Past Lessons Affect Tomorrow’s Future

By A. Andrew Raub

Have you ever butted heads with your spouse, a loved one, or a business partner when making financial decisions? I imagine that the answer is a resounding “yes!” Money decisions can often cause conflict in relationships because we each approach situations from a different perspective. It might seem like you make decisions on your own, but what you don’t see in the midst of conflict are the money ghosts lingering in the shadows.

“Money ghosts” are the invisible money lessons and experiences that we unknowingly carry around with us. For example, someone who grew up in an environment where everything had to be earned will make decisions about spending and investing money differently than someone who had everything handed to them. These two people are bound to encounter some source of conflict when making financial decisions together simply because of the money ghosts that they can’t see! That’s why it’s so important for us to uncover our own life experiences and lessons. In doing so, we’ll make better, intentional decisions, and we’ll better manage conflict.

My goal in this article is slightly different than normal. I’m not trying to offer you a solution to “fix” this issue of money ghosts, but rather I’m attempting to stir thought that will lead to an increased awareness in your life. There is no way to pinpoint a cause and effect relationship with money ghosts because there are so many other factors that also influence our decisions—personality and education just being two of them. So, this month’s newsletter is meant to be more general in subject to get you thinking about why you make the spending and investing decisions you do. I’ll also point out that “money ghosts” can refer to both positive and negative lessons about spending and investing. Although we tend to give more weight to negative lessons, it’s important to note that positive lessons about finances also make a difference!

So, my question to you is this: What money ghosts are you bringing into your present money decision making?

Generally two different types of money ghosts influence us—our family background and our personal experiences.

Family Background

As children, we tend to pick up our ideas about money from our parents. Think about the lessons you learned as a child, whether verbal or nonverbal. Did you see your parents save? Did they give to charity? Was money tight or abundant? Did your family take vacations? What financial hardships did your family encounter? Did they teach you the value of hard work?

Think about your answers to those questions, and then think about how your spouse or loved one might answer those same questions. Understanding the subconscious triggers that you carry into the financial decision-making process not only can help explain some of your own financial behaviors but also can help you understand others.

For example, children of the Great Depression have a very different background than most kids today. They fought very hard for things that many modern Americans take for granted. They learned to make something out of almost nothing. The culture of financial hardship they encountered as children shaped their view of money and how they would make financial decisions for the rest of their lives. I’m sure you’ve heard the stories of those who grew up in the Great Depression “turning cuffs” to salvage a worn shirt rather than buying a new one. This simple act of mending worn shirts is easily explained by the poverty of their childhood, but is a far cry from today’s Baby Boomer generation where most just purchase a new shirt rather than fix an old one.

Neither mending a worn shirt nor buying a new one is a better decision—just different. But each side will see his or her view as “right.” If you don’t understand the background of those with whom you make money decisions, you might end up encountering conflict based upon your different backgrounds.

Personal Experience

I’m sure you’ve heard the horror stories from family and friends: investment funds embezzled, money stolen, stocks are bad, stocks are good, and the list goes on. These things are confusing and scary to say the least! I’m sure you have a list of your own positive and negative experiences, too.

I know one man who years ago lost several million dollars chasing “can’t miss” promotions. As a result, today, he is reluctant to listen to any financial advice. Therefore, anyone with whom he makes money decisions needs to understand the powerful money ghosts that influence him. One circumstance years ago still paints the way he handles his finances.

Take a moment to think about the experiences that might be coloring your financial lenses. What is the greatest negative experience you’ve encountered dealing with money? What is your greatest financial fear? Can you think of any money ghosts that you’ve let invade your own investment strategy? Discovering these money ghosts now can help prevent fear from ruling your next money decision. Go back to the basics of Peace of Mind Investing: know where you are going and have a plan to get there. Then don’t let your money ghosts throw you off track.

Understanding the “whys” of your spouse’s, your children’s, or your own money decisions can help you avoid conflict and make better financial decisions. You may evaluate your own money ghosts and decide that there are a few you want to keep. But you might also find some that have influenced you in ways that you no longer want to be influenced. Don’t unknowingly let the hidden money ghosts of your background and past experiences drive your financial decisions. Open the door, turn on the lights, and clean out those closets where your money ghosts might be hiding. You will be glad you did (and so will your spouse!).

If you want to talk through some of your former money lessons, give me a call. I love a good ghost story!