you are in terms of your finances, exploring your history with money can give you insight, clarity, and peace of mind - even if it's uncomfortable at first.

money history drives behavior

Financial Behaviors Come From Scripts

All of our financial behaviors; good, bad, or otherwise, are a result of our money scripts. If you feel very uncomfortable when your checking account drops below $1,000, it's because of a money script. If you spend money faster than you can get it, it's because of a money script. If you only buy name-brands, it's because of a money script. If you get anxious when others start talking about money, it's because of a money script. If you get nervous at the thought of spending more money than you made in a particular week, it's because of a money script.

And on and on.

Money scripts are rules that we subconsciously follow about money. They aren't necessarily good or bad. We don't always know we're following them, and often we don't know they exist.

Your money script, or money rule, that you follow might be, "it's not safe to have less than $1,000 handy," "I don't deserve money when others have so little," "I deserve the best," "it's not polite to talk about money," or "money should be saved and not spent."

These scripts were written for us based on what we've experienced in the past.

Scripts Come From Money History

Money scripts come from our past. They tend to be passed down from generation to generation and are based on lessons we learned and form observing the world around us.

We learn by experiencing. When we have painful experiences, we don't want to repeat them. Our subconscious brains create rules about what happened that lead to the painful experience. It's not always right about the cause and effect. Nonetheless, it creates a rule for us. We can sometimes end up in a situation where we follow a bad rule because deep in our minds, we think we are protecting ourselves.

Similarly, when we have joyful experiences, we want to do what we can to repeat whatever caused the joy. So our brain writes a script to follow to bring us more joy. Again, it's not always right, but we end up with rules that we subconsciously follow because we think will bring us happiness.

Highly emotional experiences around money are called financial flashpoints, and they can cause a dramatic shift in our thinking around money. You can think of these as the money equivalent of trauma. If you were mugged, for example, outside a bar in a downtown area, you might be afraid of being in downtown areas, near bars, or out at night going forward. That one event could be enough to change your future behavior. Similarly, if you were publicly made fun of for wearing the wrong kind of clothes in Junior High, you might have changed your opinion about what types of clothes you were going to wear and how much was appropriate to spend on clothing going forward.

Most of these lessons are passed down to us by parental figures.

Financial Beliefs Are Passed Down

Money beliefs are passed down from generation to generation. The lessons you learned from your parents (or parental figures) we taught to them by their parents. The core lessons learned remain very similar, even if the exact lessons change from generation to generation.

For example, in the book Facilitating Financial Health, the authors talk about a couple who grew up in the Great Depression-era and lost everything overnight because the banks failed. They lost everything. The lesson from that was, "you can't trust banks."

Even though the context changed - e.g., we put in insurance to protect your money if the bank fails - the rule stayed. That couple's children learned those lessons, but not entirely. They trusted banks a little bit, in that they didn't keep their money under their mattress anymore. Instead, they put money in banks, but only safe accounts and they spread their money around to different banks, just in case one of them failed.