Your money habits trace back to childhood, financial psychotherapist says. Here’s how to fix them

Your relationship with money might seem random, but one expert says it offers clues about your childhood — and understanding this could help overcome toxic spending habits.

Vicky Reynal, a financial psychotherapist and author of “Money on Your Mind,” told CNBC Make It that there are psychological reasons behind our spending habits, and many of these attitudes stem from childhood experiences.

“Our emotional experiences growing up will shape who we become,” she said.

For example, someone who felt secure during childhood might feel that they deserve good things, and later in life may be more likely to negotiate a higher salary or enjoy the money they have, Reynal said. Whereas someone who experienced childhood neglect may grow up with low self-esteem and act this out through money behaviors.

This could include feeling guilty when spending money because they don’t feel they deserve good things, or splashing the cash to impress because they feel unworthy of attention.

“The little toddler that goes up to their parents to show them their scribble — how they get responded to will give them a message about how the world will respond to them,” Reynal added.

Reynal said “the money lessons we learn growing up” are largely shaped by whether we grew up in an environment of scarcity or wealth.

“To give you an example, growing up in scarcity, people that manage to move themselves out of that economic reality, and maybe in their own adult life manage to accumulate quite a bit of wealth, it’s quite common for them to struggle with what they call the scarcity mindset,” Reynal said.

This is a pattern of thinking that fixates on the idea that you don’t have enough of something, like money. A scarcity mindset means someone might struggle to enjoy the money they’ve earned and be anxious about spending it, Reynal added.

Alternatively, there are people who grew up with little but became wealthy, and are now very careless with money.

“They’re giving themselves everything that they longed for when they were little so they might go on the other extreme and start spending it quite carelessly, because now they want to give their children everything that their parents couldn’t give them,” Reynal added.

The key to overcoming toxic spending habits is to stop self-sabotaging — a common behavior — according to Reynal.

“Often behind a pattern of financial self-sabotage, there are deep-seated emotional reasons, and it could range from feelings of anger, feelings of un-deservedness, to maybe a fear of independence and autonomy,” she said.

To identify these, you first have to determine what your financial habits and inconsistencies are, Reynal said, giving an example of someone who might overspend in the evenings.

“Is it boredom? Is it loneliness? What is the feeling that you might be trying to address with the overspending?” she said.

“That’s already giving you a clue as to what you could be doing different. So, if it’s boredom, what can you replace this terrible financial habit with?”

Reynal said she had a young client who would always run out of money within the first two weeks of the month. She asked them: “What would happen if you were financially responsible?”

The client revealed that they feared risking their relationship with their mother because every time they ran out of money, they called their mother to ask for more.

“Their parents had divorced a long time ago, and the only time they ever spoke to their mother was to ask for money,” Reynal said. “They had a vested interest in being bad with money, because if they were to become good with money, then they had the problem of: ‘I might not have an excuse to call mother anymore and I don’t know how to build that relationship again’.”

The financial psychotherapist recommended being “curious and nonjudgmental” when considering the root of bad spending behavior.

“So sometimes asking ourselves: “What feelings would I be left with if I actually didn’t self-sabotage financially, or if I weren’t so generous with my friends?’ That can start to reveal the reason why you might be doing it,” she added.