There is one thing that trumps everything else when it comes to how you feel about money. It doesn’t matter how much you make. It doesn’t matter how much you’ve saved. It definitely doesn’t matter where interest rates are. The thing that most influences how you feel about money is how you grew up around money.
I’ve been thinking about this while listening to Ramit Sethi’s podcast. Ramit sits down with a couple in every episode where one or both partners feel anxious about money. The kicker is that in most situations, these people make a nice living. Each story is a little different, but it seems like they all have one thing in common. They faced financial hardships as a child.
A listener sent us a post on the Bogleheads forum, I’m 70 years old and I can’t spend my savings.
He says, “I can’t spend money without feelings of anxiety. It’s really painful.”
He then goes on to list a bunch of big-ticket purchases he makes. He even seems to feel good about them:
Daughter needed new car – $16,000, done earlier this year.
Furniture – last week my wife said I want to replace all our furniture with some really nice stuff. Will probably cost $15-$20,000 minimum. I said great, let’s do it.
But he doesn’t feel good about any of this. In fact, “none of this makes me happy,” he says. “Every expenditure is accompanied by moderate anxiety.”
I should point out that there is no financial reason for his anxiety. He has a $6 million portfolio and a $1 million house. Later in the post he gets to the root of the problem, saying:
I think I know where this comes from – my father (a big influence on me) was born in 1920. His father died in 1932 (think about it ….). My father was extremely frugal, and he never invested as single penny in the stock market. Growing up in the 1920/1930s he distrusted it 100% for the rest of his life.
You’re not rich if you’re afraid to spend your money. This person needs help, and clearly, it’s not with his finances.
But some things are hard to undo. How we grew up stays with us forever, for better and for worse.
I don’t care for the phrase “I was never driven by money.” Almost always, the person saying that is financially comfortable and would feel much differently if, say, I don’t know, they were struggling. Now, if you’ll allow me to be a hypocrite, I can honestly say that I wasn’t motivated by money because if I were, I would have done things way differently. I would have taken things more seriously. I would have prioritized summer internships. I would have planned for the future. I didn’t do anything of the sort.
My childhood was comfortable. I had everything I needed. Maybe not everything I wanted, but I was just fine.
I don’t remember money being a major topic of conversation growing up. I knew my dad worked hard to provide for his kids and for his parents, who relied on him to make ends meet. So when he and my mother got divorced, I’m sure he felt an awful lot of financial pressure. Being a father now, I can understand what he was feeling in a way that I couldn’t as a child. Nor was I expected to, to be clear. He never complained about how hard he was working. He just did what he had to do.
My father made a nice living. My mother, on the other hand, whose house I grew up in, didn’t. Money wasn’t a daily issue. Far from it. But there are a few experiences growing up that stick with me all these years later.
One time I was at the diner, and my mother told me I couldn’t order something from the menu because money was tight. I don’t remember how old I was, but I remember exactly how I felt. I was angry. I was ashamed. I feel bad for having those feelings, even though I don’t fault myself for having felt them. I was a child. It was confusing.
You would think that would have driven me to say, “I’m never going to be in the position of not being able to order what I want.” For whatever reason, it didn’t. That had a massive emotional impact on me, but not a financial one.
Why didn’t that light a fire under me? I really don’t know. I guess, now that I think about it, there’s a huge difference between not being able to order something off the menu and not being able to afford going out to dinner. I never had to wonder where my next meal was coming from. My parents were never ruined by a stock market crash or a real estate bust.
Now that I’m older and have a family, I’m absolutely driven by money. Pretending otherwise would be disingenuous. And to say that I was never driven by money, again, is something I can say because I never truly had to worry about it.
I’m financially fortunate, but more than that, I’m just grateful that I don’t feel guilty about spending money. Listening to Ramit’s podcast, you can’t help but feel sorry for these people. Worrying about money when you have it is a curse. A first-world curse, to be clear, but a curse all the same.
And I understand why these people have the relationship with money that they do. You can’t undo the experiences that formed you.