Are Our Spending Habits a Product of Biology or Environment?

What exactly is it that shapes our attitudes about money?

When it comes to living within our means, why is it that some folks have no trouble exercising self-control and sticking to budgets while others fall victim to emotion and take advantage of every last dollar of credit available to them with no regard to the long-term financial impacts or how they will ever pay it back?

Last week I wrote a post outlining ten key characteristics of debt-free people.

One of my readers, Kris from Everyday Tips, had this to say regarding that article:

“For me, I think being debt-free has a lot to do with how I was raised. I saw what debt and spending could do, and I knew I never, ever wanted to live that way.   Also, since I didn’t grow up with much, I didn’t have a habit of spending or being used to getting the latest ‘things.’   I appreciated what I had, and I still don’t have the desire to spend on something unless it is something I really need.”

After reading her comment it dawned on me that, although I didn’t mean to at the time, my article sort of implied that the way we handle our personal finances – and our attitudes about money, in general – is hard-wired in our brains from the moment we are born.

Yikes.   If true, wouldn’t it be discouraging if our spending habits and aversion to bad debt was almost, well, preordained?

Biology or Environment?

So what is it that ultimately determines our attitudes, not only about how we spend money, but how we manage our personal finances in general; biology or environment?

When I looked back at my list of ten characteristics of debt-free people, I could only identify three traits that were more likely than not to be hard-wired biological characteristics:   1) patience; 2) attentiveness to detail; and 3) immunity from shopping addictions.   All of the others seemed to be more susceptible to influence by one’s environment.

Making an interesting case for environment, a recent study conducted for Charles Schwab suggests that parents of kids who did household chores view their children as being more financially responsible than those who did fewer or no chores.

I know much of my personal finance philosophy and attitude about money came from my family.     From an early age I remember my folks incessantly encouraging me to be self-reliant and financially independent.   They often reminded me that it was important to work hard, save for the future, and eschew debt whenever possible.     I also remember my cousin, Kevin – who happens to be a very successful CPA – continually hammering home to me the message that debt accrued in the present limits choices in the future.

Of course, family influence can also work in ways that encourage reckless spending and or a general neglect of one’s general personal finances too.

There are other factors that can have a big effect on how one spends money.   For example, whether or not you grew up in good or bad economic times is a powerful motivator.

It is no big secret that generational savings rates generally are influenced by the health of the economy.   Historical personal savings rate data verifies that each generation shows no proclivity to save money until it has undergone a significant economic downturn such as a severe recession or a depression.

Thankfully, or perhaps not, I think most psychologists agree that while our neuron biology may play a small role regarding our attitudes about money, for the most part they are predominantly learned behaviors.   Obviously, Kris’s comment and my life experience anecdotally bares that out.

Good News and Bad News

Okay, Len, I’ve got a dentist appointment.   Where the heck are you going with this darn post?

If your past spending habits have now got you drowning in debt, I’ve got some good news and bad news for you.

The bad news is that, unless your finances have been decimated by a catastrophic medical condition or some other unforeseen stroke of terrible luck, you can’t blame your poor financial situation on your neuron biology.   Sorry.

The good news is there is no need to despair because your past behavior that led to such adverse circumstances can be shaped and changed for the better.

You’ve just got to be willing to look inward and take that first step.


  1. 1

    Tom from Michigan says

    Environment played a big role regarding my money habits. When I was 14, my father ended up losing his job. We were pretty well off too at the time. I was amazed when we were never asked to cut back at all. We just kept on going like nothing ever happened. It took my father over a year to finally get a new job. Ironically, that’s when we were finally forced to cut back. My parents had never saved a dime in the good times and after my father lost his job they had run up so much credit card debt they were barely keeping their heads above water! Once dad got hired again they scrambled to pay back all the credit card debt they ran up. I vowed never to make the same mistake.

  2. 2

    Spedie says

    I’ve always been a saver, since the very start of my money earning capability (mowing lawns and paper route).

    My dad was the same way. My mom was not, but she always ran a budget, and stuck to it.

    We were always broke and living at or below the poverty level when I was a kid – perhaps that had something to do with my habits.

  3. 3

    Becky says

    I keep a very close tab on my money and budget every penny and it is definitely due to how I grew up. My parents never seemed to have enough money. I remember them fighting a lot about where the money was going and how it was being spent and it really bothered me.

  4. 4


    I raised my two kids the same exact way. They had the same allowance, curfew, chores, college funds, driving requirements, etc. But, they have very different attitudes towards money.

    I think the reason for this is because my older son watched us struggle more when we were just starting out. My younger daughter never remembers living in the apartment, having one car or walking places. She only knows living in the house, going on more vacations and being chauferred around. So, she seems to act more entitled.

  5. 5


    I have a great example of how environment played out with my spending/saving habits:
    My parents divorced when I was 4. Back in the 70’s one parent had the right to move the child all the way across the US. And that’s just what my mother did. My mom remarried a very frugal man, my stepdad. He grew up during the depression and had a very stringent way of living. I learned to save my money and work hard from him.

    However, when I would visit my dad once a year, it was a completely opposite lifestyle. Fly by the seat of your pants, wads of cash stuffed in his pockets, yet all too often his bank account was overdrawn. I loved visiting my dad because of the excitement (he also lived in NYC – which added to that excitement). BUT, I learned some of my behavior from him: last minute decisions without the worry of money = bad combination later in life!

    So, environment definitely plays a part in how one views their own personal finances. BTW, my dad had a few lucky breaks and he’s looking okay for retirement. (But again, what does that teach me or his other kids!?.)

  6. 6

    Jenna says

    Definitely some food for thought. Seems like people can gain insight from their observations about money from growing up but might have some behavior issues that stem from that along with misinformation or beliefs. Tough balancing act.

  7. 7

    Samuel says

    I have three grown kids. Two have their act together but my oldest is constantly broke even though he has a good job. So it ain’t all about environment.

  8. 10


    @everyone: Thanks for sharing your thoughts and personal experiences! It really is an interesting question. Before reading your comments, I figured that environment probably was responsible for 75 percent of a person’s money attitudes, but after reading Bret’s and Samuel’s experiences I’m not sure at all any more.

    How do you explain the case of siblings growing up in (supposedly) the same environment yet with completely different attitudes about money? That seems to suggest environment plays ZERO role on some people.

    It is a fascinating question to be sure.

  9. 11


    I think it’s mostly environment, but then I think about my dad and his brother whose only 1 year younger than him. My dad was Mister Career, spent his entire work life at one company. He never considered owning his own business.

    My uncle started a restaurant in 1981 during a recession. I think the interest on his loan was 21%. It was great timing as the economy rebounded strongly soon after. My uncle was a successful entrepreneur for over 30 years.

    I think the difference has to do with risk tolerance and ability to work for someone else – or not.

  10. 13


    I think it also may also depend on the TYPE of environment. For instance, we struggled when I was growing up. Fortunately, I took the path of ‘no way am I going to live like this when I grow up’ as opposed to others I know that just repeated the cycle. All 3 of us kids in our family are very financially responsible as adults.

    Fast forward to my own family. I have 3 kids, all close in age. Child 1 does a decent job managing money, child 2 refuses to spend on anything, and child 3 will be bankrupt before he is 20 if he secretly gets his hands on any credit while he is in middle/high school. None of my kids really know struggle like I did. They have the clothes they need, all the food they could want, and can play travel sports. We do not buy them whatever they want by any means, but they have never seen us standing at the mailbox waiting for the next paycheck either. We all know how the Depression affected many people, and although I was not raised during the depression, I knew what poor felt like. Maybe if my kids felt that real struggle, it would have shaped their spending habits different. Instead, they are comfortable, so money doesn’t have the same meaning as it did to me at their age. Don’t get me wrong, my kids do chores, mow the lawn, shovel snow, pay for their own ‘entertaiment’ and such. However, if I had an extra 10 dollars when I was a kid, I bought a pair of pants, whereas my 16 year old may go to the movies instead.

    Sorry for the long ramble, I just find it such an interesting topic. Also, thanks for basing this post on my comment. Have a great day!

  11. 14

    Jenna says

    @Len / The sibling question is an interesting one. My brother isn’t nearly as frugal with his money as I am and he doesn’t take good care of his stuff. But I equate that to the fact that he’s a male in college versus an out of school woman…

  12. 15


    I agree with the consensus of others that environment plays a bigger role: more nurture than nature. But I think we learn more from observing than being lectured to. My mom raised three kids alone, walking a mile each way to work at a 5 and 10 store. I learned a work ethic by watching her life. She seldom talked the talk but she certainly walked the walk.
    This being said, our kids are watching us. Hmmm.

  13. 16


    @Jennifer: One think I am not is risk tolerant. I am very conservative by nature, which essentially keeps me from ever risking the capital necessary to start a business that would have the potential to make me filthy rich. Sometimes I wish I was more risk tolerant.
    @Everyday: You’re welcome, Kris! I have two kids that early indications suggest will be polar opposites in how they handle money. My daughter saves and keeps careful track of her money. My son, spends it as fast as he gets it and even leaves money laying around! Thanks for sharing your story – and inspiring the post too.
    @Jenna: I remember being a college-age male. Those were the days!
    @Joe: Great point. I hope my behaviors with money rub off on my son. Soon.

  14. 17

    Megan says

    As the wife, daughter, and in law of persons with Attention Deficit Disorder, I have to disagree with your conclusion. Executive function is the name for the functions of the brain that coordinate planning, scheduling, and allow you to foresee consequences. A number of brain injuries and disorders lead directly to an inability to control money, including ADHD, Traumatic Brain Injury, and mood disorders. While I like financial blogs (and as my Household CFO) I am often frustrated that if you “just” do x, things will straighten out. However, the current estimate for adults in the population with ADHD is 10%, which means that 10% of the adult population have difficulty with money management. (However, I also recognize that the likelihood of a ADD adult reading a blog like this is low, due to lack of focus). Thanks for you blog! I enjoy it!

    • 19

      Cassandra says

      Thank you for bringing this up. I am bipolar and have watched my similarly coded parents spend their way into the ground multiple times because they just can’t hack budgeting. As a result I am terrified to spend money – unless I’m manic! :) It’s a tricky dance to manage.

  15. 20


    Do you think that maybe the biology is the foundation for our decisions, but that our environment governs the future direction?

    It seems like many people who’ve had bad upbringings try to right themselves, but then end up failing/quitting/etc.

  16. 22


    @Megan: Thanks for your comments. I completely agree that folks with ADD are at a tremendous disadvantage with respect to managing money – but it can be overcome. I know people with ADD who have been able to work out their issues – although it takes lots of effort. I sent you an email to discuss a bit more…
    @FinEngr: I don’t know. While I think biology plays a role, I think adverse behaviors resulting from how our brains are wired (at least with respect to money attitudes) can be conquered. That’s not to say it can ALWAYS be conquered – I can see Megan’s example of brain injuries, for example, being a case that might be just too much too overcome.
    @Barb: Oh, I bet you are, Barb! I bet you are! :-)


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