It’s the end of another month and you’re in the red again. It’s always the same: as soon as you have money, it disappears. You avoid checking your bank balance, too scared to see how much you have been spending, and too scared to do anything about it.
Emilie Nutley, 29, used to be bad with money too. She would open credit card after credit card to fund her lifestyle of meals out and drinks with friends. In 2020, as she was opening yet another card, she had a realisation. “I knew if I didn’t do something, I would just max out this card too,” she says. “I’ve never been able to manage my money. I grew up in poverty and all I knew was that money comes in and then it goes out. So when I went into the adult world, I carried that mentality. I didn’t realise that’s what it was, at the time.”
Nutley is now a money coach, with a qualification in financial trauma. She works with clients to unpick their “money story” and speaking with her feels closer to a therapy session. “I find that most of my clients are very financially avoidant. They don’t want to think about the money. They don’t want to open their banking app. I try to unpick that by asking, what was your earliest memory around money?”
This is a well-studied area of psychology. A study from the University of Cambridge found that your money beliefs are set as early as seven. This means that those who struggle to balance their finances probably absorbed some unhealthy lessons in childhood. “It’s this idea that your caregivers, the education system, media, and religious ideas play a part. It all builds up to what we call our money mindset, which is just what we believe about money. And if you believe that you’re bad with money from a young age, you will be bad with money,” says Nutley.
But how does a seven-year-old come to believe they are bad with money? The messaging is subtle. In financial psychology, Nutley tells me, there are countless behaviour patterns that cause trauma. Here she explains the four major belief systems that can be hard-wired from a young age, and how to prevent them.
The four major mindsets
“There are lots of money mindsets but the four main ones are: money avoidance, money worship, money status and money vigilance,” Nutley says.
Money avoidance means you might ignore your finances. “My mum had this mindset,” says Nutley. “She wouldn’t look at her bank account until she really had to pay a bill. With this mindset, you never want to check your balance and so you’re not going to put yourself in a position to be able to cope with paying off debt.”
The worship type believes everything revolves around making more money. “Here, you believe that money will solve all of my problems, and more money will bring happiness. You prioritise building wealth above all else and continuously try to get more and more,” she says. “But that can show up in workaholism, gambling, or unreasonable risk-taking with money.”
The money status type occurs when an individual’s self-worth is subconsciously linked with financial status and the things that you own. “That might be about having to get the shiny new car, so everyone knows that you’re doing well. It’s using money as a means of gaining approval and validation from others,” Nutley explains. “This can lead to overspending in terms of trying to please other people; and keeping up with the dream lifestyle.”
Money vigilance shows up as anxiety and over-cautiousness. “It’s a very anxious approach to managing money. It means constantly worrying about financial security even when you don’t need to and perhaps means you’re not taking enough risks when it comes to investing.”
Nutley’s financial problems stemmed from a few of these mindsets. “Money worship was a problem for me, I think, because I didn’t come from much, my mum would just tell me: when you’re older, and you have your own job, you can buy what you want,” she says. “I took that very literally. I believed: If I want it, I can have it. I thought the problem was that I just didn’t earn enough so I was just kept trying to make more. But that didn’t solve anything.”
All of these types can cause problems with spending, and many of us will have a few of these beliefs hard-wired into us. “For all of us, every financial decision is 80 per cent an emotional decision,” she says. Nutley believes that understanding these drivers is key to breaking old cycles and bad habits.
The drivers of emotional spending
Your parents never spoke about money
But what causes these mindsets in the first place? “A lot of my clients will say, ‘I don’t have any early memory around money, my parents never spoke about it,’ and I say: that’s it,” says Nutley.
This is when the avoidance mindset may have begun to set in. “These people then believe, that if I don’t address my money then it must be all fine. And if I don’t deal with it, then nothing can happen,” she explains. “But obviously, that causes financial problems in the long run. Deep down, you believe you’re bad with money because you weren’t taught about it, but it’s not your fault. You just don’t know how to manage it and now you have this belief that you will always be bad with money.”
Your parents spoke negatively about money
Or the problems might have more obvious roots. There may been financial trauma in your childhood. “There could have been financial abuse experienced by your parents that you witnessed or sudden financial loss, such as a parent losing their job, and all of a sudden, you’re having to scrimp and save. Your family might be in a lot of debt, and you experience poverty.”
But there are more subtle ways money might have become problematic. “Your parents may have spoken negatively about money. You might have been told that you can’t have something because they don’t have enough of it or your parents might have argued about money,” says Nutley.
No matter how subtle these negative experiences were, your parent’s attitudes will have shaped your belief system. “Your brain is just constantly trying to figure out the truth. So if people were talking negatively about money, then our brain goes: That’s the truth. And then you will just keep looking for that evidence that it is true. You might believe that money is the root of all evil as a result, or because your parents argued about money you might think that you are bad with money by extension, or you cannot manage money.”
You believe you’re bad at maths
It isn’t just your parents. School might have also influenced your negative mindset. “Money is often seen as the same as numbers, and growing up I very much believed I couldn’t do maths,” says Nutley. “If you gave me a mathematical equation, my brain froze. You may have been conditioned to think you are bad with numbers, maybe you were in bottom-set maths, and now your brain puts the dots together and concludes: I’m not very good at maths, therefore, I’m not very good at money.” All of this together can damage your confidence, and sustain the self-fulfilling prophecy that you can’t spend responsibly.
Cultural stereotypes
There has long been a trope that women are bad with money. Growing up, this messaging may have been subconsciously drilled into you. “If women spend their money, it’s frivolous. You will never hear the word frivolous used to describe how a man spent some money. It’s only ever on women,” says Nutley. “We are not always aware of it, but it is all around us. Rachel from Friends is supposed to be in debt and bad with spending. Our conscious brains may have just watched Friends, but your subconscious brain is taking in all that information.” For young girls, this might only serve to prove the already burgeoning belief they can’t handle their finances.
Ultimately, our relationship with money is an emotional and subconscious thing that needs to be reflected upon. “We are just emotional creatures,” says Nutley. “Unless you take time to sit down and think through everything, you just make impulse decisions.”