Psychology of Financial Planning

CHAPTER 5Money Beliefs

We all have beliefs about money. Have you ever wondered how two people could live within the same community, generation, socioeconomic group, and even family, and have dramatically different beliefs about money? Each of us spends, saves, and invests differently. Two members of the same family with the same income and upbringing could be different clients with different goals, needs, and behaviors. Many of these differences relate to factors such as culture and environment. Although we all have similar challenges related to our outdated brains, we each have a variety of life experiences that stay with us and impact our daily financial lives.

A young girl sat at the dinner table with her parents one evening. She had heard her friends talking about how much money their parents made and was curious about her own parents. So, she innocently asked her dad how much money he made. Without hesitation, her mother slapped her. Through teeth gritted in anger, the mother said, “We do not ask people how much money they make.” The girl was stunned and confused. Later, in her adult life, she understandably felt a great deal of anxiety whenever she talked about money. She avoided the topic of money whenever she could, which led to her being money‐avoidant. Because of her negative associations with money and wealth, she sabotaged her financial success. She ignored her bank statements, ran up debt from overspending, financially enabled others, and had trouble sticking to ...