My name is Thao, I am a CERTIFIED FINANCIAL PLANNERTM professional. The topic I wanted to discuss today is about RELATIONSHIP, our relationship with money.
Like most of us, I had a love/hate relationship with money. I grew up in a middle-class family in Ho Chi Minh city, Vietnam. I was aware how different my life was compared to most of the other kids in my neighborhood. My parents did not use money to show off their status, but I knew the benefit of having money: access and power. At very young age, I already tried making money in my school by reselling school supplies, toys, and some of my kiddie inventions. I used some of my money to “employ” other classmates and made earnings from selling those things to others. I thought I was somewhat “powerful” until my homeroom teacher found out and shut it down. I got disciplined. I did not understand why I was discouraged from doing what I did, but I still love money. I thought to myself that when I grow up I will become a famous billionaire inventor, because that would give me power.
When I got a little older, I witnessed my family fell apart because of money. I hated money so badly. I blamed it for everything that happened to my love ones. My perspective changed 180 degrees: I decided that I just wanted enough to cover my means. I promised myself not be dragged into the
money race, because having less money would mean that I would have fewer problems to face. People would not try to put their hands in my pockets; hence they will be more “real” to be around.
Of course, both of those 2 stages were silly and unhealthy. If my family did not have money to give me access to better education, I would not have the drive, resources, and supports to be here in the US today. If my family did not go through the dip, I would not be able to truly value money as I do today; I would not stop blaming the external factors or myself.
Our childhood experiences, social and family influences can leave deep imprinted patterns on our beliefs, behavior, and relationships with money. Sometimes they get in the way of our financial success and happiness. If you already know your goals, knowing what drives your financial decisions can help you design the system around you to help you reach your money goals more easily.
Below are the four most common “Scripts” that people tell themselves about money. Which one is yours?
Avoidance:
_Thought pattern: You believe money is evil or that you don’t deserve money.
_Behavior pattern: Ignore your bank statements or avoid thinking about it. You think wealthy people are corrupted. You have trouble sticking to a budget. You don’t feel like you deserve a raise at work.
You may unconsciously give away money so you don’t have to deal with it or have as little as possible.
_ Outcome: Increased risk of overspending, lower-income (results from underselling yourself), missed payments, and maybe monetarily enabling.
_Actions to correct: Create a ritual around tracking your finances that you can easily follow that will feel less threatening. Set up automatic contributions to your saving/retirement account and auto bill pays, so even if you look away, the automated systems will still keep you on track. Set up periodic meetings with your financial advisor to review your plan, and let that person help you increase your financial knowledge. It will feel easier over time.
Money Vigilance
(This is my script now, due to the nature of my work)
_Thought pattern: Money is a private matter; it is extravagant to spend money on yourself.
_Behavior pattern: You can be very alert and watchful about your financial health. You are frugal, or at least believe saving is important. You can be anxious and secretive about your finances and uncomfortable discussing about money with family/friends. You are less likely to spend on credit.
_Outcome: You are already making good financial choices. You spend what you can afford. You may not have a good resource to go to for money questions or tips because you are too secretive. You can also be too anxious to enjoy the benefits and sense of security that money can provide.
_Actions to correct: Extra online research at reputable sources, or work with a trusted financial adviser. Compartmentalize your money and give each bucket a job to do. Allow yourself to relax and enjoy the left over. Remind yourself you are exactly where you need to be and on track to meet your financial goals.
Money Status:
_Thought pattern: Your net-worth = your self-worth. You deserve new things!
_Behavior pattern: You strive to make money as a way to achieve a higher status. You prioritize the outward display of wealth, not necessarily for the show to other people; rather it’s to convince yourself that you’re important and successful. You will take higher risks in order to make money quickly and allow you to buy more expensive items. You may not be honest about your spending and/or pretend to have more money than you do. Many people from this group have grown up in families with lower socioeconomic status, where they felt inferior financially and socially.
_Outcome: Increased risk of spending more than you can afford. You could become or stay financially dependent on others and may also have to hide your spending from your spouse. Some people in this group could also be very successful and wealthy but also have the potential to become workaholics.
_Actions to correct: Discuss spending honestly with a loved one or trusted advisor. Strive to be emotionally, physically, and financially healthy. Financial success without health and fulfilling relationships is worthless. Slow down, and recognize that you are not your net worth. Your net worth is a part of you, of course, but it need not define you.
Money Worship:
_Thought pattern: You believe money is freedom and the key to happiness. Money is never enough.
_Behavior pattern: You are more likely to spend compulsively, hoard possessions, and put work ahead of your family. You are drawn toward attaching your happiness to your income, net worth, and possessions. You may engage in compulsive spending and convince yourself that spending money on other people is a show of affection. This behavior is very similar to “Money Status” but money worship is more externalized while Status is more internal.
You may unconsciously give money to others even though you can’t afford it, and still be financially dependent on others.
_Outcome: Increased risk of overspending. You are more likely to end up with a lot of material possesions that you do not need and exhaust yourself with a lifelong belief that something better is just around the corner.
_Actions to correct: Set aside specific times throughout your week to connect with loved ones. Recognize that money will not solve all your problems.
Status and power are just temporary, just as “being broke” is not a permanent condition. What is more important to focus on in the long-term is our core values, the people who we love, and ourselves.
I would encourage you to embrace all your experiences with money, and most importantly, embrace YOURSELF and what you have been through. You are who you are today because of your experiences. Now that you know your relationship and behavior with money, you can start to “rewrite” your script, “unlearn,” or build new habits and systems to work around your negativities and realign with your goals. Your future will be determined by your present and the actions you take today.
Have you heard of the Law of Attraction? You cannot have a healthy relationship with money if you hate it or are addicted to it. Trash in trash out, positive in positive out. To me, a healthy and happy relationship with money means experiencing what nature intended: calmness and blissfulness. What future do you want for yourself?