April 3, 2025
Money Psychology: Understanding Your Relationship with Money
By: Leonardo Atkinson, FPQP®, Banking Center Manager
When we talk about financial wellness, it’s important to recognize that financial well-being goes beyond managing numbers and budgets—it’s about understanding the emotional and psychological connection we have with money. Our personal relationship with money is shaped by many factors, from early experiences to the values and beliefs we carry into adulthood. Gaining insight into how these psychological influences shape our behavior is essential for building a solid financial foundation.
The Role of Money Psychology
Money habits and attitudes are learned, not inherent. Our experiences, family influences and societal expectations all contribute to the way we perceive and interact with money. These learned behaviors often drive decisions, from spending to saving, and can be either empowering or limiting. Financial decisions are not always made logically; emotions and past experiences often play a large role in shaping how we manage our finances.
How Money Habits Develop
Our relationship with money begins early, often influenced by the environment we grew up in. For example, if we experienced financial struggles in our childhood, we may develop a sense of fear around money or a tendency to hold on to it tightly. On the other hand, those raised in an environment that emphasized wealth as a measure of success may approach spending and saving in different ways. These early lessons create the foundation for our financial mindset and continue to influence how we make financial decisions throughout our lives.
As we move into adulthood, it’s crucial to examine how these early experiences shape our current money habits. Understanding the “why” behind our financial behaviors is the first step in making lasting changes. Financial literacy goes beyond learning practical skills like budgeting or investing—it involves understanding the psychological patterns that govern our actions and, ultimately, our financial outcomes.
Changing Negative Money Habits
The good news is that it’s possible to change negative financial habits once we become aware of them. Many people are unaware of the emotions driving their financial decisions, whether it’s overspending when feeling stressed or avoiding saving because it feels like a sacrifice. Acknowledging the emotional triggers behind these actions allows us to take control and begin replacing old patterns with healthier financial behaviors.
One of the most powerful ways to create change is by taking small, consistent actions. Begin by focusing on simple, manageable habits that align with your financial goals. Building awareness and practicing intentional decision-making around money can gradually shift your mindset and behaviors.
Practical Steps to Rewire Your Money Mindset
- Reflect on Your Money History: Take some time to think about your past experiences with money. How did your family handle finances? What messages about money did you learn growing up? Understanding where your habits come from is the first step toward transforming them.
- Recognize Emotional Spending: Many financial decisions are driven by emotions, whether it's an impulse buy to ease stress or the avoidance of saving because it feels uncomfortable. Start paying attention to the moments when emotions drive your spending, and practice mindfulness to avoid impulse decisions.
- Set Financial Goals Based on Your Values: Instead of focusing on societal pressures or trying to keep up with others, prioritize goals that truly matter to you. Whether it’s saving for retirement, paying off debt or building an emergency fund, align your financial goals with your personal values to stay motivated and focused.
- Build Healthy Financial Habits: Replacing old habits with new, positive ones takes time and consistency. Start small by automating savings, tracking expenses or setting aside a certain amount each month for future goals. Small changes, made consistently, can lead to big results.
- Seek Education and Support: Financial literacy is a continuous journey, and seeking out resources and advice can be crucial in helping you make informed decisions. Whether through books, courses or trusted financial professionals, the more knowledge you gain, the better equipped you will be to manage your finances effectively.
The Bottom Line
Understanding the psychology behind your money habits is the key to making lasting changes. By becoming aware of how your past experiences and emotions influence your financial decisions, you can take control of your money mindset and create healthier financial habits. It’s all about being intentional with your choices, aligning your actions with your goals and continuously learning and improving.
Stay tuned for the next post in this series, where we’ll explore practical strategies for building and maintaining a budget that works for you!
Leonardo Atkinson, FPQP®
Banking Center Manager
Leonardo Atkinson serves as Cape Cod 5’s Banking Center Manager in Dennis, bringing nearly a decade of experience serving as trusted financial advisor to clients. Leo holds a Bachelor of Science in Business Administration from Roger Williams University and an MBA from Cambridge College. He has also earned the Financial Paraplanner Qualified Professional (FPQP®) certification and is a graduate of the New England School for Financial Studies and Leadership Cape Cod’s Community Leadership Institute. Additionally, Leo is a Certified Personal Financial Wellness Consultant (CPFWC). You can connect with Leo here.
