Have you ever been in the middle of a stampede?

If you’re imagining thundering hooves stirring up clouds of dust, the answer will almost certainly be no. (Otherwise you wouldn’t be here to answer at all.) But the fact is, everyone who’s ever been a member of a group—in other words, each and every one of us—has undoubtedly been caught up in the human equivalent of a stampede. You may even have led one.

We’ve seen the thundering-hooves kind of stampede at the Black Hills Wild Horse Refuge outside Hot Springs, South Dakota. We’ve spent considerable time there watching the wild horses, their behavior and their interactions with each other. There always seems to be a leader or a group of leaders who determine what the group does—not through force, but simply by example. If the leaders suddenly begin galloping away, the entire herd goes with them. It doesn’t matter if they’re galloping because they’ve caught a whiff of mountain lion, or because they’ve stumbled into a hive of ground-nesting hornets, or because they’re just feeling in the mood for a good gallop—where the leader goes, so does the herd.

The lead horses might be taking the herd towards safety. They might also be leading it, by mistake, to the crumbling edge of a cliff. None of the other horses knows for sure. But all the horses are sure that they do not want to be left behind and they do not want to be the slowest. After all, to escape from a large predator, a horse doesn’t have to be the fastest in the herd. It just has to be faster than at least one other horse. To the members of a herd, being left behind means certain death—if not now, then soon.

A common belief is that all financial decisions are driven by greed. We disagree. We believe that all financial behaviors are driven by fear: that, like the horses in a stampede, our decisions about what direction to take, and the speed with which we take them, are driven by the fear of being left behind.

Humans are social animals. Our very survival for thousands of years depended on being a part of the tribe. Being kicked out meant being alone, and being alone meant death. Plus, we are wired to connect with others. Though this is an ancient instinct, one that evolved in our prehistoric past, it’s still one of the strongest impulses we have. MySpace, Facebook, LinkedIn, Twitter, are just modern-day examples of the ancient herd instinct, and their success is testament to the power of that need to belong. That desire is not only still alive, but it is powerful, even though it typically operates below our immediate awareness. When activated, it will take charge and throw rationality out the window.

Think of the lead horse taking the entire herd over a cliff. This wasn’t a rational, conscious decision—it was an instinctual one. In humans, the herd mentality—the blind following of some de facto leader—can result in anything from riots, to gang violence, to bullying among children. Herd instinct can go out of control in the most unlikely of settings—as it did on Black Friday 2008, the day after Thanksgiving, when a temporary worker at a Long Island Walmart was knocked down and trampled to death by a “herd” of shoppers eager to snap up bargains.

The human herd mentality, too, applies to financial behaviors, and as such, can play an important role in shaping our money scripts. Many behaviors that seem to be random and irrational are, in fact, the result of a highly predictable social dynamic; our innate desire to “stay with the herd.” It is this desire that keeps us from breaking free of our “financial comfort zone,” or the socioeconomic herd in which we are most comfortable. Until we are willing to venture outside of our financial comfort zone, to leave our own herd and entering the territory of another, we will continue to unconsciously engage in financial behaviors that keep us stuck in, or draw us back to, our own.

Financial Comfort Zone

Picture the neighborhood you lived in the longest. You probably got to know it pretty well. You knew where to get groceries. You knew the quickest way to get to the hospital emergency room. You knew the friendly neighbors and the not-so-friendly ones. You knew where the closest hardware store was. Drug store. Coffee shop. Playground. Drycleaners. You knew your neighborhood. You felt comfortable there. You felt safe there. You belonged there.

A financial comfort zone works the same way. It’s the financial neighborhood that makes you feel safest and most at home. We often find ourselves in a particular financial comfort zone as a consequence of our birth and family-of-origin. We didn’t choose it originally, but many of us never realize how much a part of us it becomes. We can leave—but even if we do, the original boundaries we learned are very strong. Those boundaries may be arbitrary and drawn by others, but we soon learn to live within them anyway. Just as you learned not to throw a ball into the cranky neighbor’s yard, these financial boundaries set the parameters for where it’s acceptable for you to go and what it is acceptable for you to do with your money. They become second nature to us. They define our reality. Because they are automatic and lie outside our awareness, these financial boundaries, when unexamined, become glass ceilings and floors.

We see this phenomenon in multigenerational welfare recipients, professional athletes who come from poverty and, despite new-found riches, soon return there, and other sudden money recipients who turn their gold into dust. They are so comfortable with the expectations and the membership requirements of the social groups they grew up in, they will cling to the attitudes, beliefs, and behaviors of that group, even when their circumstances have changed. Some go so far as to lie, cheat, steal, and sacrifice relationships on the altar of the work-god, in a desperate attempt to stay in the neighborhood where they believe they belong.

Each financial neighborhood has its own set of values and mores. It has its own answers for questions like: What is the financial role of fathers and mothers? When if ever is it acceptable to take on debt? What is the best way to use my money? What are we supposed to put up with to meet our financial obligations to others (for instance, working at a job you don’t really like much)? How acceptable is it to flaunt how much I have, and what I spend it on?

Your financial comfort zone also dictates how “poor” and “rich” are defined (as we’ll see in a minute, these in fact are highly relative terms), and at what point you move from one position to the other. We know of one young lady from an upscale neighborhood who was planning her wedding. Her parents told her that they would give her a certain amount of money for her wedding, setting a limit to what they would be willing to contribute. Shocked, the young woman said, “A budget? Mother, that’s what poor people do!” Point is, the wealthy and the poor think very differently, and without a significant shift in thinking, it is difficult to move from one group to the other.

Our goal is to teach you to stretch your own financial comfort zone. We want to help you think and behave differently, so you can become comfortable at any financial level, and develop the mental and emotional framework you need to reach and maintain the financial level you aspire to.

The animal kingdom gives us many metaphors for human hoarding, including “squirreling things away.” But squirrels often lose track of just where those treasures are buried and so we at least get new, nut-bearing trees out of the deal. Human hoarding has few such benefits.

Compulsive hoarding is another example of an otherwise positive behavior—saving—taken to unhealthy extremes. It’s good to save money, but it’s also necessary to spend it. It’s also good to have extra toilet paper on hand, but not stacked to the ceiling. Hoarding behavior can take various forms. For some it is enough to simply hoard money; others have a compulsion to hoard various—and oftentimes bizarre—objects.

Some compulsive hoarders are overspenders or compulsive buyers, but the key difference is that it is the accumulation of the stockpile of objects, not the act of buying or spending, that provides the hoarders with safety, security, and relief of anxiety. No matter how useless the objects seem to others, compulsive hoarders are emotionally attached to their possessions—be they magazines, $100 bills, or Mickey Mouse figurines—and become anxious or overwhelmed at the thought of getting rid of them. If you know a hoarder, you probably know how hard it is to get them to throw or give anything away. Even while the clutter and out-of-control accumulation may cause embarrassment and shame—since hoarders are aware that their anxiety and hoarding behaviors are unreasonable–objects become stand-ins for love, affection, or whatever is missing in that person’s life. This is why hoarders feel such irrational attachment to their possessions. For the hoarder, these are not just objects. They have emotional meaning.

Hoarders may protect their possessions by creating “secret stashes” hidden from family, or they may refuse to allow anyone inside the house to see—and judge—the mess. Hoarders also feel a kind of responsibility toward their objects, believing that simply throwing the stuff away would be an act of treachery. In the hoarder’s home, the clutter of accumulated objects intrudes on the simple actions of daily living. At its extreme, hoarding makes a home unsafe and unusable: beds and chairs inaccessible, doorways blocked, floors entirely covered.

It’s difficult to pinpoint a definitive cause of compulsive hoarding. There’s some evidence that it has a genetic component, and can be a symptom of obsessive-compulsive personality disorder. Among the people we see in our practice, hoarders often have a history of childhood scarcity, childhood abandonment or betrayal, or both. For instance, hoarding behavior is common in foster children who come into their foster or adoptive homes from situations of extreme deprivation. We have worked with many foster and adoptive children who kept food hidden in their room, despite having unhindered access to full refrigerators and pantries. Their early experiences taught them that there was never enough to eat, so they developed anxieties over running out and going hungry—anxieties that persisted even after this was no longer a rational worry.

One child had a more unusual hoarding compulsion. He collected and stole over a dozen cell phones from friends and family members and hid them in his room. Many of the phones were broken and none were activated; they were useless to him as phones, but in his mind they were extremely important nonetheless.

Remember Bridget from the introduction? Abandoned by her mother, she was adopted into a loving but unstable family. As a child, she demonstrated classic hoarding behavior.

bridget: As a small child I would hide money in places around my room. If I got money as Christmas presents or birthday presents, it was always a very small amount and I would squirrel it away. I became very miser-like in my dealings with money. At the same time, I became very suspicious of people who had money. My parents were always very critical of people who had money. They would assert that those people got their money by some less than desirable means.  They would make comments like, “They can act that way because they have money.” Or, “Oh, the only reason you’d want to be friends with that person is because they have money and you don’t.”

Bridget outgrew her childhood hoarding behavior, as many children do. But even though she was longer compelled to keep a stash of hidden coins, her emotional relationship with money remained troubled; she associated money with both security and shame.

Like financial disorders in general, hoarding behavior can be triggered by events far less dramatic that parental abandonment. Lewis had a privileged upbringing, yet he often felt emotionally distant from his parents. As a child, he learned that he could connect with them through their interest in collecting. As an adult, this comforting emotional association with objects continued. Lewis’s collecting soon outdid his parents’, to the point that his friends and family teased him about it. He collected everything: art, sculpture, old sinks, old mirrors, used furniture, used pots and pans, walking sticks, newspapers—everything.

lewis: Mother and Daddy collected things. They took me with them out into the country or antique shops and I was a little bitty boy, pretty rambunctious, and so they started me collecting little glass jars that mustard used to come in. They sold for a nickel or a dime. That gave me something in the store to look for and kept me busy and out of trouble. It always felt relaxing to me as an adult to go collecting things. It was a good way to unwind. So I took collecting to an abnormal level.

I believe that stems too from my father being sort of a hoarder. During World War II there were things that were hard to find, sugar or canned pineapple, things like that. Throughout my life my father always bought things in bulk, toilet paper, canned goods and that type of thing. He never talked about running out. His behaviors were just accepted, though other people in the family would make fun of his habits behind his back. Just like my family made fun of mine. I think I learned some of those behaviors from him.

Though Lewis himself didn’t experience the tumultuous and economically strained years of economic collapse and wartime scarcity, he was still influenced by those times, since he observed and imitated his father’s behavior. As we discussed in chapter three, the economic experiences of childhood form the financial habits we cling to into adulthood. The Great Depression and the wartime shortages that followed created many compulsive hoarders: people who washed and saved used aluminum foil, stashed hundred-dollar bills in coffee cans hidden all over the house, and mistrusted and avoided financial institutions for decades. Let’s hope the current financial situation doesn’t end up creating another generation, or more, of compulsive hoarders.

Unfortunately, in our consumer-oriented culture, compulsive buying is a relatively common problem. It afflicts one in twenty people in the United States (approximately the same rate as clinical depression) and over 75 percent of compulsive shoppers are women. The prevalence of compulsive buying also appears to be on the rise, especially among adolescents; a recent study of high school students found that 44 percent met some of the criteria for compulsive buying.

We should note here that in some cases compulsive buying takes a surprising twist: the shopper seldom actually buys anything. The problem here is not the spending but the inordinate amount of time and energy expended in the process of shopping (at the expense of jobs, relationships and other productive activities), whether it be going to actual stores, looking through catalogs, watching the home shopping channels, cruising the internet, or some combination of these activities.

Compulsive buying, like most other addictive and compulsive disorders, has been successfully treated with a variety of approaches including psychotherapy, psychotropic medications, and support groups such as Debtors Anonymous.

mollie: My husband and I struggled and fought over money matters often. Neither of us had any sort of financial map to guide us. Neither of us had savings or risk management strategies and we lived paycheck to paycheck for the most part. I struggled to figure out a way to get some kind of relief from the anxiety I felt, to learn how to manage money in my life. I would try to control, threaten, cajole, manipulate, withdraw, argue, cry, plead, bargain, etc, with my husband, driven by my fear regarding finances. So it was these financial issues that led us to couples’ therapy over and over, but the focus was seldom about the financial issues that had become a wedge between my husband and me. 

Hurricane Katrina blew the lid off of things, so to speak. Our home was flooded and our investment property was destroyed. My business was temporarily lost—I hoped it was temporary—so my income was at a standstill. My community was devastated and so many things I counted on for security—my income, my spiritual community, my neighborhood structure, my local friends and family, even my faith—all of those were challenged. Though I had a great marriage in so many ways, my money issues reared up like a dragon. It demanded healing or I knew I would lose more than a lot of material things—I would lose my marriage.

Mollie and her husband did slay the dragon and their marriage was saved. But, like most of us, they didn’t take that step until things were at a crisis point. They limped along, struggling with money issues without ever actually dealing with them. This created more stress, which put the animal brain ever more in charge. By now you’re well aware that when your animal brain is activated, you will automatically default to using your money scripts to guide you in your financial decision-making. To the degree that those scripts are faulty or incomplete, your decision-making will be too. That’s at the core of money disorders.

As we’ve discussed, money disorders stem from family dysfunction, emotional difficulties, coping strategies gone awry, profound painful childhood experiences (research has shown that those who have experienced childhood trauma are more likely to exhibit disordered money behaviors) or—most often—a combination of these factors. Similar to other compulsive or addictive behaviors, money disorders are symptoms of unfinished business related to a troubled past. The self-medicating aspects of these disorders may help us temporarily avoid difficult feelings and psychic pain. However, the relief this offers is only temporary, and it comes with its own set of emotional, relational, and financial side-effects. Symptoms of money disorders may include any or all of the following:

•     Anxiety, worry or despair about one’s financial situation

•     A lack of savings

•     Excessive debt

•     Bankruptcy, loan defaults, or both

•     Conflict with family, friends or colleagues around money

•     An inability to sustain changes in financial behaviors

What does financial wellness look like? We agree with researchers Dr. So-Hyun Joo and Dr. John Grable who list several factors contributing to a healthy financial life:

•     Maintaining reasonable and low debt

•     Having an active savings plan

•     Having and following a conscious spending plan

•     Lack of conflict with family/partner around money

•     Experiencing high levels of financial satisfaction

•     Experiencing low levels of financial stress.

As we’ve learned, even the most irrational money behaviors make perfect sense when we discover their underlying money scripts and the context from which they arose. Still, when these problematic behaviors become habitual they can lead to significant problems in relationships, work, psychological health, and general—not to mention financial—well-being.

While unresolved childhood issues, financial traumas, and other early flashpoint experiences make up the backdrop of all financial disorders, the disorders themselves take many forms. And it’s important to note this: Like money scripts, these disorders are not mutually exclusive. We can show signs of more than one, in varying degrees, in varying situations, and at varying times in our lives. These disorders may be persistent but they are not static. And while the scripts that underlie them rarely change (at least not without conscious effort and hard work) the ways in which the disorders manifest themselves are prone to morphing over time. And of course, because no two people are identical, because we all have wildly different backgrounds, experiences, family histories and ways of seeing the world, these disorders don’t look exactly the same from person to person.

So as you read these descriptions and real-life examples, look for overall similarities to your issues, behaviors, and thinking patterns, knowing that while you may not find a perfect description of yourself and your money difficulties in a single disorder, you may see many glimpses of yourself throughout. We also invite you to visit our website at www.yourmentalwealth.com to take a free money disorders diagnostic test. You will need to use the code at the back of the book to access your assessment and see your results.

It comes as no surprise that dysfunctional family systems often result in financial dysfunction. Given money’s powerful influence on every aspect of life, and its symbolic connections to emotions like comfort, security, and affection, it’s only natural that we are quite prone to misinterpreting money’s role in painful family systems. Money itself may not be the primary issue, but can very quickly become associated with family pain or problems. For children, the situation is even more complicated. With still-developing brains and coping skills, limited perspectives, and little ability to distinguish between actual threats and imagined ones, a young child can experience almost anything as traumatic: a visit to the dentist, a first haircut, a momentary separation from one’s parents, overhearing a heated argument between adults. Children are programmed to pick up the subtlest of clues with regard to threat or danger. As such, they are much more likely than adults to draw false conclusions or interpret benign situations as threatening. And, because children are so focused on taking in information and making sense out of their world, small events can take on what seems to be, in retrospect, outsized significance. It doesn’t matter whether or not the incident is something our adult selves would consider traumatic. If the emotional component is strong enough, if the message is powerful enough, a child will carry it forward into adulthood.

Additionally, children form their view of the world from observing and modeling adults. They learn what they’re supposed to fear and avoid, and what they should want and pursue. The more stressed a parent is about money, the more likely the child will develop money anxiety also. Or, a child who grows up in a wealthy but painful family system, where money is used as a means of control, may erroneously equate wealth with distress and heartache and spend the rest of his or her life repelling it. Another possibility is that child could grow up equating the amount of money one spends with how much love is felt. Remember Denise’s story from Chapter 1, about the Christmas checks kept in her father’s “fancy box”? She still struggles with separating love and money. Conversely, a child who grows up in a poor and painful family system may erroneously equate a lack of money with distress and heartache, resulting in a life spent pursuing enough wealth to bring happiness (which never materializes). Often that pursuit results in one of two extremes: workaholism or crime.

ELLEN: My mom was one of twelve and they were very poor. She dropped out of high school to help take care of her younger brother and sisters and had her first child at nineteen. There were many things that she couldn’t have and she adopted a “by any means necessary” attitude toward getting what she wanted. Getting something for nothing, having a “hustle”, was just a way of life. She was determined that we would have “everything she never had” and that meant that she would hustle, steal, borrow, do anything to get what she wanted. My mother never saved any money. She spent every dime she made. She was a maid for a wealthy family and she stole from them. Eventually she was caught, she lost her job and we eventually lost our home. 

Early in life I remember feeling it was okay to take things and there was a thrill to getting away with it. Fortunately I learned very early that I didn’t want to live that legacy. As a mother and grandmother, I don’t want to look like I’m a taker so I give excessively. I have difficulty accepting anything, whether it’s money or gifts or friendship, offered by people who care for me and simply want to be kind. 

Ellen grew up exhibiting a textbook case of one of the disorders we’ll talk about in the next section –rejection of money. Because of the behavior her mother modeled, and the trauma that resulted from her mother’s behavior she grew up to associate money with dishonesty and shame, so it’s hardly shocking that as an adult she wanted little to do with it. Today, Ellen is a highly trained professional who works primarily with the economically disadvantaged. She volunteers to take on projects and work for free, even when the federally funded projects she heads up are designed to pay her. She literally returns the money she does earn, because she wants to preempt any criticism from anyone that she is just “doing it for the money.” Of course, the criticism comes from only one place: her own mind. It would be one thing if she didn’t need the money, but at age 55, her financial situation is one of living from day-to-day, one paycheck at a time, with no savings or retirement plan.

One other source of confusion for children about money is the silence around it. In many families, even though issues involving money are ever-present, they are rarely talked about or expressed. This silence can be just as traumatic as experiences like Ellen’s – if not more so, because the issues are swept under the rug and never dealt with. When money is never talked about in front of the children, common and predictable responses include the child growing up financially dependent, living in financial denial, or developing an avoidance of money (three common disorders we’ll discuss shortly). While it’s important to protect children from worries they’re too young to handle, it’s much healthier to include them in financial decisions appropriate to their age.

All families have histories. Traumatic events are often a part of that history. And when families experience stress or trauma, they respond like individuals do; they create unspoken scripts to try to reconcile that trauma with an acceptable, or at least minimally painful, version of reality. These scripts are compiled into family anthologies and these stories—not to mention the unhealthy habits and behaviors that go along with them—get passed down  like heirlooms. And they can exert a powerful and profound effect on families for generations.

Exploring and revealing your family’s financial history can be tremendously rewarding and enlightening. In doing so, you’ll realize that your beliefs are not your own—that they’ve been passed down to you, taught to you (deliberately or not) by your family members. That discovery can be very freeing, opening the door to learning and growth.
As father and son, we share a multi-generational financial legacy, one that went unexamined until we faced our own financial difficulties:

TED: One day in my mid-thirties, I collapsed into bed at 11:30 pm, and silently said to myself “At least they can’t call me lazy.” I had gotten out of bed that morning, as usual, at 3:30 am to feed and care for the six horses I was in charge of. By 5:00 am I was at the gym I owned, working out myself before opening it for customers at 6:00 am. By 7:15 I had traveled the twenty miles to my day job as a high school teacher and coach (for baseball, and men’s and women’s basketball). I would be done with practice by 6:30 or 7:00 pm, go close the gym by 10:00 pm, come home, tend to the horses once again, and get something to eat myself. I’d fall into bed about 11:30 pm, only to start again in four hours. “At least they can’t call me lazy”—where did that voice come from? It made absolutely no sense. No one had ever suggested such a thing. It wasn’t until years later that I began to understand the power of my family’s unspoken legacy.  

My father’s family had been very wealthy landowners in Virginia prior to the Civil War. As the war began, they were forced to abandon their holdings and move away in the middle of the night. They settled in southern Ohio, and records show that at one time they were on the county dole. One of the sons enlisted in the Union army and the family used the bonus money for a down payment on some land. He was killed in the war and the death benefits were used to pay off the purchase, much to the everlasting shame of his mom and dad and the succeeding generations. They felt they’d profited from their son’s death.

My paternal grandfather didn’t work much. It could have been because of his bad vision; it could have been because he had injured his foot as a young man; it could have been because he didn’t choose to. The story is a bit unclear. The point is he didn’t do much, and everyone knew it.

My paternal grandmother lost her own mother, who died delivering her. Her father died just months later and she was raised in an orphanage. As an adult, she supported the family by working for other families: taking in laundry, doing mending, caring their children, whatever domestic duties she could barter for what her family needed. The family was exceedingly poor.

My father grew up hearing his mother complain about his father and how little he did to support the family. He started helping neighboring farmers when he was six years old, and he was held up and honored by his mother. She tried to shame her husband into working harder by unfavorably comparing him to his own son. It didn’t work for that purpose, but as a result, working became the centerpiece of her son’s; my father’s life. 

When I was a child, my father always had several jobs at the same time. He went to work at his regular job, then come home and work for one of the neighboring farmers. When he finished that, late at night, he’d repair a piece of equipment for yet another neighbor or friend. As with his mother, he was held up by everyone around him for being such a hard worker and doing his best to provide for his family. Every event in our lives was organized around his work. Every hobby turned into some kind of business venture. In our family, being called lazy was one of the worst things that could be said about someone.

I grew up watching this and for as long as I can remember, I wanted to be known as a hard worker, too. I wanted people to admire me the same way they did my father and so I became a hard worker. I worked until the job was done, whether that meant I ate meals or not. Work came before anything else, always. Long after my days on the farm were over, long after my grandparents were dead and gone, I was still trying to live up to the standard that would guarantee that no one can ever call me lazy.

I was so focused on working hard that I left myself at the mercy of others in terms of what happened with my financial life. I never took control of my finances, because I believed that work was about proving my worth, not about making money. I trace that script back to one afternoon at my grandfather’s farm. This was my maternal grandfather and he did work hard. I often worked for him and one day, when I was about ten, I finally mustered up the courage to ask him if he’d be willing to pay me a dollar a day to help bale, pick up and store the hay we were putting up. He’d hired other boys my age, many of them friends of mine, and he was paying them a dollar an hour to do the same work I was doing. I knew he’d never pay me a dollar an hour, but I thought maybe a dollar a day would work. I’ll never forget his answer. His words became the guiding principle of my life for the next thirty years. He said, “I will decide whether or not I think you’re worth anything, and if I do, I’ll pay you. Furthermore, you should feel lucky that you have something to eat, a place to sleep and clothes to wear.”

End of conversation. I never got a cent. Every job I worked at for the next thirty-five years was one where other people decided what I was worth and what I’d be paid.
 
BRAD: This was a powerful story for me hear. Until recently, I had never heard it. As a child, I saw my father work. A lot. On weekends he’d take me into the office with him, where I would mill around while he worked. At home, I’d see his back for much of the day, as he worked on whatever he was doing. As we grew older, my sister and I would joke that he had “ADS Disease”—Always Doing Something. He and I never had a discussion about work, but I knew it was all-important. Whenever my sister and I argued, her knockout punch was to call me a “slug,” implying I was lazy. Even as a child, this comment sent me over the edge. The biggest sources of shame in my life involve the times that I have left a job unfinished or didn’t follow through on a promise. Hard work and integrity meant everything.
After high school, I spent the next ten years in school full-time. Part of me wanted to take some time off to travel but I couldn’t allow myself to do that. I finished my doctorate in four years. I paid off $90,000 in school loans in three years, while driving a $400 car and living in a home with no furniture. I was working seventy hours a week but I felt like I wasn’t doing enough, that I was being lazy.

At the same time, I saw how my father consistently worked for much less than he was worth, did not save and did not take even moderate risks with what little money he accidentally accumulated. After all, we were poor people, from generations of poor people. As I was growing up, I decided I’m not going to be poor; I’m not going to play it safe.
When I finally graduated, I became an investor. Without any training or real knowledge about finances or the stock market, I began buying and selling stocks. For me, the real risk was not taking any risks. However, in the two years following the tech bubble implosion in 2000, I lost over half the money I initially invested. This was a life-changing experience for me. I felt a great deal of pain and shame. I had no conscious understanding about my hidden generational beliefs and my personal relationship with money. In trying to “do it differently” than my parents, I made a big mistake and ended up just like them, with little money.

My family legacy and its impact on me became clear when I heard my father was working a hundred hours a week and felt lazy compared to his father. This awareness was freeing for me, in that I saw how ridiculous it was for him to feel that way. After all, I had seen him be a workaholic my whole life. To hear that he felt that he was lazy compared to his father helped me put my own automatic thoughts and guilt into perspective. It helped me come to terms with how inaccurate my thinking is in this area, and gave me permission to have a healthier work-life balance, stop taking excessive risks, and not succumb to guilt or shame.

leslie: When I was a girl we would get paid for doing chores around the house, and we were told that half had to go into a savings account at the bank and we could spend the other half on candy or whatever we wanted. I’d save half in my piggy bank and then, once a month or so, I’d go to the real bank to make a deposit. I liked looking at the numbers on the passbook, thinking about my little pile of money getting bigger and bigger.

One day, when I was twelve or thirteen, I went to the bank to make a deposit and check my balance. The teller said there was nothing there, that my dad had withdrawn it all. When I confronted him about it, he just laughed and said, “That’s my money.” I was just so shocked that he would do that.

I stopped putting money into the savings account. After that, whenever I got any money, I spent it all. I’d spend it when I had it, before someone else could take it away.

 This was a profound financial flashpoint for Leslie. She felt a deep sense of betrayal, and her entire “reality” about how money was supposed to work was changed in an instant. As a child, her behavioral adaptations were limited. After all, she couldn’t open up a bank account without an adult co-signer, and she obviously couldn’t trust her parents with her money. So in an effort to never feel betrayed again, Leslie arrived at what seemed to her like a logical conclusion—spend money before it can be taken from you. After a while, long after Leslie’s rational brain had put the incident with her father behind her, this habit became so ingrained, it took on a life of its own. As a result, she became an over-spender (one of the disorders we’ll talk about in the next section). She lived paycheck to paycheck, accumulating more and more debt, never putting aside any savings.

 Carla: All I remember as a child is chaos, around money and in every area of my life. One of my first memories, at maybe age three or four, was when my mother was in jail for writing bad checks. For the next five years Mom was constantly being arrested, in and out of jail. We were always running from the law, hiding from creditors, moving from house to house, one step ahead of the sheriff. 

When I was nine, Mom finally had a kind of breakdown. She was weeping and crying, just inconsolable. Finally I said “Mom, call Dad.” Amazingly, she did. The very next day, we moved into a house that was better than anyplace we’d ever lived. We were just six houses down from Dad, and I thought it was great to be so close to him. My parents had divorced when I was sixteen months old so I never knew him that well. But now I saw him a lot and we had a nice place to live and food to eat, and things were going better than they ever had. 

Early one Saturday morning, I was still asleep when my mom and my uncle roared into my room. They said, “Grab what you want to take with you. We’re leaving and we’re not coming back.” So I grabbed my goldfish and ran out the back door. They plopped me down in the back seat of a little sports car with a little U-Haul trailer behind it. We took off and drove straight through all day and all night, only stopping for gas. We drove fifteen hundred miles to our new home, and it all started up again.

That did it for me. Something seemed to break inside. I gave up. I learned that I couldn’t trust anything or anyone, that nothing will ever work out and I have no power to change anything. From that point on, whenever things got stressful, I just pretended like I didn’t notice. I just tried to look good, just get by. That was all I could do.

 When I got out on my own, I did pretty well financially. I was taking care of myself, acting responsibly, paying my bills, saving money. All that went away when I married my husband.  I married someone who behaved, in many ways, just like my mother. All my old scripts came rushing back; scripts like “I have to help him and I’ll do that by putting everything I have into our relationship, and never questioning him.”

So for the next twenty years, through lost job after lost job, after many, many moves all over the United States, after promises from him that he’d change his behavior, and lots more chaos, I just gave up. I believed I had no power over my life. I believed that I didn’t deserve to get my needs met. I just shut down, blindly trusted, and just gave up. 

Strange as it may seem, these beliefs kept me sane during that difficult time. As long as I didn’t pay attention to what was going on, I didn’t feel a lot of anxiety.  I didn’t feel a lot of anything, and that seemed okay.

Carla’s story demonstrates how unfinished business from childhood can affect our choices as adults. We’re drawn to people, places and things that feel familiar, often in an unconscious effort to replay the past and “fix it” this time. This rarely succeeds. Notice too how her scripts served her well, in the short term, in a specific situation. They allowed her to survive until she gathered the strength to confront her husband and begin putting together a plan for her own future, despite the fact that her husband was not able or willing to join her in that process. Yet these same scripts were what led her into the painful situation she had to escape, and they would have led her into other self-destructive situations if she hadn’t taken steps to heal.

When people talk about trauma, they often think that only unusual events qualify: armed combat, a mugging, sexual assault. But the fact is that any event, however mundane it might seem, that causes emotional distress and pain can be traumatic. There are differences in degree, not kind. Financial flashpoints don’t have to be shocking rare events, like finding out that your father has robbed you of your savings, or seeing your mother being hauled off the jail; many common, everyday experiences— a hurtful comment from a parent, an embarrassing moment in front of peers—can leave equally lasting imprints, and have equally negative effects on our financial and mental health. The effects of these traumas may not be as immediately noticeable or easy to pinpoint, but they are just as real.

This chapter looks at the fundamental role traumatic experience play in shaping disordered money behaviors. First we’ll explain how emotionally charged or traumatic events associated with money can actually change the physical structure of the brain in such a way as to make future financial reactions primal and automatic, bypassing the logical brain that would otherwise allow us to make informed decisions. Then, we’ll look at the various types of early trauma and the impact such events have on our adult patterns of thinking and acting.

Picture the neighborhood you lived in the longest. You probably got to know it pretty well. You knew where to get groceries. You knew the quickest way to get to the hospital emergency room. You knew the friendly neighbors and the not-so-friendly ones. You knew where the closest hardware store was. Drug store. Coffee shop. Playground. Drycleaners. You knew your neighborhood. You felt comfortable there. You felt safe there. You belonged there.
A financial comfort zone works the same way. It’s the financial neighborhood that makes you feel safest and most at home. We often find ourselves in a particular financial comfort zone as a consequence of our birth and family-of-origin. We didn’t choose it originally, but many of us never realize how much a part of us it becomes. We can leave—but even if we do, the original boundaries we learned are very strong.

Those boundaries may be arbitrary and drawn by others, but we soon learn to live within them anyway. Just as you learned not to throw a ball into the cranky neighbor’s yard, these financial boundaries set the parameters for where it’s acceptable for you to go and what it is acceptable for you to do with your money. They become second nature to us. They define our reality. Because they are automatic and lie outside our awareness, these financial boundaries, when unexamined, become glass ceilings and floors.

Each financial neighborhood has its own set of values and mores. It has its own answers for questions like: What is the financial role of fathers and mothers? When if ever is it acceptable to take on debt? What is the best way to use my money? What are we supposed to put up with to meet our financial obligations to others (for instance, working at a job you don’t really like much)? How acceptable is it to flaunt how much I have, and what I spend it on?

Your financial comfort zone also dictates how “poor” and “rich” are defined (as we’ll see in a minute, these in fact are highly relative terms), and at what point you move from one position to the other. We know of one young lady from an upscale neighborhood who was planning her wedding. Her parents told her that they would give her a certain amount of money for her wedding, setting a limit to what they would be willing to contribute. Shocked, the young woman said, “A budget? Mother, that’s what poor people do!” Point is, the wealthy and the poor think very differently, and without a significant shift in thinking, it is difficult to move from one group to the other.

Our goal is to teach you to stretch your own financial comfort zone. We want to help you think and behave differently, so you can become comfortable at any financial level, and develop the mental and emotional framework you need to reach and maintain the financial level you aspire to.

This flexibility is something that has to be consciously learned. Without awareness, new knowledge, and skills, it’s hard to overcome the pull of our upbringing. As long as your financial status is compatible with your financial comfort zone, you’ll feel as if everything is fine. The problems begin when your income level or standard of living significantly increases or decreases, or when that comfort zone limits your potential success.

When your circumstances bring you beyond the top boundary of your financial comfort zone, you will begin to feel unsettled or anxious. You probably won’t even be aware of that anxiety or the reasons for it. After all, more money should be a good thing, right? It’s having less money that should be stressful, right? Wrong. In our work, we have found that feeling stress about having more money is just as common, if not more so, as feeling stress about having less. For example, all other things being equal, people with 401(k)s have been much more anxious about the stock market decline then those without. In many ways, the more we have the more we have to worry about. True, stress sometimes comes from having less money, but also from the feelings that arise when you find yourself in an unfamiliar financial place, away from your herd. Under unfamiliar circumstances, the alarm in the animal brain sounds a danger alert and your unconscious mind will attempt to pull you back to familiar ground. For your animal brain, it is an issue of life or death.

This is why we experience such stress any time we face a change in our financial status. And if we aren’t conscious of this financial comfort zone and what we are experiencing, we’ll begin to behave in unconscious ways that will move us back into our comfort zone. We’ll, without awareness, do what we have to do to restore our sense of equilibrium and comfort, even when that is to our financial detriment. We’ll make automatic, often totally unconscious money decisions that are designed to reduce our exposure to that uncomfortable top boundary and pull us back into safer, more familiar confines.

After all, moving above that boundary might require a move to a different neighborhood, where we may not know the rules or speak the same language.  Where we might feel judged, unsafe, isolated, like we don’t belong, or like we might be misunderstood or “evicted.”

This classic tale of how one man finds his true course in life provides a powerful model that we can still learn from today. Not only was Dickens a master storyteller, he had insights into human behavior—and how to change it—that were far ahead of his time. To help Scrooge on his journey from misery to enlightenment, the spirits skillfully use techniques that are employed by modern psychologists and financial planners.

As the story of A Christmas Carol unfolds, Scrooge learns five principles that lead to financial wisdom. In this book we share this wisdom. We have seen it transform careers, families and lives. Don’t think that these principles work only for the wealthy. You will soon come to understand that the amount of money you have or make is irrelevant. It’s not about the money. It’s the relationship you have with money that is the key.

By applying these principles to your life, you can move from denial to awareness, from destructive behaviors to productive behaviors, from misery to joy. You can become a new person.

Scrooge Changed ….and so can you!

One of the most profound truths in this book is that as long as there is life, it is possible to change. It is never too late. The peace and joy that Scrooge finds is possible for all of us.

The answer that you—and millions like you—are seeking can be found in The Financial Wisdom of Ebenezer Scrooge.

The basics of financial health aren’t complicated, and they’re pretty much the same, no matter who you are or your level of wealth. They are even the same whether you’re talking about a person, a family, a company, or a country: Save now and invest for the future. Spend reasonable amounts of money to enjoy life and accomplish your goals, but spend less than you earn. Beware of an investment that looks too good to be true, because it probably is.

Pretty simple, right? So why is it that so many of us can’t seem to make those rules work for ourselves? Especially now; at no time in recent history has our collective financial health been more compromised. No matter what measure of disaster you pick—foreclosures, bankruptcies, consumer debt, unemployment—the past two years have set records. (How many times in the last eighteen months have you heard or read the phrase “Not since the Great Depression…”?) Even if your own finances are in order, the uncertainty wears on you; if you were worried about money before, the constant drumbeat of bad news over the past two years has likely been enough to send your stress levels through the roof.

Today, many researchers agree, the biggest source of stress in our lives is money. According to an Associated Press/AOL poll released in June 2008, as many as 16 million Americans suffered from high levels of debt stress and accompanying health complaints. This was a 14 percent increase over a similar 2004 poll. In October 2008, when the American Psychological Association released their annual survey on stress, what do you think was the primary source of stress for Americans? A whopping eighty percent said it was money and the economy. That makes sense given the current financial crisis but it’s nothing new. Year after year, through boom and bust, the APA poll has shown that for the large majority of Americans—over 70 percent—money is the number one stressor, ranked higher than work, health, or children. But why?

Why is money so significant?
In 1992, psychologists Dr. Joe Griffin and Dr. Ivan Tyrrell developed a new psychological framework about basic human needs. Their human givens approach combines current neurological research with earlier work by theorists such as Abraham Maslow. According to Maslow, all humans have a hierarchy of needs, beginning with the most basic physiological requirements for food and shelter and ascending through social, emotional and intellectual needs. Our needs must be met at one level before we can begin to address our needs at the next.

Griffin and Tyrell build on Maslow’s work by identifying not only universal human needs but also a range of innate resources available to all people to meet those needs. Together, these are the human givens. In this model, each person, regardless of cultural boundaries, has basic needs that are both physical (such as food, sleep, exercise) and emotional (such as security, attention, connectedness). Our psychological health depends on our ability to meet these needs through the exercise of our inherent resources (such as empathy, imagination, and rationality) in effective, productive ways.

In a modern, industrialized society, money is one of the only things that touches on and impacts each and every one of our needs. The effect of money on physical needs is obvious; you can’t have shelter, for instance, without enough money to pay rent or a mortgage. Take a look at the list of emotional needs on the left. Money also affects our ability to meet these, some more than others. And while it is always possible to feel a sense of competence and achievement without money, this is certainly more difficult in our culture. The same with status, or autonomy.
Now take a look at the human resources. In many cases, our access to money influences our capacity for using these as well. Of course lack of money doesn’t rob us of our rationality, or our ability to observe and learn from our environment. But financial limitations can affect how we’re able to act on these insights.

Finally, money is concrete and measurable in a way that our needs (love, security, attention) are not. Given these qualities, money can easily become so closely linked to our emotional needs that we can’t separate the two. We come to believe that money is love, or security, or attention. Nothing illustrates this better than the story of the Christmas “fancy box.”

DENISE: My father started and developed a very successful business and he uses the fruits of his labor to “reward” us kids. Every Christmas, after all the gifts have been opened, he brings out his “fancy box.” That’s the real centerpiece of the family gift-giving, and it’s been that way since I was a child. Inside the box are envelopes with checks inside, addressed to each one of us kids. Or not. Because I’m a girl and because I’m not directly involved in the family business, sometimes there’s no envelope for me. Or there might be an envelope with my name on it but my brothers each get several envelopes. As the envelopes are opened, the amount of the check is announced to all assembled. My check is always the smallest. Last Christmas, my brothers got $300,000 checks but there was no envelope with my name on it.

Of course I’ve taken a few lessons from this: Money equals love and whoever gets the most money is loved the most. I also learned that money can be used to control and humiliate others. Those lessons have affected my life, all my life.

Given that money is both essential and so emotionally loaded, it’s no wonder it takes up so much of our attention, nor is it a surprise that so many people have such tumultuous and self-destructive relationships with it. As financial planning pioneer Dick Wagner says, “money is the most powerful and pervasive secular influence in the world.”

Mind Over Money: Overcoming The Money Disorders That Threaten Our Financial Health

By Dr. Brad Klontz & Dr. Ted Klontz

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