How Your Childhood Shapes Your Financial Habits

By Adebisi Adeloye

Have you ever caught yourself acting just like your parents when it comes to money, such as hoarding spare pennies or impulsively splurging when you’re stressed? This is because you are following a “money script.” Our relationship with money isn’t something we’re born with. It’s crafted in our childhood, long before we even earn our first paycheck.

What Are Money Scripts? 

Psychologists call these internal narratives “money scripts.” As Keph Senett explains, they are “a narrative or set of beliefs that affect how you view money and behave with it.” These scripts dictate whether we become cautious savers, anxious avoiders, or compulsive spenders. A 2024 systematic review published in the journal Aging Medicine found that “adversity in childhood, such as abuse, neglect, or socioeconomic deprivation, is linked to an increased risk of developing chronic diseases and mental health disorders in later life.” The researchers concluded that “childhood experiences profoundly shape the health, mental well-being, cognitive functions, and social relationships of older individuals.”

So, what does this look like in real life? If you grew up in a home where money was a taboo topic, you might avoid checking your bank balance or discussing finances with your partner. If your parents were savers, you might naturally budget. But if you grew up in financial instability, you might have developed a “scarcity mindset.” This is when you may hoard cash under the mattress or refuse to invest, due to being driven by a fear that there will “never be enough”. A child raised around spontaneous spending may grow into an adult who relies on “retail therapy” to cope with stress, which is a behavior that often leads to a crushing amount of debt.

Impacts and Influences

The impact of financial habits in one’s childhood can also reach one's career paths. Senior financial planner Kim Baker shared a memory: “Without any prompting from my family, I remember being a kid who was always careful with money. Early on, I realized that it took a long time to build up enough to buy things I wanted.” She notes that this early prudence served her well in her financial planning career. Similarly, José Vélez recalls a childhood lesson from his mom: “You get 1 per month,” she’d say about a toy allowance. Due to this, it taught him self-control. Today, he credits that lesson for keeping him “disciplined in my spending and saving habits.” These examples prove that our daily financial decisions aren’t always random but are part of our upbringing.

Path to Change 

While our upbringing does shape our financial habits, it shouldn’t be a prison. The Aging Medicine study emphasizes that recognizing the influence of early life experiences “highlights the significance of programs and policies that prioritize the well-being of children.” For us, this means we can rewrite our script. Consider the following suggestions to get started:

• Keep a “money journal” for a week. Write down each purchase and why you did it. If you notice a pattern linked to your childhood, try to think of ways to break this cycle.

• Implement the 24-hour rule by waiting a full day before making any non-essential purchases. This can help to break impulsive cycles.

• Start having open conversations about money with your friends and family.

While your childhood sets up the script for your different financial habits, you’re still able to break them. By understanding where your financial fears and habits come from, you can make the choice to build a future that serves you. After all, a healthy relationship with money is a skill you can learn, and it’s never too late to start.