Money Habits Have Family Roots

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By Eileen AJ Connelly, AP Personal Finance Writer

NEW YORK (AP) — If every budget you've ever tried has failed, maybe it's because you didn't first examine your attitudes toward money.

Personal relationships with money reflect influences that go all the way back to childhood. Kids learn from the ways their parents handle spending, saving and debt. Other family members, peer groups and, of course, advertising and marketing also have an impact.

You may rebel against these experiences, or emulate them. But the growing field that combines behavioral psychology and personal finance says the lessons you learned as a child will continue to play a role long after you're on your own.

That doesn't mean you can't take control of your spending and saving habits. Whether you hope to save to buy a house, pay down debt or shed that Scrooge-like reputation, the key to financial success is awareness of the role money plays in your life.

The recession and its aftermath has sparked new interest in finding the root causes of money problems, said Kathleen Gurney, founder of Financial Psychology Corp. and author of "Your Money Personality." She said more people are doing some personal reckoning and trying to break free from ingrained patterns. That requires "recognizing what's behind them and using that knowledge to develop new habits," said Gurney, who is based in Sarasota, Fla.

Gurney developed nine profiles to broadly categorize money behaviors. With names like Hunters, High Rollers, Safety Players, Achievers, and Perfectionists, the profiles are based on 13 traits identified using a series of questions to probe childhood memories and adult behaviors linked to money. There are several other similar programs that use personality traits, with numerous quizzes available online.

Others say labels don't matter that much. "Once you label somebody, so what?" said Lois Vitt, chair of the Institute for Socio-Financial Studies based in Charlottesville, Va. "I'm a spender in some categories, I'm a saver in others."

Whether you're more comfortable finding a classification to identify with or working with a broader approach, Vitt said what's important is making an effort to define how you think and feel about money, how your values influence your decisions, and what you would like to change
"What you want to do is become more conscious of the finances in your life," she said. "You hear a lot about mindfulness, and that's what we need."

Here are some steps to help you become more mindful of your finances:

Identify your values regarding money.

Start exploring what you learned about money as a child. Perhaps you heard conflicting messages from your parents. You might find that you identify with both in different situations, said Elizabeth Husserl Rubiano of Inner Economics, a money coaching service in Berkeley, Calif.

Also consider what triggers your spending patterns — perhaps a need to impress others or fight feeling deprived?

Gurney noted not all traits are negative. "I look at them as a balance sheet," she said. "Some traits work as assets."

Educate yourself about personal finance.
The amount of information available about money management and investing is vast compared with what consumers could get just a decade or two ago, noted Vitt.

Arming yourself with some basic money skills that can be put to work will help when you're trying to figure out how to change your habits.

Identify one or two issues to start with.

Small steps can lead to big changes that make you feel better about the process. A simple move like taking the credit cards out of your wallet can be a start.

It takes about six weeks to change a habit — and you'll likely always have to work on maintaining it. "We never quite wipe the slate clean," Gurney said.

Don't expect a smooth ride.

It might take a few tries before you discover what works best for you: For some spenders, allowing a certain amount for splurges may be a winning strategy, while others find a strict spending plan removes the need for willpower.

"We like to hold on to that behavior that makes us feel so comfortable," Gurney said. Test out different strategies to find those that are suitable for sustaining your desired changes. "Everybody slips back, because habits are powerful," Gurney said.

Copyright 2010, The Associated Press.

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