What Your Money Habits Say About You

25 Mar What Your Money Habits Say About You

Money is one of the fundamental needs in modern society. Along with food, human connection, shelter, and health, it is not only essential, but inextricably tied up with our emotions. Trying to meet all of our needs in a modern society can result in anxiety and self-doubt. But it can also lead to motivation and a sense of reward when our goals are achieved.

Whether you realise it or not, your decisions around money are reflective of your life experiences and how you view the world. Just like there is no perfect diet, there is no financial plan that will suit everyone.

It’s important to take into account not only the ‘hard facts’ of your financial situation, but also your goals, aspirations, and feelings about money.

Your Childhood

Our first lessons about money come from our parents. For example:

  • Being short of money in childhood can either result in anxiety around spending, or overspending to make up for missed opportunities.
  • On the other hand, a child who wants for nothing may be less motivated to work hard when they are older.
  • Children who are encouraged to save and understand the value of money are more likely to build good financial habits as adults.
  • When we look back on childhood, experiences stay with us longer than material possessions. Creating happy memories can cost very little, and can help relieve some of the anxieties around money.

You may find that you either repeat the patterns of your childhood (whether these are positive or not) or that you take the complete opposite approach with your own family.


Fear is natural, and it is sensible to approach your financial plan with a degree of caution, for example:

  • Keeping an emergency fund
  • Carefully managing your budget
  • Having the right insurance

But fear can also lead us to make irrational decisions, such as:

  • Spending too much money due to a fear of appearing unsuccessful.
  • Holding too much money in cash. While investments do have a degree of risk, they also provide the best chance of protecting your money against inflation.
  • Taking excessive risk to avoid fear of missing out.
  • Selling investments at the wrong time. If the market is falling it can be tempting to withdraw your money to avoid further losses. But staying invested through the ups and downs is likely to result in better returns over the longer term.
  • Not spending money on the right things. If you can’t afford adequate insurance, you should probably look at cutting back elsewhere.
  • Avoiding decisions. Fear can prevent us from taking the actions we need to in order to achieve our goals.

It’s worth asking yourself exactly what it is that you fear, what the consequences could be, and how this should affect your decisions. Is it really about losing money, or are you worried about other things? Once you get to the root of the problem you can start to develop strategies to address it.

So for example, if you are nervous about investing, start small and don’t leave yourself short of cash. You will soon build up your confidence.


Your confidence will affect your financial decisions.

Someone with financial confidence is more likely to trust their judgement, pursue their goals, invest money, and shake off disappointments such as a fall in the market.

A person with less financial confidence will be distrusting of their own judgement and more likely to feel the ‘pain’ of a financial loss.

These characteristics are not limited to financial planning. If someone doubts their financial skills (and feels incapable of learning), it is likely that this pattern has crept into other areas of life.

Confidence is derived from our experiences from childhood onwards. If we learn resilience, self-reliance, and emotional intelligence from a young age, we are more likely to be confident adults.

But confidence can be nurtured in adulthood, by learning new skills and moving slowly out of our comfort zone.


There are two main variations in mindset that can affect your financial decisions:

  • Scarcity vs Abundance
  • Fixed vs Growth

A scarcity mindset considers money to be a zero sum game. If we win, someone else loses. This can make it difficult to spend or give away money. The fear of loss is always with us.

On the other hand, an abundance mindset assumes that the flow of money is cyclical, and that we will receive back what we put in, probably more. Gifting, spending, and investing come naturally as it is always possible to make more money.

A fixed mindset assumes that our skills and success in life cannot be changed. We do not assume that we can learn new things or improve our position through hard work. Intelligence and talent are gifted, not earned.

A growth mindset assumes that we can do anything we set our minds to. Natural aptitude comes into it, but someone with a growth mindset is more likely to put the work in, find their strengths, and pick up new skills. Failure is simply another lesson rather than the end point.

The combination of an abundance and a growth mindset results from self-confidence and a belief in our own abilities. These individuals are not just lucky or blessed with talent, they believe they can succeed, so they do.

Changing your mindset can be tricky. Start by setting some small, achievable goals. How does it feel when you get there? Are you ready to try something a bit more challenging?


Money is often a topic of conflict in relationships. Perhaps one partner overspends and the other prefers to save. Or one chooses risky investments while the other keeps cash under the bed.

These couples will easily be able to point out the flaws in each other’s financial habits. But the key is to understand the other’s mindset. Why do they behave the way they do? What are they trying to achieve? What do they fear?

Gaining a deeper understanding of these issues can strengthen a relationship and allow compromises to be made.

How a Financial Planner Can Help

A financial planner can help by:

  • Bringing objectivity to what can be emotional decisions.
  • Challenging your assumptions and beliefs around money.
  • Coaching you into good financial habits.
  • Keeping you on track and holding you accountable.
  • Mediating between partners with differing financial attitudes.

Please do not hesitate to contact a member of the team to find out more about financial planning and how we may be able to assist you factoring in these behavioural issues above.