How healthy is your relationship with money? Let’s explore

How much do you love your money? This question might seem like an invitation to obsess and glorify money. But really, your love for money is what determines the kind of relationship you have with the money you get. It also determines if your relationship with money is healthy or unhealthy.

The importance of having a healthy relationship with money cannot be overemphasised. Mindy Crary, a personal finance coach and the author of Personal Finance that Doesn’t Suck, says that you will not have a healthy and mutually beneficial relationship with your money unless you are willing to treat your money with the same level of care you would a spouse. “This requires you to make a choice and invest yourself in your money, and consistently show honour in the manner your handle and relate with your cash,” she says.

The background

 “Every family has a money story from which our original outlook on money stems from. It could be beliefs such as money is unimportant, rich people are greedy, more money is good for self-esteem, or a streak of poor money decisions,” says Brad Klontz, a financial psychologist and the author of Mind Over Money. According to Klontz, an individual’s money script starts to develop at age 3 to 4 years. It then progresses until adulthood.

“Children tend to absorb ideas, perceptions, and attitudes towards money from watching, observing and listening to those around them. For example, if there was tension around pay day or when your father was due for a mega bonus at work when you were a child, the same anxieties are bound to be reflected in your adulthood, especially on how salaries and bonuses were spent,” he says. In addition, your spending habits are partially influenced by the type of emotions you attach to money. “These emotions could be fear, guilt or shame and can easily override rational financial thinking and decision-making,” says Prudy Gourguechon, the author of Starting Older Your spending. Find out what your family’s money story is and see if it has negative or positive influence on the way you relate with money today.

The comparison

“When comparison kicks in, you will start stretching your finances beyond their limit. Your paycheck will be stretched to fit into the lifestyle you desire. If it isn’t able to afford, you may easily find yourself in debt,” says Hiram Muriithi, a personal finance coach based in Nairobi. This comparison will exert pressure on you to start creating and chasing financial goals that are not aligned to your stage in life or monetary abilities. Hiram adds that you may spend on impulse or make unnecessary and uninhibited purchases. “For example, this could influence you to transfer your kids from their school to an uptown institution whose fees are way beyond your income. It could also be as simple as taking an instant mobile loan to show off with an expensive meaty lunch when the Sh. 100 in your purse could have done just fine with French fries,” he says.

The cultural effect

According to a study that was conducted in 2020 by the Swiss Journal of Economics and Statistics, culturally-shaped attitudes towards money can lead to financial habits such as loans that one cannot account for.

“Debts are the most common occurrences that are associated with cultural influence. You will willingly take debts you cannot afford simply to live according to the standards set by your culture or community,” says the study report.

In cultures that glorify liquidity and assets over luxuries, an individual may be tempted to scam or steal to gain approval from the community that he or she has made it in life. If your culture does not support wealth creation, you will most likely view wealth creation as a secondary need you can do without. The results are astounding too when it comes to positive cultural influences.

A survey of how culture influences savings, conducted by the London School of Economics in 2018, found that people who come from cultures of saving money tend to save proportionately more even when they live far away from their primary cultural regions.

“On the general scale, culture plays a role in shaping the saving behaviours of people, with saving rates higher among populations that regard saving as an important driver of personal economic growth,” the survey report said.

Identifying your negative cultural behaviours towards money will give you the lens to spot the type of financial baggage you keep attracting. Sociologist Benson Ngamau says that financial baggage is backed up by a cultural story or perspective. Get rid of all the negative stories and perspectives you have embraced. “You don’t have to buy a plot to fit in with your community’s practices if that plot won’t return value for money or when you can invest the same amount of money in a more rewarding passive income vehicle.”

Financial therapy

There are times when a relationship suffers so much turbulence that only a professional therapist can help. Do not be embarrassed to seek professional help to salvage your relationship with money. In Kenya, there are numerous tools and platforms that can offer you this assistance. The Centonomy’s Personal Financial Management Course and the 52 Week Savings Challenge Kenya are some of the platforms you can apply for and get financial therapy. There are also platforms that offer guidance on investments and budgeting at a fee. These include the Abojani monthly master class that is offered through WhatsApp.

Quick takeaway

According to Klontz, there are four basic money scripts that describe the relationship people have with money in adulthood.

• The money worshipper: This is the person who glorifies money, and believes that if they had more money than they have now, all their problems will be over. This person would be willing to do anything for money.
• The money status chaser: This is the person who believes that their money is a reflection of their self-worth, esteem, social standing, and net worth.
• The money vigilante: This type of person is very cautious about money. He or she doesn’t spend on impulse, doesn’t spend if there is no plan or budget, and is very strict about acquisition and repayment of debt.
• The money avoidant: This is the person who likes to distance themselves from money. By practicing avoidance, this person ends up undermining their own financial well-being.

Which one describes you the most?