How to get over family money problems in childhood causing issues as an adult

How our parents’ money issues affect us growing up

When we are children, sometimes we face experiences that we are not yet mature enough to handle. We don't have the power, skills or resources to resolve the issue and we may not have the perspective to understand that it's not our responsibility. This can be frightening, confusing, upsetting and frustrating. As children, we cope however we can with the issue and the feelings that come with it.

For example, we might:

• distract ourselves and others with jokes and games 

• hide and wait for it to be over

• become aggressive and try to force others to do what we want

• be extra nice and accommodating, so authorities will approve of us and protect us

• or become fixated on trying to anticipate every possible problem and control what we can control perfectly, so there are no nasty surprises

These are all understandable strategies for a child to take when faced with an adult-sized problem.

Unfortunately, once we have learned a coping strategy, it can become our automatic response for similar situations, even in adulthood. In essence, when we are faced with an issue that reminds us of being young, overwhelmed and helpless, it's like we become that child again without even realising it! We respond like we did when we were little, before our adult minds ever get a chance to come up with a better solution.

Because these childlike responses rarely work out well for us as adults, we can end up feeling even more powerless and upset and even less capable of dealing with that aspect of life. The most challenging part is that it all happens so quickly, we don't even recognise that this is what's happening!

When the issue in question involves money, this can cause a lot of trouble. We need a calm, adult mindset when dealing with questions of money, not an overwhelmed childlike one.

Examples

If you heard your parents fighting because one of them went out with friends when the other one thought they couldn’t afford it, you might try not to spend anything on yourself at all, so no one can criticise you for it. You could end up thrifty, but joyless.

Or if your dad lost his savings to a scammer, you might just spend everything you get, because deep down you don’t trust that saving could pay off. Of course, this leaves you unprepared for emergencies and at risk of problem debt.

Or if your aunts and uncles were richer than your mum and rubbed her nose in it, you might become driven by money and the status it can buy. You could become wealthy but end up burned out and doing work you hate.

Thankfully there is a way forward. 

The solution

If you can imagine yourself as you were when you learned this lesson about money, you can connect to the childlike part of yourself that keeps rushing to the rescue with a strategy that no longer works. Once you can do that, you can gently persuade them to let your adult self take over and try another way.

This takes compassion and an understanding that your younger self isn’t trying to mess things up. Your younger self isn’t stupid or selfish or bad. They’re just doing what they can with the skills and understanding you had when you were that age. A good start is to let them know you are grateful to them for trying to help and you know the did their best. This should help you to feel more calm and able to think more clearly.

Then you can tell your child self that because you are now a grown up, you have different, grown up ways to solve the issue. The child part of you doesn’t have to be responsible for trying to fix a problem they’re too young to handle any more. You’ve got this!

I can help you to learn better, more grown up strategies for managing your money. To find out more, book a free, no-strings call and let’s discuss what financial coaching can do for you!

Using money to make an impression

It's pretty normal to consider how other people will respond to our choices. We are social creatures and making a good impression is useful in many situations. There are times when it's very valuable to stand out in a crowd or fit in with a group. It can influence others to pay attention to us or support us when they might not otherwise do so. Money, especially our spending choices, can be a part of that.

Sometimes using money in this way can become overly important to us. This can even happen to people who wouldn’t normally think of themselves as “people pleasers”. When the good opinion of others is the main driver for our decisions, especially those involving money, we can end up living inauthentically or using money in ways that doesn't support our long term goals.

The most obvious example of this is when a person goes into debt buying expensive designer or luxury items to signal to others a wealth they don't actually possess. Overspending on gifts in order to appear generous or on socialising at trendy bars and clubs in order to seem like part of a fashionable in-crowd are other variations of this.

There are also more subtle ways this tendency can show up. For example, it can appear in reverse. Imagine someone whose social circle disapproves of, or is suspicious of, people with wealth and power. A member of this group might feel compelled to deny themselves anything that might be seen as a status symbol, even if they would enjoy it or it would make their life better or easier. Or they might not to make any overt moves to improve their career and earn more or manage their finances effectively, leaving them worse off and possibly stuck in unfulfilling work.

The interesting thing about this tendency is that it can occur even when there’s no active pressure from the people we’re trying to impress. The compulsion towards certain choices can come entirely from within. We form beliefs about what others want from us and anticipate getting a negative reaction if we don’t meet their expectations. The trouble is that all of this is a story we’re telling ourselves. It may or may not be true. Sometimes the people we are trying to please couldn’t care less what we do or may want something different from us than we’ve imagined. It’s worth looking for evidence of people’s true expectations and opinions. Sometimes it’s simplest just to ask!

And if a person or group really does expect you to make financial choices that don’t align with your values or goals, it’s worth considering whether it’s really worth going along with their wishes. Are you really getting what you want from this person or group’s approval?

Getting a balance between using money in ways that support your relationships and also your individual life goals is key to financial wellbeing.

If you are facing a dilemma around money in relationships, coaching can help.

No one is "bad with money"

One of the ideas I see in people who struggle to deal effectively with their finances is that they are “bad with money”. I hate this phrase. It leads to so much hurt, shame and frustration, and worst of all it’s tosh! There’s no such thing.

The idea that you can be “bad with money” or “good with money” comes from a simple assumption: that managing money is a single skill and you are either good at it or bad at it.

All-or-nothing.

Binary.

Simple.

Nonsense.

Financial success involves using a wide range of skills together, along with a measure of luck. If you tell yourself there is just one money skill and you don’t have it, you deny yourself the credit for all your existing strengths. This attitude will prevent you from realising what’s really going wrong in your money management and how to fix it. The vague undefined nature of being “bad with money” causes a sense of general helplessness that will always undermine your efforts to improve.

OK, so, what are some money skills?

• Self-knowledge - so you understand what you really want, what you really don’t want and what you are and are not prepared to do to get to your goals.

• Realistic goal setting - so you know where you want to go and whether that’s possible.

• Collecting and analysing data - e.g. what do my bank statements say about my current spending patterns? Where might those have come from?

• Planning - what, specifically, do you have to do to achieve your goals?

• Research and selecting reliable sources of information.

• Prioritising - making effective comparisons.

• Negotiating - whether that’s a raise at work, settling a complaint or a getting a better tariff for your bills.

• Assessing risk and being comfortable with uncertainty.

• Monitoring progress and adapting plans to changing circumstances.

• Reading comprehension, ability to identify key information in a lengthy document.

• Numeracy skills e.g. to compare value for money from different deals.

• Assertiveness - willingness to ask professionals awkward questions; willingness to say “no” to friends or family members when their plans don’t work with yours.

• Proactive problem-solving - spotting issues and resolving them quickly.

• Organisation to keep on top of your paperwork and avoid missing deadlines.

• Communication skills and empathy to navigate conflict around money with people close to you.

• Tenacity - for when things are unpleasant or challenging.

• Moderation and self-care - so you neither overspend your way into debt nor burn out trying to be over-frugal or hustling too hard.

This is not at all a comprehensive list, but hopefully it gives you a hint of the ways that managing money involves a range of skills in balance with each other and how you will use different skills at different times.

Once you see managing money this way, the idea of being '“bad with money” makes no sense at all. You might be missing some key skills, or not applying them to your finances, because you didn’t realise how they applied. I’m sure you have at least some of them though and once you start thinking of money management as the combination of the right skills at the right time, you can work out how you need to improve.

It all just becomes much more manageable. You can do this. One step and one skill at a time.

For more on all-or-nothing thinking and how it can mess with your finances check out this episode of my podcast Squanderlust.