A money story describes the personal relationship we each have with money. Understanding your unique money story can help you become more mindful of the decisions you make around money.
What is a money story?
A money story describes the personal relationship we have with money. It is usually made of experiences we’ve had related to money in childhood and early adulthood. Your money story is unique to you. Understanding your own money story is a way to become more mindful around money decisions you make in your life.
How does a money story get created?
Money stories are often based in experiences we had as children. Think about your earliest memories of money. What was the exact situation? How did you feel in the experience? How has that early experience informed decisions you make in adulthood? Here are some examples of real life money stories people have told me, with names and some details changed for privacy.
Example 1. “Lucy”
Lucy had been on her own financially since she graduated from high school. Growing up, Lucy’s single mom struggled to find work that could support them. When her mom got paid, all the money was spent on rent, food, and other stuff, leaving them broke until the next paycheck. When her mom lost her job, the electricity got shut off. Eventually they were evicted from their apartment and had to move.
Lucy learned there was never enough money, so there was no reason to save it. Instead, she learned to use any money she had for enjoyment now, rather than watching it disappear on bills. As a result, she spent any money she had immediately, often buying things on credit that she wanted but couldn’t afford.
As an adult this idea about money (scarcity) translated into her buying things she couldn’t afford, accruing significant debt, and constantly having trouble staying ahead of her bills. When she had an unanticipated expense, she had no money on hand to cover it. It was an ongoing cycle for her.
Example 2. “Samantha”
Samantha’s parents divorced when she was young. Her dad moved away, and her mom’s job in retail became the family’s main source of income. Her mom earned an hourly wage plus commissions, which came and went. As a result, she tried to live as frugally as possible just on the hourly wage which was the only reliable income source. She bought groceries once a week after clipping coupons and meal planning. She instructed her children to get jobs as soon as they could, like paper routes and babysitting. The money they earned paid for new school clothes, school fees and special activities with friends.
Samantha learned to be a frugal spender and a big saver. Throughout her career as a corporate executive, she saved a significant amount of her income, and had accumulated enough to retire early. And even though she disliked her job, she didn’t retire. She felt like she didn’t deserve to stop working at such a young age after her mom worked so hard for so many years. She felt like she would never have enough money because there were so many “what ifs” – what if she got sick and needed extra money for healthcare? what if she ran out of money and couldn’t get back into the workplace? what if, what if…
Example 3. “Mel”
Mel grew up in a home with immigrant parents. Mel was the first generation in his family to be born in the US. Mel’s parents worked any job they could find, and focused all their resources on building a stable life for themselves and educating their children. Mel’s parents bought a modest home and made sure Mel did his homework and worked hard.
Mel learned to put in his best effort and eventually it would be rewarded. Mel graduated from college and got a job working in the corporate world, while raising a family. Mel bought a modest home and had very modest tastes. Later in life, Mel’s company went public and he received a life-changing amount of money in company stock. Mel continued working, living his modest life, except for a new-to-him used car. Mel taught his children the same skills of working hard, spending less than you earn, and not expecting a handout. Today, Mel can retire any time he wants, in part because of the company stock but also in part because he still doesn’t need a lot of money to live. He’s pretty content with the way things are.
How does understanding my money story help me become more mindful with my finances?
When you are able to understand your money story, you can make more informed – and hopefully healthier – decisions.
If you can, talk to a trusted person about your personal money story, and ask them if they can give you any insights into how they see your money story impacting your financial decisions. Their answers might surprise and enlighten you.
Then, try to take action. When it comes time to making a money decision – such as asking for a raise or spending money on a purchase – stop for a minute. Reflect and remember your money story. Make a decision being fully mindful of that money story and how you may want your money story to become different.
Not all money stories are bad – and not all should be changed. What’s important is to mindfully consider whether your money story is working for you in life right now, with all the information you have as an adult.
And that’s where you can really become mindful about money.
Want to talk about your money story?
Your personal financial adviser can help you in your particular situation. Don’t have an adviser? Reach out.