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.Â Also, since I didnâ€™t grow up with much, I didnâ€™t have a habit of spending or being used to getting the latest â€˜things.â€™Â I appreciated what I had, and I still donâ€™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.Â 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:Â 1) patience; 2) attentiveness to detail; and 3) immunity from shopping addictions.Â 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.Â Â From an early age I remember my folks incessantly encouraging me to be self-reliant and financially independent.Â They often reminded me that it was important to work hard, save for the future, and eschew debt whenever possible.Â Â 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.Â 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.Â 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.Â 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.Â 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.Â 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.