You may not realise it, but the longest relationship we have in our life is with money. Before we were born, our parents were thinking about it. How were they going to fund this little bundle of joy for the next 20 years or so?

When we reach the end of our days, and everyone is gathered at our funeral saying fond farewells, through the tears some will be wondering how much of your money they will get!

So, it should come as no surprise that the way we handle money as adults often comes from our early years. Those little money memories, that seem insignificant at the time, can have a big impact on how we deal with finances later in life. In other words, our money mindset will dictate our money behaviour and all the decisions we make.

Let’s start by exploring how those childhood money memories shape our adult money lives. I’ll share some personal stories and reflections along the way, giving you a front-row seat to the journey from piggy banks to credit cards.

Early money memories

What is your earliest memory of money?

For me, it was four-year-old Lynda who wanted something; the pink umbrella with all the frills, or the Barbie doll, and my parents coming back with a very firm “no”. Those moments stuck with me; as an only child I was supposed to be spoilt, supposed to get whatever I wanted, right?

By the time I was 12 I had figured out how to turn a “no” into a “yes”. Anything that was related to education got a “yes”. So, I became very clever at putting an education spin on everything. As I grew up I made up all sorts of stories about money that set the stage for the next 40 years. Those early experiences formed my money mindset and beliefs. I tossed out the fundamental money lessons that my parents taught me, which were:

1. Handle money with care: Money doesn’t grow on trees and should be used wisely.

2. Skip the splurges: Flashy stuff isn’t always necessary, be practical with your money.

3. Invest in what matters: Whether it’s a great education, experiences, or your retirement, save and invest your money in what is important to you.

The great money shift

As we move away from the influence of our parents and immediate family, we meet new friends and have new experiences. We either reinforce the learnings from those early days, or we start to test those beliefs and start to form our own, often flipping the total opposite to what we were taught.

For me, as I started to earn my own money, things took a very different turn. It was like being handed the keys to a candy store. Suddenly there was this newfound freedom, and credit cards started whispering sweet nothings in my ears. I was off on a spending spree, and I went from being careful to careless with my money.

My mindset went from “I can have whatever I want” to “I can have whatever I want whenever I want it, and credit lets me do it”.

When you are young and have no responsibilities in life, this is a common belief. It becomes an issue, however, when we do have responsibilities for a partner, family and putting a roof over our heads.

The Freddie Mercury moment of “I want it all, and I want it now!” can lead to maxed out credit cards, and the sinking feeling of debt. It’s all too commonplace.

Rediscovering beliefs

Eventually, there comes a moment of reckoning. For me, it was finding myself servicing $600,000 of debt on my own. I found myself looking back at those childhood money lessons and realising that my parents were onto something. It was a lightbulb moment when I saw that Mum and Dad were careful with money for a reason.

It hit me, they weren’t saying “no” because they didn’t want me to have a good life; they were saying “no” because they wanted me to have a great education so we could have family time together and fun holidays. They were spending their money according to their values. It was time to start looking at my own life, my own values and what was important to me. It was time to rewrite my own money story, based on what was important to me, not what I thought I should be projecting to the world.

I took a deep dive into my own spending behaviour and realised I was so far out of alignment with my values. I felt ashamed that I had been so reckless with my money. Not only did I have to change what I was doing on a day-to-day basis, I also had to make very tough decisions to deal with my financial position.

It felt like I was growing up all over again, but this time I was the one in charge of setting the rules and making the financial decisions, not four-year-old Lynda.

Money mindset calls the shots

Your money mindset (your beliefs) is like the director of a show, and your money actions are the actors on stage. What you believe about money drives how you behave with it, and the results you get.

It’s a bit like an equation: Beliefs drive behaviours; behaviours drive results. To make changes in your financial life, you’ve got to dig into your beliefs.

Here’s a real-life story that shows just how easy it is for your money mindset to tangle up your life.

Imagine someone who just can’t bring themselves to open their mail or look online at their money. Bills pile up and go unpaid. It’s not pretty. Why? Because deep down they believe they can’t handle their own money.

There’s a twist to this story. This belief didn’t come from nowhere, it came from her father who always managed the money, and a mum who (apparently) wasn’t capable of managing money either.

The belief of being hopeless with money was planted, and it became a self-fulfilling prophecy.

We can easily put systems and processes in place to make sure everything gets paid on time. Changing a money mindset takes a little longer; it’s about rewiring your brain and thinking differently.

Money isn’t just about the numbers; it’s about feelings too. It’s all wrapped up in emotions, memories and stories which create the rich tapestry of our financial life.

And guess who adds all that emotion to money? Take a look in the mirror, that face staring back at you, that’s who complicates money. When it comes to money 1+1 can equal anything you want it to. Money is a very versatile tool for expressing what you are all about.

You can use it to:

1. Show off success: The fancy car. It isn’t just to get around in, it’s a statement.

2. Spread the love: Tossing a few coins into a street musician’s hat shows appreciation and care.

3. Control and manipulate: Money can be used as a power play in relationships for better or worse.

Healthy money relationship

After looking at where our mindset comes from, how do we know when we have a healthy money relationship?

1. Money awareness: You don’t avoid money. You know what you owe and what you own. You keep tabs on what’s happening in your accounts. You know what is coming in and what’s going out. This doesn’t mean you always get it right, but if something unexpected happens you are able to deal with it, and you don’t bury your head in the sand.

2. Living within your means: You’re not spending like there is no tomorrow; you have a money plan and it's working for you. You enjoy saving for holidays and other larger purchases. Your debt levels are under control; you pay your bills and your credit card in full and on time. This doesn’t mean you are living a frugal lifestyle (if that isn’t your thing). You are having fun; making wise decisions with your money is enabling you to be relaxed and not stressed about money.

3. No money secrets: You are open and honest with yourself and your partner about your spending. No hidden stashes of shopping bags in the wardrobe or shed that you “have had for months”, but you really only bought yesterday. The only things hidden are birthday and Christmas gifts for your partner.

4. You have aligned your money mindset and your behaviours: You’ve taken a peek under the hood, and you understand why you do what you do with your money. You know where your money mindset has come from. You’ve challenged and reframed those that aren’t working for you, and you are focusing on what does work. If you get derailed, which happens to us all, you can pick yourself up and dust yourself off and take responsibility for getting back on track.

Money and happiness

Have you ever day-dreamed about just how fantastic life would be if you won Lotto and didn’t have a financial care in the world? For many, happiness is tied to financial milestones; we tell ourselves the “I’ll be happy when ...” story; when we earn more, we have the house, then the holiday home, then when the kids leave home, or when we are retired. Before we know it, we have reached all those milestones, and we still aren’t happy.

You start to realise that no matter how long and hard you’ve worked, most of the time what you have “right now” isn’t enough to feel that the money and happiness thing is working.

It’s called the “hedonic treadmill”. Basically, it means when something good happens – the raise, the new car – we are happy for a while then we get used to that level and we start wanting more. We upgrade, and the cycle begins all over again.

How do you get off the hedonic treadmill? Realising you are on it is a good start! It’s great to be ambitious and, yes, you do need to keep up with growing families and cost of living increases. But it’s also equally important to appreciate the here and now.

In addition to using your current financial situation as a yardstick for happiness, add to it your sense of well-being using non-financial measures. Here are a few to think about:

1. Cherishing relationships: Spending time with loved ones can light up your life like nothing else.

2. Embrace those special places: Exotic travel and places overseas are amazing, but there’s also places close to home that give you a sense of contentment and build precious memories.

3. Celebrate the milestones: We are so busy looking forward to the next milestone we often forget to celebrate and pat ourselves on the back for what we have achieved so far.

4. Feel grateful for something every day: Jot down one thing you’re grateful for each day, and you’ll be surprised how much good is already in your life.

In the end, our childhood money memories and beliefs play a massive role in our adult money mindset and the games we play with money. When we recognise and dig into those beliefs, we can make smarter money moves.

Money isn’t just about dollars and cents; it’s about the stories we tell ourselves. If you aren’t where you want to be with your money, start unravelling your money stories. It’s like discovering a hidden treasure within yourself.

If you need help with your journey of discovery, reach out to me. lynda@moneymentalist.com