How to Break Generational Spending Habits

What happens in your body when you think about your spending habits? 

What happens in your body when you think about your partner's spending habits? 

What happens in your partner's body when they think about your spending habits?

Most people think that spending habits as based on behaviors that they need to control or influence their thinking. Behaviors are important parts of our psychological makeup, but the story doesn’t stop there. Our spending habits are influenced by many aspects of being human. 

This is why we need to continually learn about ourselves and how we operate. One of my favorite areas to focus on with clients who are trying to change generational spending habits is their bodies. 

If you're scratching your head, stick with me for a minute. We all live in our bodies. Our bodies are powerful messengers of both pleasure and discomfort. When we spend or don’t spend money, we are often trying to alter the way we feel in our bodies. 

Take a moment now to imagine the last time you spent money. 

Where were you? 

What were you buying? 

No what do you notice in your body?

 Is it a sense of ease, openness, warmth, and relaxation in your chest, shoulders, or neck?

 Perhaps it is a collapse of your shoulders, a tightness in your chest, or a constricting in your throat.

There are few money decisions that are completely neutral for us and our bodies. The term from health sciences is introception, which is the ability to be aware of what is happening inside of our bodies. The linked article from Harvard Medicine highlights the exciting advances in learning to work with our introceptive abilities. 

Making spending decisions would be easy if we lived in a vacuum and didn’t also have to navigate ourselves, our spouses/intimate partners, kids, parents, siblings, friends, workplace, spiritual communities, and, of course, the whole marketing industry. 

Take a breath. Regulate. Breathe. Becoming more self-reflective about your spending patterns is likely to evoke some distress signals from within, including even shame—one of the most uncomfortable emotional and physical feelings we experience as humans. 

Becoming more self-reflective and less reactive about your spending patterns will lead you to greater financial freedom. 

Rethinking Generational Spending Habits

It didn’t start with you! That is true for many things in life, including our personal relationship with money. 

In our individualistic and self-determined society where we are expected to take full responsibility for our lives, it can feel like our money problems are all our fault. This couldn’t be further from the truth as revealed by many different domains of research. 

This does not mean you don’t have a responsibility to work with your spending habits in a way that is healthy and effective for you and the people that you are connected to. 

Each generation takes on a certain reputation for relating to money in a particular way. These broad generalizations are helpful to some extent for understanding a generation and their experiences. Millennials are navigating mounting student loan debt, that many of their parents did not face. The silent generation had widely available pensions to help secure their retirements, and their parents raised them through the Great Depression, leaving many people with a scarcity mindset. At the same time, painting with this broad brush often misses the nuance and detail of how individuals respond to similar circumstances.

We are all currently living in an age of neuromarketing and digital advertising that leaves us exposed to opportunities to spend money 24/7. Before you think I am bemoaning our current economic reality, I am not. Each culture’s financial reality has both its strengths and weaknesses. No “golden” period or group of people has navigated spending perfectly. 

We humans have been navigating the reality of spending, meaning, and what is good for all of history. So let’s learn from the past and also remember that we are navigating a different financial reality in the present.

Money Lessons Learned from Previous Generations

Stop now and reflect on these questions.

What did your father learn (via direct lessons or through observation) about spending money in his childhood from his parents? What did your mother learn from hers? What about your step-parents?

Here are a few common lessons they may have learned. Do any of them sound familiar? (Please note what happens in your body as you consider them.

• Spending is fun and we don’t worry about the cost
• Spending is scary because I will be criticized for what I spent
• Spending is boring 
• Spending is morally bad because you are dishonoring God, Mother Earth, etc.
• Spending is morally good because you are helping grow the economy
• You can never get what you really want; you have to get things on the sale rack
• You should always buy the best so you look your best

Now take time to think about how that influenced what they wanted to show and teach you about money in direct and indirect ways.

Whether parents are conscious of it or not, they teach their kids a lot about the meaning and role of money in life. These internalized money rules are invisible to us, but they can leave us stuck in destructive and counterproductive spending habits that are inconsistent with our personal goals and values. 

Few if any of us grow up with two parents who give us all the same money messages; rather, it is a mix of money messages. For instance, one of your parents may have been a saver and the other a spender.

Many of us have made private bargains with ourselves that we will either be exactly like or the opposite of our parents including the way they related to money. Either of these decisions may pull us too far to either extreme. We will need to find a middle zone that brings balance to the way that we spend money. 

Improving our spending habits will take ongoing self-reflection to get clear on what needs to change and why it is important for us to change. 

6 Bad Money Habits To Be Aware Of

Let’s reframe bad money habits. We love to label things as good or bad, black or white. In our early moral development, that is very helpful. It gives us clear guidelines to live by before we can handle moral complexity. 

As maturing and mature adults, we need space to find and develop the gray space. Let’s use the phrase “it depends” when we label spending decisions as good or bad.

Six Common Money Habits That Get Labeled As Bad

1. Spending money without a budget
2. Spending money on addictions
3. Spending money pleasure before necessities (wants before needs)
4. Compulsively checking bank and credit card balances
5. Ignoring bills, tax liabilities, insurance premiums, etc. 
6. Using credit cards to purchase consumer goods

When we pass moral judgment about money habits as being bad, I think our intention is to help motivate people and ourselves into “right” behavior with money. However, what actually happens is that people feel shame for not following “the rules of money.” From this shamed state, they go into hiding about what they are doing, usually furthering the problem. 

To change this pattern, we can lean into and use the psychological skills of curiosity and empathy to explore the complexity of why we spend money the way we do. We can also be aware that we are evaluating others’ spending choices by our own money priorities, which may not be their priorities. 

We can also negatively self-evaluate when we go against our own rules about what is good or bad to do with money. 

As I write this, I hear the voice of Dave Ramsey citing the biblical scripture “The borrower is servant to the lender,” which evokes a deep sense of shame for me. The intention of citing this scripture is doubtlessly to motivate people to get out from a place of servitude to debt, yet the very framing can leave people feeling bad about themselves. 

I think there is a better way to talk about being in debt that maintains human dignity. Instead, I might say something like, “You are a valuable human who has some debt. You can find a way to get to the place you want to with this debt. It is okay to ask for help if you need it.”

This way of saying it doesn’t roll off the tongue easily, but when we feel connected to our self-worth and value, we can be empowered to make effective changes that feel positive to us. 

The Impact of Generational Financial Trauma

We can divide the impacts of generational financial trauma into three buckets; personal, relational, and financial. Financial trauma does not stay isolated to our financial life; it permeates many layers of our lives, much like a drop of food dye diffuses across a glass of water. 

Here are a few ways you may see generational financial trauma play out:

Personal Impacts

• Lowered financial self-efficacy 
• Financial anxiety and avoidance
• Financial shame  

Relational Impacts

• Mistrust of others financially, including intimate relationships
• Using others with or being controlled by money
• Relational loss and or distance  

Financial Impacts

• Trouble with earning, saving, spending, or investing
• Lowered net worth
• Failure to set and meet financial goals in alignment with your values  

How To Break The Cycle Of Bad Money Habits 

You’ve probably heard the old phrase “Curiosity killed the cat”. But when it comes to changing unhelpful financial behaviors, we can reframe that to “curiosity cured the cat”. Curiosity is a major psychological tool we can use to break the cycle of bad money habits. Curiosity starts us on a path of searching for solutions and better answers to the dilemmas we face in a nonjudgemental way. 

Educating Yourself

There are many views about what to do with money, and when encountering new ideas or ways of thinking about money, they can be exciting or scary at first. Over time, you will develop wisdom to discern what advice is helpful and moves you forward and what takes you further away from where you want to go. 

If you are reading this blog, you likely have a base knowledge of budgeting, investing, taxes, and insurance. It can certainly help to test your assumptions and consider other possibilities. I recently learned about flow-based budgeting and I am finding it to be particularly helpful in this season of life. 

Addressing Financial Trauma

For many of my clients, it is more than budgeting or knowing how investing works that will provide them the financial security they desire—it is about addressing financial trauma. 

Financial trauma is a constellation of experiences that overwhelms our psychological and physiological systems where we have not returned to a state of safety and security related to our finances. 

For some, financial trauma comes from growing up in a chaotic or rigid environment where money was either inconsistently available or was so tightly controlled that needs and wants reasonable to the family’s means were not met. 

Addressing financial trauma means being able to work with your thoughts, feelings, behaviors, sense of self, and relationship dynamics as they come up around money. Here’s how a few of these might be reframed in a more useful light.

• Thought – “Money corrupts people” becomes “money is a tool people use differently”
• Feelings – “Every time I look at my investment statement, I feel anxious” becomes “every time I look at my investment statement, I feel calm”
• Behavior – “I avoid asking for what I want financially” becomes “I am open to asking and collaborating to get what I want financially”
• Sense of Self – “I am terrible at money and will never get this right” becomes “I can learn more about how to manage my money”
• Relationship Dynamics – “I will take responsibility for our finances because my partner never will” becomes “we can create a way of navigating money together”  

Setting Up Financial Systems To Support You and Your Family

Navigating money would be easy if you were doing it in isolation, but you are likely are involved with an intimate partner, kids, parents, and other important people. 

You will need to develop a system to address:

1. The flow of money into and out of your life (also known as budgeting or cash flow)
2. A way of tracking and managing your investments for either accumulation or retirement support
3. Staying current with your taxes and insurance

When we are rebuilding our financial lives, we need to regularly review our personal financial systems. 

Does it still make sense to keep multiple credit cards, savings accounts, and investment accounts? Are there ways in which you can simplify your life now?

Breaking Generational Spending Habits For a Brighter Financial Future

Breaking generational spending habits is possible. Every week I watch couples and individuals bend the arch of their relationship with money to something far more healthy and in line with where they want to go. 

We all wish it were a quick and easy process, but it’s not. There are layers of conscious and unconscious experiences that need to be explored and worked with to restore the natural flexibility that we have as humans to solve our problems. At the deepest level, healing our financial trauma is about working with ourselves at the human level, beneath all the identities we have held throughout our lives. 

As we embrace an open and curious relationship with ourselves, loved ones, and money, we will find ourselves developing healthier ways of navigating life and money.