In May, we’re celebrating Mental Health Awareness Month with a series of blog articles about different life experiences, mindsets, and behaviors and how they affect our financial decisions. To learn more or find mental health resources, check out National Alliance on Mental Illness Southwest Washington.
Childhood is a fundamental period for learning about how to interact with the world—family members, friends, strangers, animals, and the list goes on and on. Money and finances are also a part of this equation. Early money memories, or the experiences and lessons about money that we encounter during childhood, can have a significant impact on our financial behaviors and attitudes as adults.
Let’s explore three examples of how early money memories can shape our relationship with money:
For the Better: Financial Literacy from an Early Age
Imagine growing up in a household where discussions about budgeting, saving, and investing were commonplace. Children in these environments often develop a stronger foundational knowledge about money from a young age. They might receive allowances and learn to allocate their funds wisely, distinguishing between needs and wants. These early lessons can instill valuable habits such as setting financial goals and understanding the importance of delayed gratification.
As adults, individuals with positive early money memories are more likely to exhibit responsible financial behaviors. They are more likely to save for emergencies, invest for the future, and make informed financial decisions. Their upbringing has equipped them with the skills and confidence to navigate the complexities of personal finance effectively.
For the Worse: Scarcity Mindset and Fear of Financial Instability
Conversely, growing up in an environment characterized by financial scarcity or instability can leave lasting impressions on one’s relationship with money. Children raised in households where money was a source of stress or conflict may develop a scarcity mindset — a persistent belief that there will never be enough money or resources to meet their needs. These individuals may adopt unhealthy financial habits, such as hoarding money out of fear, or overspending to cope with anxiety.
Moreover, experiencing financial hardships during childhood can lead to a deep-seated fear of financial instability as an adult. Even when they achieve financial success, individuals with negative early money memories may struggle to shake off feelings of insecurity and may engage in risk-averse behavior, such as investing their money too conservatively for their long-term goals, or taking a “cash under the mattress” approach instead of diversifying. Breaking free from this mindset often requires intentional effort and a willingness to challenge deeply ingrained beliefs about money.
Anywhere in Between: Cultural and Familial Influences
Our attitudes toward money are not solely shaped by our individual experiences but also by the cultural and familial contexts in which we grow up. For example, in some cultures, discussing money openly is considered taboo, leading to a lack of financial education and awareness among children. On the other hand, certain cultural values may prioritize frugality and saving, instilling positive money habits from an early age.
“People from different generations, raised by different parents who earned different incomes and held different values, in different parts of the world, born into different economies, experiencing different job markets with different incentives and different degrees of luck, learn very different lessons.”
– Morgan Housel, The Psychology of Money
Of course, early life experiences – good, bad, or in between – don’t solely determine one’s destiny. Every person is uniquely complex and a host of other factors contribute to how we each approach financial decisions as adults.
Now Think about Your Childhood …
Consider how the topic of money was approached in your own household growing up. Was it discussed openly? How were budgeting and large purchases handled? Was money abundant or a scarce resource? The answers to these questions can often explain why someone makes certain financial choices today.
Thinking back on my own childhood I have the distinct memory of going through the grocery store and being instructed by my parents to look almost exclusively for things that weren’t full price , usually denoted by colorful price tags and “Sale!” written several different places. It wasn’t just the sale items though, I was also taught to look at the unit cost, not just the overall cost. What is the price per pound or price per ounce? Was it a meaningful enough discount to warrant a purchase? Would a sale be enough to get something that wasn’t necessarily on the list? These lessons have stuck with me to this day, and I still find myself drawn to those sale stickers like a moth to the flame.
The positive takeaway is that I’ve turned out to be a relatively thrifty shopper. The negative is that I’m hesitant to ever pay full price for anything, even things that I know we need or would actively improve the quality of my life. There are two sides to every coin.
Money Memories from Our Team
I’ve asked three other members of the Johnson Bixby team to share their own childhood ‘money memory’ and how they see it connecting to how they interact with money today.
I have a few memories ingrained into my mind when I think of my first encounters with money. From the sounds of a check being ripped to pay for groceries at H-E-B, to The Phantom Menace playing on the VHS as my mom and I organized my brother’s piggy bank savings into coin sleeves. These are all my earliest memories of money, but not my own.
My own earliest memories were spent at Walmart scouting for Star Wars 3.75-inch action figures – Hasbro’s Black Series toy line to be specific. For my birthday, Christmas day and Three Kings Day, I would get a small allowance that my mom would save in her nightstand for me.
By the time I could “ask” for toys I wanted, I’d say I had about $100 to use from 5-6 years of holidays and birthdays. I’d keep most of the money set aside, but each month, I’d go with my mom to Walmart to buy an action figure for just under $10. At first, I wanted to splurge to cash, but we all know my mom would never let me blow the whole thing on toys … “You get 1 per month,” she’d say, and this is how I began to learn the concept of “self-control”. Each month I’d get a different clone or storm trooper, but it was important that I had enough if something came next month that I really liked!
From my first job in high school, college internship, and post-undergraduate job, I’d say my mom’s teachings on self-control have helped me stay disciplined in my spending and saving habits.
Kim Baker, CFP®, Director of Financial Planning
Without any prompting from my family, I remember being a kid who was always careful with money. My parents gave me a small weekly allowance, and I managed it prudently. Early on, I realized that it took a long time (weeks or months) to build up enough to buy things I wanted. Plus, one never knew when an unexpected need might come along – it was wise to have a little extra in the piggy bank, just in case.
An early money memory that made a lasting impression happened when I was about 10 years old. One afternoon, I was tasked with the responsibility of picking up a few groceries we needed at home. My mother gave me $5.00, a short list, and sent me off. After parking my bike at the store, I pulled out the list and could not find the five-dollar bill anywhere. Completely distraught, I rode back and forth between my house and the store several times, scanning the street, but it was no use. I fully expected my parents to take this money out of my weekly “paycheck”, or that I’d need to tap my emergency savings to reimburse them for the loss. When I told them what had happened, they were sympathetic, as they could see I’d learned a lesson about being even MORE careful with money than I already was!
The concepts I instinctively understood growing up – saving up for things you want to buy in the future, having an emergency fund, and being especially careful with the money of others – have served me well in my financial planning career.
Kristi Koebke, Chief Marketing Officer
One of my earliest money memories was about rolling pennies (meant for the collection basket) off the church pew at Sunday morning service. A more profound money memory was going with my mom to cash her paycheck at the South Ottumwa Savings Bank drive-up window. She’d deposit a portion of the check and then the teller would send a slim white envelope of bills back with a loud whoosh! in one of those pneumatic vacuum tube systems – remember those?? The little box of gum that came back with the envelope was also a highlight for me. The money that came back in the tube was the cash she had for expenses and extras until next payday. The money she left in the bank was for paying bills with checks, and I assume a little was put into savings. In a time where we now pay for everything with a card tap or Cash App, purchasing everything is super easy – too easy – and at the end of the month, I see exactly how much I’ve overspent on the extras like dining out, impulse new product purchases, etc. Lately, I’ve been thinking a lot about my mom’s approach of carrying around a limited amount of cash in an envelope. When it runs out, no more spending. I think I’ll give it a try and see if it helps me reduce frivolous spending.
As financial planners, we help our clients unpack early experiences that contribute to the beliefs and behaviors that guide their financial decisions today so we can breakthrough and open new ideas about what’s possible. Reach out if you’re curious about exploring this idea more, or leave a comment if you’d like to share your own money memory.
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