top of page
MM Logo Update Outline.png

Learn Your Money History


"Without understanding our past relationship with money, we cannot understand our current relationship with it."

-Ted Klontz


I'm sitting at my desk in my home office, scribbling onto a piece of paper. I feel sad. I'm exploring parts of my life that I haven't thought about for a LONG time.

I'm taking a financial psychology course, and the professor thinks it's important for us to learn about our money beliefs and money history. If we don't know about our own story, the idea is, how can we help clients understand theirs? It makes perfect sense when I think about it like that.

However, I think I'm fine. I don't need to do this stuff.

Then, I start doing the exercises. It quickly becomes uncomfortable. I'm remembering parts of my life I forgot existed. Things are starting to click. It now makes perfect sense why I'm taking Kung Fu classes; I was embarrassed as a kid in karate class and never got to learn any martial arts. I know why I didn't have a lot of friends growing up; because I was embarrassed to invite them to my apartment because everyone else lived in a house.

I get it now. Without understanding my money history, I would be ill-equipped to help anyone else with theirs.

No matter where you are in terms of your finances, exploring your history with money can give you insight, clarity, and peace of mind - even if it's uncomfortable at first.

money history drives behavior

Financial Behaviors Come From Scripts

All of our financial behaviors; good, bad, or otherwise, are a result of our money scripts. If you feel very uncomfortable when your checking account drops below $1,000, it's because of a money script. If you spend money faster than you can get it, it's because of a money script. If you only buy name-brands, it's because of a money script. If you get anxious when others start talking about money, it's because of a money script. If you get nervous at the thought of spending more money than you made in a particular week, it's because of a money script.

And on and on.

Money scripts are rules that we subconsciously follow about money. They aren't necessarily good or bad. We don't always know we're following them, and often we don't know they exist.

Your money script, or money rule, that you follow might be, "it's not safe to have less than $1,000 handy," "I don't deserve money when others have so little," "I deserve the best," "it's not polite to talk about money," or "money should be saved and not spent."

These scripts were written for us based on what we've experienced in the past.

Scripts Come From Money History

Money scripts come from our past. They tend to be passed down from generation to generation and are based on lessons we learned and form observing the world around us.

We learn by experiencing. When we have painful experiences, we don't want to repeat them. Our subconscious brains create rules about what happened that lead to the painful experience. It's not always right about the cause and effect. Nonetheless, it creates a rule for us. We can sometimes end up in a situation where we follow a bad rule because deep in our minds, we think we are protecting ourselves.

Similarly, when we have joyful experiences, we want to do what we can to repeat whatever caused the joy. So our brain writes a script to follow to bring us more joy. Again, it's not always right, but we end up with rules that we subconsciously follow because we think will bring us happiness.

Highly emotional experiences around money are called financial flashpoints, and they can cause a dramatic shift in our thinking around money. You can think of these as the money equivalent of trauma. If you were mugged, for example, outside a bar in a downtown area, you might be afraid of being in downtown areas, near bars, or out at night going forward. That one event could be enough to change your future behavior. Similarly, if you were publicly made fun of for wearing the wrong kind of clothes in Junior High, you might have changed your opinion about what types of clothes you were going to wear and how much was appropriate to spend on clothing going forward.

Most of these lessons are passed down to us by parental figures.

Financial Beliefs Are Passed Down

Money beliefs are passed down from generation to generation. The lessons you learned from your parents (or parental figures) we taught to them by their parents. The core lessons learned remain very similar, even if the exact lessons change from generation to generation.

For example, in the book Facilitating Financial Health, the authors talk about a couple who grew up in the Great Depression-era and lost everything overnight because the banks failed. They lost everything. The lesson from that was, "you can't trust banks."

Even though the context changed - e.g., we put in insurance to protect your money if the bank fails - the rule stayed. That couple's children learned those lessons, but not entirely. They trusted banks a little bit, in that they didn't keep their money under their mattress anymore. Instead, they put money in banks, but only safe accounts and they spread their money around to different banks, just in case one of them failed.

By the time it got to the third generation, it was okay to put money in banks, and even invest some of that money outside of bank CDs and savings accounts. However, money still had to be kept at different brokerage firms, and money could only be invested in safe short term bonds.

It's not always the case that lessons are spread word-for-word, but there are kernels of lessons that are passed down to us.

money beliefs are passed down

Two Ways We Learn

When we think about the actual lessons we learn, there are a couple of ways in which we learn them. It would be nice if we formally learned about personal finance, but this doesn't happen. Instead, we learn lessons from the world around us. We pick up lessons either in a direct way or indirectly by what we observe.

Direct Learning: Direct lessons are those that we learn from someone teaching us. This could be your parents, grandparents, a teacher, or anyone else sitting you down and telling you how to use a checking account, how taxes work, what investing is, how to save and spend money, or any other topic related to money. This is an easy case of a straightforward lesson, but unfortunately, it's not very common.

Another way of direct learning is from hearing lessons come straight from the mouths of those from whom we're learning. This could be something like, "We don't talk about money in this family," "You're never going to amount to anything because the odds are stacked against you," or "Find a wealthy man to take care of you."

The actual lessons will vary from person to person and family to family, but they are the types of lessons that you heard directly from someone else.

direct learning from lessons

Indirect Learning: In contrast, indirect learning is when we learn lessons from observing what happens. Nobody sits us down and tells us the lesson, but we "figure it out" based on how our parents interact with each other, how we were treated when we did or didn't do something, or how our grandparents interacted with our parents.

If you follow a money script that says you should never talk about money, it could have come directly from someone telling you to your face that it's not polite to talk about money. On the other hand, you could have picked that up when you saw your mother slapping your brother in the face for asking how much money your dad makes (real example). We piece together bits of information based on what we see and hear.

indirect learning from observations

Learn Your History

The best way to get a good handle on our current relationship with money is to explore our past. Think about the memories of money you had growing up. How did those events and lessons manifest themselves into your current beliefs and behaviors about money? Interview your family members. Since money is often a taboo, money stories have a tendency to remain untold. Ask about them. How did your parents view money when they were growing up? What did they learn from their parents?

These memories and stories can help you learn about where your current beliefs, and thus behaviors, around money came from.


Many times, simply learning where your beliefs and your behaviors came from can be enough. You'll have an awareness that most people don't have. Understanding not only that you have beliefs about money, but learning what those are and where they came from can give you tremendous insight. Being more mindful of your financial life comes with more peace.

You only have one life - live intentionally.

organize your financial mess

Read More:


Brad Klontz, Rick Kahler, Ted Klontz: Facilitating Financial Health

Brad Klontz, Ted Klontz: Mind Over Money

Sarah Newcomb: Loaded


If you liked this post, consider joining the Money Health community. By signing up, you'll receive new posts sent directly to you so you'll never miss anything.

© 2019 Money Health Solutions, LLC



About the Author

Derek Hagen, CFA, CFP, FBS, CFT-I, CIPM is a speaker, writer, and coach specializing in financial psychology, meaning and valued living, resilience, and mindfulness.


Join over 1,700 other subscribers.

No Spam - Just new articles sent to you every Thursday.

Popular Articles

bottom of page