In the first part of this conversation we looked at the concept of money memories through a book excerpt. You may read it here.

Picking up from where we left off, I want to continue by saying that when you analyse something and understand how it works, it works better for you. This applies to how you approach academics, sports, relationships, and other equally vital aspects of your life. Your relationship with money is closely related to your memories of money. Or Money Memories. How well you understand your money memories helps you evolve better behavioural patterns and plan your financial life more prudently.

Money habits are imbibed in the formative years. Seeing how your parents deal with money teaches you their ways. The influence of these learnings is present in us as adults. We form habits based on these learnings. Some of these influences will be good, some may not. We can’t change the money habits which harm us without first being aware about it. Knowing about your money habits is very essential to get to know what we desire to achieve from it. 

Align your money memories to your life plans

Successful people use memories to give themselves a better present and future. An inseparable part of this success story is the ability to align and analyse, align, and guide your money memories towards your life plan. In fact, this is a key aspect of Financial Life Planning and a very personalised approach to financial decision making.   

Examples of how money memories affect me, and you

My father looks for a good bargain in everything. I have seen him do this while shopping. This is a good habit. I imbibed it. But I also find it hard to buy something I really want because my money memory is looking for a bargain.

The reluctance to pay taxes is another by-product of money memory. Most Indians love to avoid taxes. This may be grounded in memories of an oppressive tax regime imposed by the British during the colonial times. The tax regime was unjust and unrewarding. So people were reluctant to pay taxes. The habit has carried over into present times. Indians in India are one of the least tax compliant people in the world. This has much to do with money memories. Changing this habit calls for analysis and thoughtful action. Only this will bring about a behavioral improvement.

Another very interesting instance comes to mind. If you’ve had to shift houses quite often during childhood, it affects you later in life. We learnt this from one of our client’s. She had to shift houses very often as a child. She felt rootless. So now, she invests in property a lot. Even if she doesn’t have to. This is a throwback to her money memories. Understanding it, will help her make more prudent investment decisions.  

Then there is the case of fixed deposits and real estate. Indians love these two avenues of investment. The older generation invests in these without much hesitation, when compared to participating in the stock market. The idea that fixed deposits and real estate are the most secure places to invest is a throwback to old ways of thinking. Investing in the stock market is not. It is a relatively recent phenomenon. It took off only in the 90s in India. That’s why, the Millenials and younger generation are able to think differently. They have seen the market generate returns. They have positive memories of it. This helps them participate in the stock market with fewer apprehensions. In fact, I asked one of our clients about this. I asked him, “How did you develop a positive attitude about investing in stocks?” His answer demonstrated the point about money memories perfectly. He simply said, “I saw my father investing. It gave me the confidence to do the same.”

While we can’t do much about past experiences and our memories, we can certainly be aware of them and work to change the things that impact our life adversely. Knowing is the first step. After learning about my money memories and their impact on behaviour, I have certainly become more conscious about my money habits. 

Strengthen your relationship with money
There are certain guidelines to follow in order to strengthen your relationship with money and enhance your personal and professional lives. We each have a long-term relationship with money that dates back to our childhood. These messages influence what we do with our money and its relationship with our beliefs.

For instance, if you’ve been repeatedly fed messages that say ‘rich people are bad,’ it works on your mind. Because of this you may even be less likely to and accumulate wealth. Each belief creates your mindset around money that leads to your behaviors and habits.

Your relationship to money can be your greatest ally in moving you closer to living the life you value most. Or it can be a big stumbling block on the road to achieving your dreams. Only you can modify, alter, adjust or redefine your relationship with money for the better. Doing so will support you as you pursue your version of the good life. Unfortunately, it’s easy to overlook this relationship with money on your path to success. Until you stop and understand that relationship and how it was formed, reaching your long-term financial goals and destinations will prove challenging.

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