WEEK ONE

Uncover the Origins of Your Relationship with Money

This week, you can

• Set financial goals

• Examine the past for clues to your current economic situation

• Move beyond the past to a successful financial future

Penny married Randy right after she graduated high school. He was in his late twenties and established in his career. Randy hadn’t wanted a wife who worked outside the home.

In the beginning it looked as if hers would indeed be a storybook life. In quick succession she had three healthy, handsome sons. Her husband prospered. Penny took care of their large home and the children. And then one day everything changed. Randy came home and announced he was leaving her for another woman.

When he requested the divorce, Randy promised to support Penny in the lifestyle she had grown accustomed to. He promised to pay her child support. He assured her she would stay in the house. There was just one problem. Randy never kept his promises.

Penny did some soul-searching when Randy left. At first she was terrified that she wouldn’t be able to support herself or her children because she thought Randy held the key to her financial security. As she peeled back the layers of her belief system, she discovered that from the time she was a child, the messages she got from her family and the society in which she lived fed the notion that women aren’t capable of handling money. “It’s a man’s job.”

Have you ever taken the time to examine the financial messages you received as a child and young adult? Very often it isn’t just what adults say that influences us; it’s what they do. I’d be willing to bet that you will uncover something from your childhood that drives your current experience with money. And with any luck, it will be positive! If it isn’t, you are free to let it go and replace it with a more realistic value system. Penny left behind the belief that women can’t handle money. Moreover, she went back to school and discovered something about herself: She loved working with numbers. Penny had always been able to do complex math computations in her head. She went on to become a top real-estate agent in Los Angeles.

ESTABLISHING YOUR FINANCIAL GOALS

This week is not about looking for blame. Instead, it’s about simply understanding the reality of the past so we can move on and create something better. Knowledge really is power, especially where money is concerned.

Change is never easy. Equal measures of commitment and courage are required to weather the storm that change inevitably creates. When it’s thrust upon us, change is particularly thorny to navigate. But when the going gets tough this year, you can be grateful that you have chosen to make improvements in your financial life. You are the architect of the change, not its victim.

We—and our financial circumstances— also are the result of our experiences. Grab your financial notebook and let’s do some digging into the past.

Set your timer for thirty minutes. (Your cell phone has a handy alarm.) Here are the questions I’d like you to answer. Record the first thoughts that come to mind. Later in the week you can add more notes if you feel you have opened the door to something you need to explore.

Are you ready? Let’s begin with a series of questions that will help you focus on specific goals for the year that we’re going to spend together. After each question, take a minute to reflect or have a sip of water.

1. What are your three biggest challenges in terms of finance? (Common ones include: “I never pay my bills on time.” “I run up huge bills.” “I have no savings.”)

2. What are your top three goals for the year? (For example: “I’d like to save for a down payment on a home.” “I need to learn how to budget money.” “I want to be able to pay for the extras in life rather than charge them on a credit card.” “I want to have a secure retirement.”)

3. What are your top three financial strengths? It’s important to give yourself credit for what you do handle successfully! (For example, “I always pay my bills on time.” “I have life insurance in place to protect my family.” “I have a will.”)

EXAMINING YOUR PAST

Now let’s shift our focus to the past and see whether, like Penny, you can uncover the origins of the negative beliefs that hinder you today in your quest to understand finances.

If you discover that you can’t remember many details of your childhood, don’t worry. You have lots of company. If you have siblings or your parents are still alive, give someone a call. See what he or she remembers. If no one is around, look at a few family photos to jog your memory. See if you can find the person or object that can help open your memory bank. Reconnect with your past. What you learn can help you heal today and forge a more secure future tomorrow.

Keep your financial notebook handy and answer these questions:

1. How did you learn about money? Was it through formal lessons with one of your parents or from their offhand comments? Or did a family member, friend, or teacher act as your mentor?

2. Was this training adequate? Do you think it serves you to this day, and if so, how?

3. If you now regard these lessons as woefully inadequate, when did you first wake up to this reality?

4. Was your home life stable in terms of money? Did both of your parents work outside the home? Do you remember having a feeling of financial security?

5. Can you remember your parents having money or did they have arguments about it? Did they have similar values when it came to finances? Who are you most like in terms of how you relate to money?

6. What would you say are your major issues with money today? Did the same problems crop up while you were growing up?

7. Did you get an allowance? Were you required to do chores to earn this money or did it come with no strings attached? Was the amount adequate?

8. Were your friends in basically the same economic boat as you were? Or do you remember feeling privileged or living in a state of lack in comparison?

9. How did your childhood experiences make you feel about money? Were you eager to earn your own? Did you resent money?

10. Do you feel that anyone ever used money to try to control you? Who? In what way?

11. Finally, were you taught to save on a regular basis?

Right about now you may be feeling like your head is going to explode. You probably haven’t thought about these things in years, if ever. Let me tell you about my first money lesson. See how it compares to yours.

THE ORACLE OF BROOKLYN

It was a hot August afternoon in Brooklyn and I was five years old. My mother came to me and said in a tone I hadn’t heard before: “Tomorrow your father is going to teach you about money. You’ll need to understand money when you start school in a few weeks.” The next day, as promised, my father called me to him. My mother sat on the side watching with what seemed a mixture of pride and apprehension. Suddenly I wondered if this money thing was a lot more complicated than I had imagined.

My father laid out one quarter, two dimes and a nickel on the kitchen table and identified each one. He told me how two dimes and a nickel were equal in value to a quarter. So far so good: This money thing was pretty easy, I thought. Next my father explained how money should be used. One dime represented the percentage of the money you earned that would pay for the necessities of life like a mortgage, insurance, or food. The other dime represented the percentage that would be salted away in a savings account for a rainy day. And the lowly nickel represented the money one needed to have fun. My father paused. He seemed to be searching my face for recognition. “So now you understand money, right?” I was too young and inarticulate to say something pithy like, “Uh . . . not so much.” I was stunned and the lesson was over.

After this lesson my father did something destructive that ironically came from a loving place. It crippled my understanding of money for many years. My father said, “But don’t worry. You save your money and I will take care of you. Just tell me what you need.” And he did. I was raised as a privileged only child. My description of my childhood is that I was given everything I asked for except a horse. (It’s hard to keep one in a Brooklyn brownstone; otherwise I’m sure I would have been given one.) I traveled the world. I had pretty clothes. I never had a job. This pampering led to my “magical thinking” that money somehow just appears when you need it. It’s not an uncommon problem for people with money issues.

When my father and mother died, I had a small inheritance. It took twelve years but one day it was gone. And then credit cards became the magical source of extra money for all those things I was certain I needed. I was an actress at the time with the volatile income typical of any artist. One month you’re raking in the dough and the next six you’re subsisting on rice and beans. It’s a hard life even if you are financially savvy. Well, more than a decade ago, I went through bankruptcy proceedings. Much like Randy leaving Penny, it was my wake-up call.

It takes ten years for a bankruptcy to vanish from your credit report. During those years I worked diligently to rebuild my credit. I learned that earning money raises your self-esteem, as does learning how to manage it well. The most humiliating experience of my life ultimately empowered me.

As you examine the past, you will likely find that you received mixed messages about finances. My father wasn’t the greatest teacher when it came to sharing lessons with me. He was, however, an amazing example of a responsible adult. He purchased the home I grew up in with cash. He had one credit card and paid the balance monthly. Every insurance policy you can imagine a family might need, he purchased for us. Had he died suddenly, his will was in place. He tended to the tiniest detail: My mother and I were both signatories to the family safety deposit box. And we knew what was inside and where the key was.

If you have difficulty getting your financial act together, I understand your struggle. But understanding the connection between the past and the present is the first step to taking control of your financial life.

MOVING FORWARD

Previous questions were about understanding how you were first taught about money. Many of you are decades past your childhood. Here are four final questions to answer in your financial notebook. These questions will help you understand the evolving nature of your relationship with money. These bring you forward in time and allow you to see how you managed when on your own. I’d like you to make a connection between what you learned and how it affected you.

1. When you first left home to live on your own, did you know how to manage your money? Were your bills paid on time, for example, or were you always calling home for a loan?

2. If you are married or living with someone, who is in charge of the finances? Does this arrangement suit you? If you have relinquished financial management to your partner or spouse, would you be able to take over control if necessary?

3. Are you a dreamer who trusts the future will take care of itself, or are you a planner who manages every detail of your financial life?

4. What’s your biggest financial regret? Are student loans weighing you down? Did your house lose a great deal of equity in the recent downturn? Do you overextend on your credit cards?

 

DRAWING CONCLUSIONS

As the week comes to a close, you now have more insight into the reality that brought you to your current situation. We all come away from our past with things we’re grateful for and things that make us shake our heads in wonder. Whatever the situation, there’s no blame to be laid at the feet of anyone—especially ourselves. It really is true that we’re doing the best we can at any given moment. With the understanding you acquired this week, you’ve leveled the playing field. You are no longer driven by elements from the past: unconscious forces, wounds, or inadequate instruction.

My father was trying to give me the childhood he was denied. He didn’t intend to cripple my understanding of money. Ultimately I acknowledged the source of my money issues and disengaged. Today I understand something my father knew only too well: Making and managing money is incredibly empowering. I have embraced the example he set and found other teachers and mentors to give me the instruction he didn’t know how to impart. Just so, your future is bound to be better.