Breaking news: there might finally be an answer to the age-old question: “Why am I like this?”
It turns out that nearly every financial behaviour you have has its roots in something else, and many of these influences are so minor that you’d never recognize them.
“We attempt to put money into a vacuum, instead of looking at how it really intersects with every area of our life,” says Ellyce Fulmore, a financial educator and author of Keeping Finance Personal: Ditch the “Shoulds” and the Shame and Rewrite Your Money Story. But in reality, all the pieces of our lives, experiences and identities “impact how we think about money, view money, spend money [and] the decisions that we make around money.”
Ellyce, who owns a financial literacy company and has over 530,000 followers on TikTok, likes to describe this as a “money story”, though it’s also been called a “money script”. Basically, our financial beliefs, behaviours and attitudes are formed in accordance with an almost infinite number of outside factors. These can range from culture, class and trauma to personality, birth order and the movies we watch (it turns out we’re a lot more impressionable than we’d like to think).
Sometimes, this cause-and-effect situation is obvious; for example, if you witness a friend get laid off, you might make the intentional decision to beef up your emergency fund. But often it’s instinctual.
Imagine you’re standing in the grocery store, trying to choose between two boxes of cereal. Ellyce says your brain will make a decision based on everything you’ve experienced in your life thus far.
Maybe when you were young, your parents taught you to only buy cereal on sale; maybe you know that one of the cereal manufacturers donates to a politician whose values you don’t support. All of this information is swirling around in your mind, she adds, and “You make those snap decisions without even necessarily consciously thinking about them.”
It’s not just nurture, either. Nature, too, can influence your habits.
For example, research has found there’s a correlation between menstrual cycle phases and how susceptible people are to impulsive spending. Mental health can also be a major determinant of how you handle money.
Ellyce says folks who struggle with executive function (the mental skills that help you plan and meet goals) may have trouble sticking to a budget, while those who are wired to seek dopamine (a neurotransmitter and hormone linked to feelings of pleasure) may be more likely to splurge. A person’s anxiety might lead them to book the first hotel they find while vacation planning, even if it’s more expensive than they’d like, because they have an underlying fear of not being able to get a room later.
The rub is that because these factors are so easy to overlook, they’re often difficult to address. It’s a lot simpler to overcome financial challenges when the solution is black and white.
Ellyce talks about how, when she was in college, she was always running late for class, so she ended up buying takeout and coffee most days. But if she’d asked a financial planner for advice on how to remedy her overspending, they’d likely say she should pack her lunch and make coffee at home.
That wasn’t the problem, though: “The issue for me was time management stemming from my undiagnosed ADHD, not the finances,” she says.
To give yourself the best shot at mitigating the effects of outside factors on your financial behaviours, you first need to take a step back and recognize what’s going on. Then you should carefully take that into account when designing a plan for your money.
“Block out the noise of what everyone else says you ‘should’ be doing with your money and focus on what’s going to make the most sense for where you’re at in your life,” Ellyce says.
This article was written by Julia Glum from Money and was legally licensed through the DiveMarketplace by Industry Dive. Please direct all licensing questions to legal@industrydive.com.
