Your past money experiences can affect the way you deal with your financial decisions today, and into the future.

People tend to deal with money on an emotional level and that can affect their ability to make good financial decisions. This is one of the reasons people resist recommendations given to them, despite the good evidence provided.

People spend too much, they don’t invest in equities, they don’t get the insurance they need, and they make terrible investment decisions — all based on emotions, and often at the worst time to be making important decisions. They don’t have a plan, they don’t enjoy themselves at their current stage in life, and they don’t use the money they make to live the life they want.

Think about these questions:

  • What money messages did you get from your parents, directly or indirectly?
  • How, what did they do, how did it make you feel?
  • What about your grandparents?
  • How, what did they do, how did it make you feel?
  • What are some of the best financial decisions you have made in the past?
  • What made it a good decision, and what steps were involved?
  • What is important about money to you?
  • Is it security? Love? Freedom? Comfort? What is it?
  • Do you know WHY you feel this way?

The Exercise

To examine this a bit further, take the time to answer the next two questions as honestly and completely as you can. Your answers can show you how your past money experiences may affect your money decisions today.

What is your first joyful memory of money?

This past money experience should be from when you were a child, possibly high school, but for most people, it occurs before then.Really think about it. What is the first memory that comes to mind? Where were you? Who was there with you or involved? What events prompted this experience? How did you react? How did it make you feel?

What is your first painful memory of money?

Again, don’t think about your adult experiences, but your first unpleasant money memory. It could be when you were five or ten years old, or possibly when you were a teenager.

Consider the same details as above: What is the first memory that comes to mind? Where were you? Who was there with you or involved? What events prompted this experience? How did you react? How did it make you feel?

The Results

Look at the answers you have written and then decide whether these money memories are still affecting you today as you make major financial decisions. Are those effects positive or negative?

How did the joyful past money experience affect the way you respond to and think about money as an adult? How about the painful memory? Can you reframe the way the painful memory affected you and make it a positive reaction instead? For example, if your parents were really bad with money and you couldn’t get the new bike you wanted, could you take that experience and make a promise to yourself to manage your money better so that you can afford the extras that your kids may want?

If some of your painful past money experiences are still having a negative effect on your financial decisions today please feel free to email me at joseph.falbo@falbowealth.com to see if I can help get you pointed in a more positive direction. Also, feel free to email me with your answers to these two questions. I would love to see all of the different money memories people have.

Joseph F. Falbo, CFP®, AIF®, CRC® is an independent LPL financial advisor that helps grow and preserve clients’ wealth using cutting edge, customized, and comprehensive strategies. With over two decades of experience, Joe helps clients to pursue and retain the lifestyle they want in retirement. To discuss your retirement goals or any financial topic you want, schedule a 20-minute complimentary call. To learn more about Joe, please visit falbowealth.com.

The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual.