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#2: Money Disorders + How Childhood Affects Your Money Story | NEW MONEY NEW PROBLEMS PODCAST

#2: Money Disorders + How Childhood Affects Your Money Story | NEW MONEY NEW PROBLEMS PODCAST

November 01, 2022
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Studies have shown that a significant portion of our thoughts about money are formed before we're 10 years old.

Join us as we talk about common money disorders that impact high income-earners on their journey to wealth creation!


Mind Over Money Book 

Money Disorder Assessment 

Childhood Financial Trauma Article (CNN)


Brenton: [00:00:00] All of us struggle with money at some point in our lives, but the reason why may have to do was something that happened before you even knew money existed. And in this episode, I'll tell you why.

Hello, this is Brenton Harrison of New Money, New Problems, and your host for the New Money New Problems podcast. We wanna welcome you to episode two, and I hope you joined us in our inaugural episode where we talked about the format of the show, what it's about, who it's for, and what you can expect moving forward.

In that episode, we covered that we are going to be sharing thematic content. Each episode will fall into a certain area of your finances that we think you will enjoy or benefit from on your journey to wealth. This episode is a what's in the news segment where we're gonna go through an article that I think is relevant to the people who listen and will listen to this show. We're gonna share this article on screen if you're joining us on YouTube, and if you're listening in podcast format, we will make sure we leave the links to each of the pieces of content we review in the show notes [00:01:00] so you can read it on your own time.

When I was planning out the content that we were gonna share in the first few episodes, I had to ask myself, What are some of the foundational money lessons that you want your viewers and listeners to know and enjoy and consume?

And I immediately thought of a concept called money disorders, and we'll get into the details of what a money disorder is. And in doing so, I want to share an article that came out a little earlier this year from CNN and that article is entitled How Early Traumas Can Affect Your Relationship with Money.

In this article by Jeanne Sahadi, they talk about how divorce, job loss, business failure, eviction, bankruptcy, poverty, all of these negative financial experiences that a person can go through can often have ties to experiences from traumatic instances in their childhood. I quote, "Few people get through life without experiencing a financially traumatic situation of some kind.

Whether as a child, watching [00:02:00] your parents go through it or experiencing it yourself as an adult, look no further than the pandemic to see countless recent cases of it. Such events can lead to undermining money, habits that can hurt your finances, your relationships, or both".

As they continue through the article, they talk about the negative impacts of growing up in a financially volatile household, especially if your family barely scraped by and how that can leave, and I quote, "a deep imprint and influence on how you handle money in adulthood no matter how financially successful you become".

In reading this article, it brought me back to one of my favorite books, if not my favorite book as it relates to the psychology behind how we spend. It was one that was given to me early in my career by the authors of the book, a father and son duo named Brad and Ted Klontz, and these are both PhD professionals, and they wrote a book

called Mind Over Money. And the premise of that book is that when we are children, we experience, either knowing [00:03:00] or unknowingly, a number of different things that relate in our mind to money and how money impacts relationships. So you observe how money impacted the relationship between your parents. You observe how money impacted the relationship between your parents and yourself, or even how

having money or the lack of money impacted your journey into adulthood, out of adolescence. And the problem with experiencing those things as a child is very rarely are we given the full story behind what we're going through, positively or negatively. But unfortunately, our brain is incapable of taking an incomplete story and processing it.

If your brain gets 80% of what's going on, it's going to work to complete the remaining 20% of that story, even if the context that it creates is inaccurate. And unfortunately it, and unfortunately, this completing of the story with often inaccurate context can lead to us [00:04:00] establishing what the authors call money disorders.

And a money disorder, and I quote, is a "persistent, predictable, rigid pattern of self-destructive financial behaviors that cause significant stress, anxiety, emotional distress, and impairment in major areas of one's life".

I can tell you that in reading about the various money disorders listed in the book and in experiencing the process of going through finances of families, individuals, and even small business owners, through the course of my career, all of us have things that we bring with us from childhood that inform the way we go about attaining wealth or can explain why we have such trouble in doing so.

So what I thought we would do was go through some of the excerpts from their book, and in this book they cover three different sections of money disorders.

There are money avoidance disorders . There are money worshiping disorders. And there are even relational money disorders.

So we're gonna cover one from each of these financial sections that I see frequently in the instances [00:05:00] of first generation high income earners who are trying to break some cycles and establish wealth for the first time.

We're gonna start with financial denial. Reading from the book, and I quote, "Financial denial is when we minimize our money problems or try our best to avoid thinking about them altogether rather than facing our financial reality. People in the throes of financial denial often won't look at their bank statements or credit card bills.

They won't negotiate for raises. They won't talk to their partners about money, and they avoid saving or accumulating wealth. Often financial denial can be rooted in confusion or lack of understanding about money. This confusion can result from any number of flashpoint experiences.

Receiving mixed messages about money, being told that money issues are none of our business or being shamed when we do something involving our finances, usually in childhood.

Another form of financial denial occurs when one partner pays little or no attention to family finances, while the other takes care of everything related [00:06:00] to money. In its extreme form, financial denial can take the form of dissociation.

For instance, a question even loosely related to money, even something as simple as what would you like for your birthday can trigger a moment of dissociating. It isn't that they don't have any ideas of what a fair salary would be.

It isn't that they don't know what kind of support they need, It's that their denial is so pronounced in the moment, when these people are forced to articulate those needs, they shut down ".

 I can tell you I come across financial denial almost every single week when I deal with couples who are earning more money than they thought they'd ever make before, but are still not as far ahead as they'd like to be financially.

And that can bring on a feeling of guilt and a stress response that causes them to not want to deal with some of the major issues that might be plagueing their finances. So rather than dealing with it, they avoid it. And the topic or the idea of confronting it can bring more stress.

This is an example of a money avoidance disorder.

Next, let's [00:07:00] go to a money worshiping disorder, and in this instance we're going to use the example of overspending.

And I quote, "overspenders are trying to achieve feelings of safety, comfort, affection, and wholeness by spending excessively on themselves and others. In their work with over spenders, the authors found that many reported financial flashpoints where giving or receiving a present seemed to transform a relationship.

Another common flashpoint is having experienced deprivation or a time in their childhood when not having a particular item made an emotional impact. They were teased or bullied for not having the right clothing, or they convinced themselves that if they'd only received the one possession they craved, they finally would've been happy.

Many overspending clients say then and there 'I decided that I would do whatever I had to get those things'. People who overspend on their children say, 'I resolve to never have my children feel the way that I did that day'. Often extreme confusion about money can result in [00:08:00] overspending".

Let's tackle both of these types of overspends. I do see people who overspend as a result of them finally quote unquote, "making it". They work so hard in their career and had so much delayed gratification as they attempted to be an attorney, a PhD, a physician. Where they went through residency, then they went through fellowship, then they were an attending, and once they get to a certain point, they don't want to talk about the idea of having to further delay that gratification.

They want to spend it all now. And I also come across over spenders who don't have any idea of what to do with the high income that they earn. Thus, they go and buy the car or the house, or the insert thing that they see everyone else who's making the same amount of money buying as well, or what they think they should be buying once they've reached a certain level of income.

And lastly, let's tackle a relational money disorder. Reminding you these relational money disorders can deal with not just how we relate to our spouse, but also our parents or our [00:09:00] children.

Let's read an excerpt from Financial infidelity.

" Financial infidelity is deliberately or surreptitiously keeping a major secret about one's spending or finances from one's partner. When we talk about financial infidelity, we mean keeping significant financial secrets, such as making purchases outside and agreed upon budget or lying about the cost of a big ticket item.

Often financial infidelity stems from the fact that the trust in the relationship is already absent for reasons that have nothing to do with money.

Ironically, the fact that money is the number one area of conflict in relationships is one reason why financial infidelity is alarmingly common.

 For many, the behavior stems from trust issues rooted in childhood.

In other cases, the behavior is a result of poor communication skills, a history of betrayal and adulthood, and in fact, 45% of those studied by the authors admitted being deceitful around spending because they wanted to avoid their partners anticipated anger, disapproval or lecturing.

Being [00:10:00] with a person is hard. Marriage is hard, and dealing with money and marriage is even more hard and financial infidelity is one of the ways that you can see poor communication manifest itself inside of a relationship.

These are just some of the different money disorders from which we can suffer. I encourage you to check out the link to the book in the show notes, read up on some of the other money disorders and see which one might speak to you.

And after the break, I'll tell you not only how we can confront these money disorders and make sure they're not an impediment to our wealth journey. I'll also tell you which one I suffer from.

Welcome back. Before the break, we read some excerpts of different money disorders that we might be suffering from in our journey to wealth, and I told you that one of the first things that we need to do is confront the money disorder that might be impacting us. Now, how do we do that? Well, one of the ways is you can take the quiz that the authors themselves Made for those who are trying to find out. We'll put the links to their assessment in the show notes.

But some of it just has to [00:11:00] do with you understanding what those money disorders are, and even without the quiz, you being honest with yourself or honest with your spouse and having a conversation either internally or externally about things that you know happened in your childhood that could color the way you deal with money right now.

This has been a crucial part of my journey with money, and as promised, I told you I would read a little from a financial behavior that I feel I suffer from and have to be aware of in terms of my financial triggers.

One of the money disorders is workaholism, and it's not just the idea that you work all the time, it's more so how you feel about the work you do and what it means for your self worth. And this is something that I definitely struggle with. I'll read you some of the segments of this section that speak to me.

" Workaholism can stem from the belief that more money will make you and your family happier. Prove your self worth, or make you a valuable, capable, lovable human being.

Pursuit of money, however, is only one aspect of workaholism [00:12:00] and often not the primary one. If you're a workaholic, the chances are that you feel better about yourself at work than you do in any other part of your life.

Workaholics often have an unconscious belief that they have to be productive in order to have value. So the more they work, the more valuable they feel.

They get adrenaline highs from work binges, and then they crash from exhaustion leading to feelings of irritability, low self-esteem, anxiety, and depression. To cope with these feelings.

They then fall into another cycle of excessive devotion to work. Much like any other addictive substance work becomes the only thing that can calm them and quiet their inner demons.

Now I can tell you I had a great childhood and my parents were excellent, but there were definitely parts of my experience in terms of my father and how his ability to work and provide allowed my family to do certain things, that I internalized. And in doing so, I definitely can have an unhealthy relationship with what my work means to my [00:13:00] family.

And in knowing my triggers, it allows me to be more whole and experience a state of financial wellness. All of these are topics that we're gonna talk about in future episodes and even get into more details in terms of my relationship with my parents and how that dictates my relationship with money as an adult.

But for now, I encourage you to go to these show notes, check out some of these resources that we've shared. And in the next episode, our first ask the Expert series, you're gonna hear directly from one of the authors of the book, Dr. Ted Klontz, who will give us even more details about our childhood experiences with money. See you then.