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Welcome to NerdWallet’s Smart Money podcast, where we answer your real-world money questions.
This week’s episode continues our deep dive into money and happiness. In this episode, we discuss how to analyze your history with money.
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Your money history — the attitudes, beliefs and behaviors you were taught around money while growing up — can have a big impact on the way you manage your money today. It can also offer clues about why you might struggle with certain aspects of your financial life.
To unpack your financial history, start by asking yourself what your first memory of money is. You might want to enlist the help of a financial therapist for this exercise. Maybe you spent money earned from doing chores on a toy you really wanted, or maybe you saw your parents argue about household finances. Then think about your current money habits. You might find that you are embodying patterns, beliefs and difficult emotions that you witnessed from an early age.
Unlocking your history with money can help you create positive change. For example, if you realize that you’re hoarding money in savings accounts instead of investing it, understanding why that is and rewriting your script can allow you to finally begin investing or saving for retirement in earnest. In the long run, that can create more financial security and give you more opportunities to build the life you want.
More about money and happiness on NerdWallet:
Sean Pyles: What's your first memory of money? What emotions does that memory stir, and how are you embodying that first memory today?
In this episode of our nerdy deep dive into money and happiness, we're mining our past to build a happier future.
Welcome to the NerdWallet Smart Money podcast. I'm Sean Pyles.
Sara Rathner: And I'm Sara Rathner. Last week, we covered a lot of ground, like what happiness is and why we're all so hung up on it, and how money and happiness can get tangled up in our day-to-day lives. And now, Sean, you want folks to dredge up their pasts?
Sean Pyles: Yes.
Sara Rathner: Yeah. Cool. What's up with that?
Sean Pyles: Well, I'm embracing my role as an armchair psychologist, and you, Sara, and our listeners are my clients today. So get comfortable, grab your tissues. We're going to finally confront our dads about being emotionally distant.
Sara Rathner: You speaking for yourself there?
Sean Pyles: Well, I'm speaking for anyone out there, I suppose, and maybe projecting just a little bit. But really, if you want to build your version of financial happiness, you need to know what's getting in your way, and often it's yourself and your upbringing.
So in this episode, we're going to give our listeners the tools to interrogate how their attitudes and behaviors around money developed. The goal is to help you sort out the issues that might be preventing you from living a happier and more financially fruitful life.
Sara Rathner: Sounds good and a little scary.
Sean Pyles: Yes. Well, we are not going at it alone. To help us dig into all of this stuff, I talked with Aja Evans, a licensed mental health counselor and financial therapist based in New York City. I asked her why it's important to understand our financial history and examine it.
Aja Evans: I think people don't realize how much of their emotional, internal, secretive, private feelings show up in their money and in their money behaviors. So taking the time to understand where you're coming from, what your history was about, and learning how it then correlates to the actions you take with your money now. And it gets very deep, very quickly.
Sean Pyles: I can imagine. All right. And we'll get into all of that in a little bit, but this series is about our relationship to money and happiness, why we strive for them and how the connections between money and happiness can sometimes leave us with less of both. So I'd like to hear from you about what you think around how exploring and sorting out our money histories can help us live lives that are happier and more financially sound.
Aja Evans: I think the best place to start is your family and looking at, what were some of the stories or money narratives that you heard growing up, and how did it impact how you operate as an adult? So I'll give you an example.
When I was younger, one of my friends, and I don't have this memory, it's actually my friend's memory … She told me, we were probably around 8 or so, but she told me that I went up to the cash register so confidently and just paid for my own bag of chips or candy, I don't even remember what it was, but she remembered how confident I was to speak to an adult and exchange money and pick what I wanted and do it on my own without an adult present with me. And I didn't realize that, but that story stuck with me after she told me about it, in terms of how I then tried to operate confidently with money.
Now, it could be anything from listening to a parent speak about money, observing their behaviors when it came to paying bills or talking about money or other people bringing up money. All of that information that you are taking in, listening, feeling, hearing, all of that is going to then translate into narratives that you create and what will then be your money story and how you then can operate with money in the future.
Sean Pyles: Right. Well, that brings me to my next question around some general areas that people can explore in their money history, because this is about money, but it's also about a lot more, like you just talked about, relationships and family. How does that factor in?
Aja Evans: So looking at what your beliefs are, and sometimes people don't really understand how that shows up in your money, but look at some of the things or some of the patterns that you may display consistently.
I'm going to talk about a few negatives, but I guess I'm also going to talk about a few positives, too. So, thinking about if you overspend when you are upset, so you are angry or you're sad, you're just not in a good way, you're in a bad place emotionally, you are spending your money. Is that something that you're doing consistently? Is that something that you may have seen a parent do while you were growing up or a grandparent or a family member or a friend?
Coping with money is so easy for us to do, and marketing, well, they do a really good job, but a lot of these patterns we've seen before and then we continue to display them in our own actions and in our own behaviors. So when you recognize, "Hey, I go shopping when I'm angry or I go buy food when I'm sad," that's a pattern that you realize, "Hey, this is something that I do to make myself feel better. Do I still want this? Is this something that is working for me longer term?"
And that's like some of the negative because you might be overspending your money, but on the other side, there are what can be seen as positive money behaviors, but really maybe stemming from a place that is not so positive. So one thing that I see a lot of times with my clients is that they are hoarding their money. They are so anxious about spending their money that they're just saving obscene amounts in their checking accounts, which we know is not the best.
Sean Pyles: Especially amid inflation.
Aja Evans: Yeah, exactly. Leaving it in your checking account, you might be losing money that way, and you probably are with inflation. So we need to be investing it or growing it or putting it in a high-yield savings account. And although traditionally, oh, you're saving money, feels like a good thing, there is a limit to saving money, right?
Sean Pyles: Yeah.
Aja Evans: You should enjoy your money. You should want to experience things with the money that you have been able to save up. So there is a limit to some of the traditionally positive activities that actually are rooted in things that aren't so good, and I'm talking about fear and anxiety.
Sean Pyles: Yeah. Well, hoarding money could be a way to cope with an upbringing of scarcity, a feeling like you were insecure and didn't have enough. And so you keep all this cash just in case — a hypothetical, nebulous, just in case — something happens.
Aja Evans: Exactly. You nailed it.
Sean Pyles: So when we are looking into these patterns and trying to find their origins to discover why we are doing the things that we do with our money, how far back should we go? Are you talking early childhood? You mentioned this memory when you were 8 years old. Is it more in your teenage years? What do you think is a good starting point?
Aja Evans: I would say no time is too much time. So when we think about, when was your first money memory, how old were you when you had that money memory? And this is an exercise that I do with my clients to get them creating their money story, to start from the beginning.
We don't remember all the time and in perfect detail, but a lot of our history comes from our childhood and our upbringing. By the time children are 3 years old, they have long-term memory, so you are starting to understand the concepts about money. There might be money stories and beliefs that are stemming from back then.
By the time we are 7 to 9, a lot of our money beliefs, the foundation is already solidified. So there is no timeline that is off-limits, right? We're just talking about getting into middle school, and then things start to ramp up with social pressures and how does it feel and what are you wearing? And that also plays a part, too. So, go as far back as you can.
Sean Pyles: Yeah. OK. Well, let's get into more like practical things people can do going into their first memory. When someone wants to unpack their financial history, is that the very first thing they should do is looking at that core memory or is there something else that should be a good priority as well?
Aja Evans: I would say probably starting with your patterns first, like look at, "Hey, what do I want to change? Do I like these patterns? Do I not?" And once you realize that something keeps coming up for you, then I would say it's time to look into your money story and recognizing, where did these beliefs come from? "Where did I hear this? Did I make it up?" And from there, to start being able to unpack is probably the best way to decide if this is a problem for you.
Sean Pyles: OK. So you said that the money memory is one of the initial questions that you ask your clients when you're starting this process. What other questions do you ask in that first conversation, maybe first couple sessions, that our listeners could also potentially ask themselves?
Aja Evans: Yeah. First is, are you in a financial crisis? I think a lot of times people usually come to me when something financially is going on and going wrong. And they want to feel better and they don't like what's happening, or they recognize that, "Hey, you know what? I just have been feeling bad about this long term." So I definitely ask if there's something going on currently that feels really pressing for them and feels really important to tackle before we start getting into those beliefs and those patterns.
Sean Pyles: Well, you raised an interesting point around people coming to you when they have a crisis, and it reminds me of the mindset around therapy in general, which is that the best time to go to therapy is when things are actually kind of going all right. It's not a good idea to wait until something is at crisis point to seek that help.
How do you think people can tackle that when it comes to their financial history? Just like you don't want someone to realize, oh, they're in a bunch of debt before seeking out questions and conversations around how they got to this point.
Aja Evans: Definitely, and I couldn't agree more. The same principles apply with my work as well. So, thinking about what your financial goals are, and what do you want your financial life to look like, short term and long term, and then start looking at, what kind of foundation do you either need to patch up or rebuild or rework to be able to get you to those places? Because a lot of times, when we are in crisis, it can be easy to reach for the quick, short solution because you want to feel better quickly. We don't like to be uncomfortable.
Sean Pyles: Of course.
Aja Evans: Please reach out for help before you are in the crisis so that you can start building healthier behaviors and patterns, so that when the crisis arises, you either have a plan or know yourself well enough to not slip into some of those negative behaviors.
Sean Pyles: Right. Well, what do you find generally happens when people start to answer the questions about their financial history, their goals, their patterns? What's it like for them?
Aja Evans: Hard.
Sean Pyles: I'd imagine so, yeah.
Aja Evans: Yeah, very emotional, very hard, because even though it starts with money and money might be the reasoning, it really starts diving deep into other things about themselves or things about their life that are just really complex and emotional and difficult to deal with and make peace with. So, when you start uncovering some of those stories, these might be details about your life that you haven't thought about in years or decades or ever, so it's very emotional to start really cleaning out that closet and examining those skeletons and deciding, how do you want to move forward knowing that this is a part of your history?
Sean Pyles: So much about the way we live our lives is a result of the stories and the narratives that we create in our own internal spaces, and part of what you’re trying to do is help people reframe the things that they're doing.
What are some common narratives that you hear from your clients? Maybe without naming names, of course, but what are some themes that come up?
Aja Evans: So I have this client that she's a lawyer, and she makes multiple hundreds of thousands of dollars. And she gave me the example of not sleeping with her AC on because she was so used to her past and growing up where you maybe kept the AC on and then fell asleep, and then you needed to make sure it was off. Right? Like, you do not run the AC all night long, we cannot afford that. So she was doing the same, even though she knew she could afford whatever the electricity bill would be.
And we had to work on what was coming up for her and the old narratives and how they do not apply to her currently, and how uncomfortable it was for her to say, "Wow, I am in a different position and I know I am in a different position, but I'm still holding on to some of these actions that I grew up with."
And that comes up frequently, from running an AC or splitting a meal that you have and feeling like you have to save it for later just in case because you're unsure. So, that comes up a lot, and like I said, money hoarding definitely comes up and the fear of putting that into investments.
Sean Pyles: Yeah. Wow. That's a really good example of what I was going to ask you about next. What are some of the questions that you delve into that either maybe surprised your clients or caught them off guard, questions that we maybe wouldn't link to money issues?
Aja Evans: People don't want to talk about their families. They do not want to talk about their parents. And I understand why it can be hard, but I can't ignore it, even though I know it's difficult. So when I start drawing parallels to their current behaviors from some of the examples or stories they told me about growing up and their parents, people don't usually love that and don't necessarily want to go to those places, and not because they are fearful. It's more protective.
Sean Pyles: I'm guessing there are also elements of trauma that surface as people go through this process with you. How can people deal with that?
Aja Evans: Yeah, give yourself so much grace. Just give yourself a minute to say this was hard. And nobody — and I don't care how much money you have, don't have, did have, don't have, whatever, wherever you are on the spectrum of wealth — everybody has experienced trauma in some way, shape or form. And there are some really awful things that happen to people, and there are some not-so-awful things that happen that can still be traumatic to a person. So allowing people the space to give them the ability to just say, "Hey, that was really hard for me, and that was difficult, and that really impacted the way I interacted with the world and I didn't realize it."
So giving the space to give yourself grace and allow yourself to feel those feelings I think is usually step one, because people very quickly want to, like I said, not feel the discomfort and shove it away. "Oh, it's not a big deal anymore. That was years ago, it should be fine." No, it happened.
Sean Pyles: Yeah. Right. And it has a big impact on what you are doing today. And I think sometimes when people get to this point in therapy, they can think, "OK, I'm about to turn a corner. Things are going to be good really soon," but it can take quite a long time to sort through these issues and begin to change behaviors. How do you get people through these moments where they're kind of stuck in a negative space and make sure that what they're working toward is in the end goal of a positive outcome?
Aja Evans: Yeah. So, for me, what I have found with my clients is the stuck space is usually when they have to start the behavior change. A lot of times, people come and we explore their history, and they figure out what the belief is or where the narrative theme came from, and they're like, "I'm cured!" And I'm like, "Oh. Oh, no. Actually, this is when the hard work starts."
Sean Pyles: Right. It's like, you're at the bottom of the trench; we got to start climbing back up.
Aja Evans: Right. Now you understand, but what's the hardest part is when you have to do something different when that shows up again. And you know it's going to show up now, and you know what it looks like, but the difficult part is actually changing the behavior when it keeps happening in your everyday life type of thing. So that's when they are like, "I don't want to do this anymore."
Sean Pyles: Yeah. Well, let's talk about how we can begin to climb out of that trench and start using all of this information that we've learned about ourselves and our money history to break free of the habits and patterns and narrative that we maybe didn't even know that we had. So, how do we begin to rewrite the script on our relationship with money to build a happier, more financially sound life? What are the first steps?
Aja Evans: Know the numbers. A lot of times, people want to be in a different financial position, but they don't know all of their numbers. You can't change anything if you don't know where you're at right now. So, let's have the moment and spike of anxiety and look at the numbers, and I'm talking about everything, money you have incoming, outgoing, your debts, your retirement savings, all of it. Look at your money, and then allow that anxiety to settle.
Sean Pyles: Yes.
Aja Evans: And figure out what your goals are. What do you want to do? What do you want your money to look like? And from those two steps, that is when I think financial education is the biggest part because you don't know what you don't know, but your goals and where you're at currently will inform what you need to learn more about.
Sean Pyles: How do you think people can set up appropriate boundaries around what they can and cannot do financially?
Aja Evans: Yeah. I mean, first is looking at what you can afford. And I think because we're talking about money, there's this idea that you should have some kind of deprivation in order to reach your financial goal, and I am just not about that life. I want people to experience things.
If you love sushi, please get the sushi. Just realize why you're doing it. Don't get it because you are upset and this is how you cope and that's what you do. Get it because you're like, "Hey, you know what? I really love sushi, and this makes my heart sing, this makes me happy. I feel good about this." Do something else to make sure that your mental health is in a better place. So it really is about taking the time to know yourself and know what your patterns are so that you can do something differently.
Sean Pyles: Well, when people have been able to finally get to a place where they understand their history, they've identified these habits, they're seeing them pop up in their day-to-day life, how do people begin to change those patterns, if they maybe aren't as healthy as they wish they were?
Aja Evans: Ask yourself how you feel after you do some of the not-so-healthy patterns. And if you are upset with yourself, or finding that your negative self-talk increases, that might be a sign to you that you need to make some changes and do something that you will feel better about afterwards. So, the idea is to avoid feeling bad about yourself and actually feeling good.
Sean Pyles: What have been some helpful ways to redirect people's patterns, coping mechanisms, to things that are more positive and maybe aren't about spending 50 bucks on sushi five times a week?
Aja Evans: Remember that this does not make you feel good. You do not want to feel like this. You don't like that your bank account goes down this much when you do that, you don't feel good about yourself when that happens. Remember that when you feel tempted to do it.
Another thing I use a lot lately is just mantras and positive affirmations because people are so mean to themselves, myself included, unfortunately. I'm working on it.
Sean Pyles: Everyone is.
Aja Evans: So sitting in front of the mirror and being kind to yourself is so hard, and people feel so vulnerable with themselves, and that's where we need to go. We need to go to that place so that you can start remembering, "I love myself, and I want to feel good about my actions."
Sean Pyles: And that goes back to identifying your patterns. When you get in that mindset of negative self-talk, it takes effort, but you’ve got to snap yourself out of it.
Aja Evans: Exactly.
Sean Pyles: Well, long term, what do you think people should keep in mind as they work to build a happier life and improve the role that money plays in shaping that happiness?
Aja Evans: That this is a marathon, not a sprint. I think once you realize that you want to change your finances, you kind of want them changed immediately, and I understand, but it takes a lot of time. It takes time to grow wealth. It takes time to grow self-esteem and to feel better in general, and that is really difficult for people. They want to do it "the right way" and they want to do it quickly, and that's not it. Like your way is the best way, so give yourself time and grace to feel your feelings so that you can move on into a place of feeling better overall.
Sean Pyles: Yeah. I think it's important to remember as well that these habits, these patterns, also took quite a long time to develop. So it may take quite a long time to get out of them, too.
Aja Evans: Exactly. I tell my clients that exact thing all the time. I'm like, "You've been doing this for decades. Why do you think that this just changes in six months because you recognize that you're doing it? No way.”
Sean Pyles: All right. Well, Aja, thank you so much for talking with me. I really appreciate all of your insights.
Aja Evans: Absolutely. Thank you for having me. This was a pleasure.
Sara Rathner: Well, Sean, I don't know about you, but I feel like I just went through a year's worth of therapy in a matter of minutes, and I did not spend any money on copays, so thank you for that.
Sean Pyles: You are so welcome, and we like to be cost-efficient and time-efficient on the Smart Money podcast, but of course, actually doing the work that Aja and I talked about can take a long time. Sara, what are the main points that stuck with you from that conversation?
Sara Rathner: For me, it's really interesting that to learn how much of our money habits are shaped by things that we might not even remember, just these memories from very early childhood. And you, the adult, are still very much affected by this stuff to this day, and sometimes those memories and lessons are positive for your life, but sometimes they are causing you to make financial decisions that are not in your best interest, but you feel stuck in a pattern and you don't know why.
So, as hard as it can be to look back and dig deep into your past and dig up things that you don't even know are there, it really is going to go a long way in helping you kind of just learn how to set those boundaries and how to define your own financial values and stop living according to lessons that you were taught long before you were going to manage your own money in the first place.
Sean Pyles: Well, for me, as it relates to this whole money and happiness thing, one of my takeaways is that the way we interact with money is just an extension of the rest of our personality, which is partly a product of our upbringing.
For example, if you find that money is really difficult to talk about with friends, family, romantic partners, think about why that is. It could be the result of growing up in a family where difficult topics weren't discussed very much. But breaking from that pattern, having an open dialogue about money, can mean that you have more opportunities to express what you really want out of life, which can leave you happier and in a better place financially.
Sara Rathner: And isn't that what we all want, more happiness and a better place financially to boot?
Sean Pyles: It's the whole point of this podcast series.
Sara Rathner: Yeah, I love it. It'll improve your life in a lot of ways. So, hopefully you can reach a point of healing, either after this podcast or after years of therapy, whatever works.
Sean Pyles: Either, or — or both!
Sara Rathner: Yeah, or both. That's all we have for this episode. Do you have a money question of your own? Turn to the Nerds and call or text us your questions at 901-730-6373. That's 901-730-NERD. You can also email us at [email protected], and visit nerdwallet.com/podcast for more info on this episode, and remember to follow, rate and review us wherever you're getting this podcast.
Sean Pyles: Here is our brief disclaimer. We are not financial or investment advisors. This nerdy info is provided for general educational and entertainment purposes and may not apply to your specific circumstances.
This episode was produced by Tess Vigeland and myself. We had editing help from Sara Rathner. Kaely Monahan mixed our audio, and a big thank you to the folks on the NerdWallet copy desk for all their help.
Sara Rathner: And with that said, until next time, turn to the Nerds.