Growing up in poverty can profoundly shape our financial behaviors and attitudes toward money. Our experiences and observations during our formative years often become deeply ingrained habits that persist into adulthood.
While these habits are every day among those who have experienced poverty, it’s crucial to understand that they are not inevitable. With awareness, effort, and the right strategies, overcoming these learned behaviors and developing healthier financial habits is possible.
In this article, we’ll explore ten bad money habits that often stem from growing up poor. We’ll delve into the reasons behind these habits and their potential consequences and provide practical advice on how to break free from them.
By understanding these patterns, we can take the first step towards improving our financial well-being and building a more secure future.
Scarcity Mindset
1. Impulse Buying
One of the most common habits developed from growing up in poverty is impulse buying. When money becomes available, there’s often an overwhelming urge to spend it quickly on immediate wants rather than saving or investing for the future. This behavior stems from a scarcity mindset – the fear that resources are limited and may not be available later.
For example, someone who grew up with limited access to new clothes might buy unnecessary items during a sale, even if they don’t need them. This habit can lead to financial instability and prevent long-term financial success.
Try implementing a 24-hour rule before making non-essential purchases to overcome impulse buying. This cooling-off period allows you to evaluate whether the purchase is necessary or just a reactive response to having money available.
2. Neglecting Savings
Living paycheck to paycheck can become a persistent habit for those who grew up in poverty. Setting aside money for the future might seem impossible or even pointless when immediate needs are pressing. Neglecting savings can leave individuals vulnerable to financial emergencies and unable to pursue long-term goals.
To break this cycle, start small. Even saving a tiny amount regularly can help build the habit. Set up automatic transfers to a savings account, even if it’s just a few dollars per week. Over time, as you see your savings grow, you’ll be motivated to save more and prioritize your financial future.
Lack of Financial Education
3. Poor Budgeting Skills
Growing up without exposure to proper budgeting techniques often results in poor money management skills in adulthood. Many individuals who grew up poor never learned how to allocate their income effectively, track expenses, or plan for future costs.
This lack of budgeting skills can lead to overspending, difficulty meeting financial obligations, and constant financial stress. To improve budgeting skills, start by tracking all your expenses for a month.
This will give you a clear picture of where your money is going. Then, create a simple budget, allocating your income to different categories and prioritizing necessities and savings before discretionary spending.
4. Misunderstanding Credit
Another consequence of limited financial education is misunderstanding how credit works. Many people from low-income backgrounds may view credit cards as “free money” or fail to understand the long-term implications of high-interest debt.
This misunderstanding can lead to accumulated significant debt and damage one’s credit score. To use credit responsibly, educate yourself on how credit works, including interest rates and credit scores.
Use credit cards sparingly and aim to pay off the entire balance each month. If you’re in debt, create a plan to pay it off systematically, starting with high-interest debts.
Emotional Spending
5. Using Money as a Coping Mechanism
Childhood financial stress can lead to spending as an emotional coping mechanism in adulthood. Shopping or buying things might provide a temporary sense of control or happiness, especially for those who experienced deprivation in their youth.
However, this habit can lead to financial problems and doesn’t address the underlying emotional issues. Instead of turning to spending for comfort, explore healthier ways to cope with stress or negative emotions. This might include exercise, meditation, or talking with friends or a therapist.
6. Overspending When Funds Are Available
When money comes in, people who grew up poor might tend to splurge rather than allocate funds responsibly. This behavior often stems from a fear that the money won’t last or a desire to enjoy it while it’s available.
To overcome this habit, plan for any unexpected income before receiving it. Allocate a portion to savings, debt repayment, and necessary expenses. If you want to treat yourself, set aside a small, reasonable amount for that purpose.
Avoidance Behaviors
7. Ignoring Financial Problems
Growing up in an environment where daily financial struggles can lead to avoiding money issues in adulthood. It might feel easier to ignore bills or avoid looking at bank statements than to face financial difficulties head-on.
However, ignoring problems only makes them worse. Start by facing your financial situation, no matter how uncomfortable. Create a list of all your debts and expenses. If you’re overwhelmed, don’t hesitate to seek help from a financial advisor or credit counselor.
8. Not Paying Bills on Time
This habit often stems from childhood experiences of unpaid bills due to lack of funds. As adults, we might continue this pattern, leading to late fees, damaged credit scores, and increased financial stress.
To break this cycle, create a system for paying bills. This could involve setting up automatic payments, using a bill payment app, or creating a calendar reminder. Prioritize essential expenses and communicate with creditors if you have difficulty making payments.
Misguided Beliefs
9. Equating Money with Happiness
Growing up with limited resources can sometimes lead to the belief that having more money is the key to happiness. While financial security is essential, this belief can lead to unhealthy financial behaviors and disappointment.
While money can provide comfort and opportunities, it’s not the sole source of happiness. Focus on building meaningful relationships, pursuing passions, and finding purpose in your work and personal life. These non-material sources of fulfillment are often more sustainable and satisfying in the long run.
10. Undervaluing Education and Career Development
Sometimes, growing up poor can lead to a focus on immediate income rather than long-term career growth and financial stability. The pressure to contribute to family finances or the belief that higher education is out of reach can limit professional development.
Understand that investing in your education and career can lead to more financial stability in the long term. Explore opportunities for skill development through formal education, online courses, or on-the-job training. Many resources are available for low-income individuals to pursue education and career growth.
Conclusion
Breaking free from the bad money habits learned from growing up poor is a journey that requires patience, self-reflection, and consistent effort. People who want to change must take the first step by recognizing these patterns in their behavior.
It’s essential to approach this process with self-compassion, understanding that these habits were formed as survival mechanisms in challenging circumstances.
As you work on developing healthier financial habits, celebrate small victories along the way. Each positive change, no matter how small, is a step towards greater financial well-being.
Your past experiences with poverty don’t define your financial future. You can build a more stable and prosperous financial life with determination and the right strategies.
The path to financial health may not always be easy, but it is achievable. By addressing these ingrained habits and beliefs, you’re not just changing your financial behaviors – you’re transforming your relationship with money and opening up new possibilities for your future.
Your experiences have given you resilience and resourcefulness; now, it’s time to channel those strengths into building the financial life you deserve.