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How Upbringing Can Shape Our Relationships with Money

By Keph Senett

PUBLISHED July 14, 2023 • 4 min read

Being able to make money-related decisions is just a part of being an adult, but many Canadians don’t have personal finance education. So how are they making financial decisions? Researchers suggest we may be making decisions based on what we learned in childhood, informed by a variety of factors, including socioeconomic status, culture, childhood experiences, and the attitudes and beliefs of the adults around you.

How we interact with money, known as a “money script,” can be emotionally charged, clouding our ability to make good financial decisions. However, when we take the time to examine our relationship with money, we can take steps toward improving our approach toward personal finance.

Understanding money scripts

When it comes to financial planning, it’s common to think about where one needs to go moving forward, but it’s equally as important to consider where you came from. That’s because you have an existing relationship with money or a money script.

Originally coined by researchers Ted and Brad Klontz, a money script is essentially a narrative or set of beliefs that affect how you view money and behave with it.* A money script may play a part in habits like overspending, hoarding money, showy spending, or workaholism.

How to help ensure your relationship with money is healthy

Your money scripts are just that — scripts. Just like any other narrative, they can be adjusted and reframed healthily.

The Klontzes identified four major scripts

  • Money avoiders feel stress and anxiety about money, often questioning whether they deserve it. They often react with negative behaviours like ignoring bills or avoiding banking altogether.

  • Money worshippers see money as the key to happiness and place it in a top spot on their priority list. This makes them vulnerable to feelings of inadequacy and workaholism.

  • The money status script is related to money worship in that a person conflates their self-worth with their net worth. This can lead to showy spending and needing the most expensive goods and experiences.

  • Those who are money vigilant may have generally positive financial habits like saving and investing. If this mindset becomes extreme it can lead to detrimental behaviours like refusing to spend, even on useful or necessary items.

You might see yourself in one or more of these categories. The idea is to gain insight into your money behaviours so you can challenge your assumptions and make better decisions. You can do this on your own or with help from a financial professional.

Identifying your relationship with money

Reflecting on the past may be useful to understand your current relationship with money. Here are some things to consider:

  • Socioeconomic status. While your socioeconomic status does not determine your money script or how you manage your finances, it may be useful to consider how it might have affected you. For example, you may have known someone who was young during the Depression and still stashed resources “just in case.” For them, their socioeconomic circumstance likely informed their money script.

  • Family values and beliefs. As a young person, you learn values and beliefs from the adults around you, including how you feel about money. If, for example, the people in your family engaged in “retail therapy” and expressed that spending money was a way to find happiness, you might carry that behaviour into adulthood.

  • Family financial habits. Just as adults shape personal relationships, work ethic, and other ways of behaving, they are some of the first to teach kids about money. Consider whether yours was a family of spenders or savers and whether financial literacy was prioritized for you as a young person.

  • Communication about money. A person’s ideas about money can be shaped by how money is discussed (or not) in their family. Someone who grew up in a household where money was the subject of conflict might feel differently from someone for whom money was infrequently an issue.

Whether you’re hoping to save more for a house or retirement, learn how to invest, or have a different financial goal altogether, understanding how your upbringing may impact your ideas about money can help you build positive financial habits.

*Klontz, B., Britt, S. L., Mentzer, J., & Klontz, T. (2011). Money Beliefs and Financial Behaviors: Development of the Klontz Money Script Inventory. Journal of Financial Therapy, 2 (1) 1. https://doi.org/10.4148/jft.v2i1.451

This article is intended as general information only and is not to be relied upon as constituting legal, financial or other professional advice. A professional advisor should be consulted regarding your specific situation. Information presented is believed to be factual and up-to-date but we do not guarantee its accuracy and it should not be regarded as a complete analysis of the subjects discussed. All expressions of opinion reflect the judgment of the authors as of the date of publication and are subject to change. No endorsement of any third parties or their advice, opinions, information, products or services is expressly given or implied by Royal Bank of Canada or any of its affiliates.

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Managing Money