The term financial dust bunnies probably won't be found in The Wall Street Journal or on Bloomberg but that doesn't mean they don't exist. What I'm referring to are entrenched thoughts and behaviors, which are hiding in the subconscious of our mind. Just like the dust bunnies underneath your refrigerator, these thoughts and behaviors can go undetected for years. Many times you know they are there, but you choose to ignore their existence. Your own personal dust bunnies never seem to be as noticeable or disgusting as someone else's. If you dare to open your mind to the possibility of their existence, you stand a good chance of reducing the bunny population in your mind. As for the little critters underneath refrigerators, ranges, and couches, they will continue to return with predictable regularity.
Let’s take a look at one place these thoughts and behaviors originate. Are you ready?
Really!? Sorry, we are going there, yes, your childhood.
Your financial mindset develops very early in life. Can you remember when you first learned about money? Many of your basic values and attitudes toward money develop when you are young and stay with you throughout your life.
Children observe how their parents interact with and manage money. Some parents educate their children about spending and saving, while others never talk about money. Some parents teach their children about money by allowing them to do chores for an allowance, while others freely give their children everything they want.
Whatever your financial scenario was while growing up, it influences your feelings and beliefs toward money and is the foundation for the financial mindset you have now. You may model your parents’ behavior or you may choose an opposite approach to your finances. Either way, you’ve developed attitudes toward money and biases, or patterns of thinking that you incorporate into your own financial life as an adult.
Some people acquire a healthy financial mindset and a solid foundation for how well they will handle their money as adults. For others, dysfunctional family finances create a shaky foundation and a more difficult road ahead for dealing with their finances in adulthood.
The problem with financial thoughts and behaviors that originate from childhood is they are incomplete. They are created with an immature mind that likely was missing key information. Family dynamics often make these conclusions even more troublesome by sheltering children from all the relevant facts and circumstances. In many families, discussing financial matters is taboo; therefore, children are left to draw their own misguided conclusions.
Few people escape childhood without a few financial dust particles lurking in the corners of their mind. Here are 3 ways to uncover and examine yours:
- Emphatic Statements - Listen to your self-talk for statements that sound like “I will never” or “I will always.” The next time you hear yourself use an absolute when discussing a financial matter, stop and see if you can remember the situation that brought you to that conclusion. Usually, there’s a story behind an emphatic statement. You may remember a person or situation that you saw when you were young and you told yourself “I will never” or “I will always.” Next, analyze the situation with a more mature mind to see if you would come to the same conclusion now. The next time you are compelled to use your standard emphatic statement, make sure the circumstances are aligned with the statement, not a partially informed conclusion made by a much younger you.
- Family Motto - Were there phases commonly used in your household? Things like “A penny saved is a penny earned” or “If you don’t work you don’t eat”? For some people, phases of this nature are comforting and familiar, but if applied incorrectly they can get you into trouble. My father always said “A deal is not a deal unless both parties are happy.” Although I really like this philosophy, if I applied it to every situation I might compromise too much. How about "a penny saved is a penny earned"? Is that always true? What if you sacrifice quality to save a few pennies? "If you don’t work you don’t eat" can be a bit harsh under many circumstances. When we become adults and our lives are filled with responsibilities and decisions, these household phrases can be shortcuts to decisions. Sometimes they are shortcuts to good decisions, and sometimes they are shortcuts to bad decisions. It is wise to keep an eye on these shortcuts in your own day-to-day financial life.
- Strong Emotions – The strongest emotion we feel is that of fear. Fear is the emotion that triggers our fight and flight responses. Anger and rage are thought to be masked fear. Fear triggers the amygdala in our brain, which can hijack all rational thought and is never good when making financial decisions. So what scares you financially? How realistic is this fear? Where did this notion originate? If you are feeling fearful or anxious, it is best to back away until that feeling diminishes.
Some people find these thoughts and exercises useful and some find them unrelated to financial matters all together. The latter of which is usually the guy that could benefit the most from giving this a little more thought. No matter where you fall on that continuum, please note there are tons of research that suggests the way we handle money says a lot about our childhood, family, and the community in which we grew up.
I personally think these kinds of questions are important because I believe those that understand where they came from are better at ending up where they want to be. I love quotes so I will leave you with one from the Dalai Lama.
“The simple act of reflecting, the simple act of pausing to consider to reason, can have an impact.” -- The Dalai Lama