What is Money Baggage?

Each of us carries around money baggage. This baggage is crammed full of the experiences, ideas, and beliefs about money that we had as children. It is stuffed to the brim with the attitudes about money our parents and other adults in our lives had and what they taught us through their actions or words.

Everyone has money baggage. Everyone. I don’t care how rich or poor, what race or nationality, whether spiritual or not. Everyone in your family has money baggage. All your friends carry some. Everyone you work with does too. As we’ll discuss later, even Dorothy in The Wizard of Oz had money baggage.

Our money baggage is a decision about money that we formed in childhood. It is based on something we experienced, were told, heard, or observed. Early on, something happened to us. We were taught something about money, or we heard adults talking about it, or found out it was something you don’t talk about, or we saw something that led us to make a conclusion about it that we treated as fact. And we did it without awareness, without realizing we were doing it. We considered it true and we made our lives conform to it without question.

You might, for example, believe that you have to work hard to make money. That you aren’t supposed to talk about money. That it is wrong to have too much. That you can never have enough because you can lose it at any time. You might believe deep down that you don’t deserve money, or that money is bad or that you’re not supposed to spend it on yourself.

These ideas about money are ingrained in us. We accept them as truth, the way the world is. And to the extent these beliefs go unexamined, they are responsible for affecting every decision we have ever made about money. They affect the job we have, the savings we do or don’t have, the way we spend money, what we spend it on, and whom we spend it with.

If you unconsciously believe deep down that you don’t really deserve money, that you aren’t good enough to enjoy abundance, guess what? That may be the reason you don’t get the raise you want, or never win that lucrative contract, or are always struggling to make ends meet. Or perhaps you acquire plenty of money but something always comes up and it is gone before you know what happened, either by spending it or giving it away. Deep down you are telling yourself that you don’t deserve it, and the universe is simply listening to that deeper voice and giving you precisely what you believe.

If you were taught that women aren’t good with money, that may be the reason you married a man who would provide for you and handle all the financial details in your life. If you believe that money is bad, maybe it makes sense that you don’t have enough, or can’t hold onto it, or attract situations that require more money than you expected to spend. If you saw a relative using money to control the family, maybe you vowed to become financially independent, never relying on anyone else—and perhaps you carry that independence over to parts of your life you never intended, and find yourself unable to maintain a long-term intimate relationship.

Our money baggage takes root deep in our subconscious. It is so deeply underground that we do not question it; we don’t even know it is there. In my workshops, some people will cross their arms and tell me emphatically that they don’t have money baggage or that they can’t identify it. But for those who keep working and do the exercises, their money baggage eventually appears. It is always there.

From listening to hundreds of people’s stories, I have identified the seven most common money baggage themes (some people may have more than one of these):

  1. I don’t deserve money.
  2. There will never be enough.
  3. Money is bad.
  4. I have to work hard to make money.
  5. I can’t depend on anyone else.
  6. Money equals security.
  7. Money determines my self-worth.

Because money affects everything in our lives, our money baggage affects our finances, our relationships, the house we live in, the job we have, and even our health. In later blog posts we’ll see specifically how and why.

As you read the stories in subsequent posts, begin to reflect upon your own earliest memories about money. In those memories you will find a blueprint of your current life and the specific struggles you have around money. What shaped your childhood? What conclusions and decisions did you make about money that are still silently driving your life today?

As you reflect on these matters, your money baggage may become obvious to you. But if you are like most people, it won’t be so readily apparent; you will need to dig a little for it. Whenever it comes to you, write it down; give it words; claim it as your own. This important act of claiming your money baggage is the first step toward living a life consistent with your highest beliefs about money and finding your soul’s true calling.

Next week I’ll provide advice on discovering your own money baggage.


Caring for Your Soul in Matters of Money

For most of my life I worked hard, excessively hard. It was the only way I knew how to live. And yet, despite long hours and dedication, I could never really get ahead financially. It seemed as though some invisible force held me in its grasp. My response to this was to work even harder and resign myself to the fact that struggling about money was just a fact of life.

Then I came across a book that changed my entire outlook. Professor Jacob Needleman, in Money and the Meaning of Life, talked about money from a philosophical point of view. He inquired into the role of money in the search for our ultimate purpose, our meaning in life.

I had never considered that money could have a deeper purpose. Money symbolized a never-ending source of struggle to me. How could it help me uncover a deeper meaning to my life? The soul searching that followed over the next few years led me to question everything I had ever been taught about work and money. It eventually led me to discover my true life’s work.

In exploring my deeper attitudes and beliefs around money, I came to discover core subconscious beliefs about money that I learned in childhood and that had run my life without my even knowing. I call these beliefs my money baggage. It was this money baggage that was responsible for my incessant struggles around money, my working hard but never feeling like I had more than just enough to squeak by.

Once I began my practice as a Certified Financial PlannerTM professional, I saw that I was not alone in struggling over money. Nearly everyone I spent time with shared these troubles, and it made no difference how much money they had. From millionaires to waitresses, they were all wrestling with core issues around money. With some people, their struggles were obvious: they were worried where the next check was going to come from or how they would pay for their children to go to college. With others it was more subtle, a nagging kind of worry that there wouldn’t be enough. Many people did not want to deal with money at all; they preferred avoidance. Others never were able to make ends meet no matter how hard they worked. And still others had plenty of money but weren’t happy or couldn’t stop working themselves to the bone. Young or old, rich or poor, every person I knew was struggling with money.

As I met with each of them I came to realize that each had their own unique money baggage they were carrying around. Each was operating on a belief system about money, handed to them as children. And, like me, they had unknowingly built their lives in complete alignment with these deeper beliefs.

As I helped individuals examine these deeper beliefs, they became consciously aware for the first time that their struggles over money were not innate, that they were not carved in stone. Rather, their experiences with money were born from a deeply held thought. As they learned to change their thoughts around money, their lives began to change, first inwardly and then outwardly.

Once these burdens of outworn beliefs and attitudes about money were brought into the light, I found that people had something else within them, a deeply resonant passion in their lives, some driving force pulling them toward what they wanted to do. I saw it so often that I now consider it universal. There is within everyone at a deep level a desire to live a more purposeful and meaningful life.

What holds most people back is not that they are unable to identify their passions and dreams and deeply held interests. It’s that, once defined, those dreams don’t seem attainable. There is always some obstacle—a feeling of unworth; a fear of leaving the familiar; conflicting feelings about being successful; a fear that those dreams wouldn’t be lucrative enough. So back they go inside the limitation of their money baggage where they continue to struggle over money.

For more than a dozen years now, I have led workshops to help people examine their relationship to money, deconstruct their limiting belief systems, and understand how to bring money in line with their deepest passions.

Each of us has a custom-made gift to give to the world. A gift based on our distinctive background, abilities, values, passions, commitments, and concerns. A gift that is a joy to give, an expression of who we truly are. A gift that inspires others and brings a purpose to our life. A gift the world needs. I believe our soul knows what our gift is. When we listen, we discover that gift. When we find the courage to give that gift to the world, we are caring for our soul.

Why does your soul matter in money? It matters because money affects everything in your life. And your life is sacred. Your soul wants you to do more than just survive; it wants you to live an authentic and purposeful life. Your soul is that voice deep inside you asking you to find meaningful work, and to do that work empowered by love and awareness, fully confident that the resources you want and need are available to you.

Only by incorporating the soul into our lives and, therefore, into our relationship with money, will we set fear to the side and gain a measure of that peace of mind, joy, and happiness we so often hear about but rarely experience.

Follow this blog every week as we dive below the surface to discover our innermost beliefs about money and transform those beliefs so money can do what money was meant to do: help us make the world a better and more loving place. This process is about making our subconscious beliefs and the attitudes we have about money more conscious. Then using this newfound consciousness, we can craft a more powerful and confident life that is fully consistent with the deep potential of our soul.

Get to Know Karen Ramsey

In the age of digital communications and social media it is easier than ever to “get to know” the service providers in our lives. Here’s a quick look at Karen Ramsey, CFP, founder of RamseyInvesting.com. Don’t miss page 2 of this fun little “flip book” — you’ll see how growing up on a farm and learning to live frugally helped this now nationally celebrated financial advisor form her current world view and service philosophies.

Get to know Karen Ramsey via this short “bio book.”

Helping Your Children become Financially Responsible Adults (part 2)

In this week’s blog post, Karen Ramsey continues with her tips on how to help your children become financially responsible adults.

4. Give your kids an allowance and cash gifts on special occasions to help them discover the power of saving. If you choose to give your children money, you can use it as a way to help them become more conscious about money and allow them to discover the power of saving.

I suggest splitting the cash gift allocation into four buckets; 1) Tithing; 2) Immediate Gratification; 3) Delayed Gratification; and 4) Long term goals:

  • Tell them that 10% of their money has to be given to someone in need. This is the “tithe” allocation. My younger daughter Annie told me, “I want to send money to an orphanage in China.”
  • Thirty percent of their allowance can be spent on anything they want right now. This is the “immediate gratification” allocation. If they want to spend this 30% portion on movies or candy or whatever, that’s their choice.
  • They need to save 30% for things that cost more. This is the “delayed gratification” portion. They may want a camera, a cell phone, an archery set, or in-line skates. They have to save until they can buy them.
  • The last 30% is for long-term goals, like college, or a trip to South America when they are sixteen.

Each portion of the cash gift has its own purpose. Each portion has a lesson that the child can learn from it. Incidentally, the above method of allocation is a valid practice for adults, as well.

For younger kids, give them jars for each portion of their allowance. You won’t believe how focused they will become, how fascinated and proud they will be, seeing the longer-term jars fill up. Visitors to your home will be escorted to the kids’ rooms to see their jars of money. In later years, you can set up a savings account instead of jars for the kids’ longer-term goals, and they will learn about the power of compounding interest.

I started Lydia, my oldest daughter, on a 25-cent allowance. When her Long-term jar got full, we set up her savings account at the bank. When her first statement arrived, showing she had earned 21 cents interest, her eyes lit up.

“How did that happen?” she wanted to know.

“Isn’t it amazing?” I asked. “All this time while you have been sleeping and eating and playing, your money has been just sitting there growing. And they gave you almost a whole quarter for it.”

She couldn’t believe it. Now every month, she can’t wait until the bank statement comes. She wants to see how much she earned while she was sleeping, eating, and playing.

5. Let them know what it costs to run a household. Allow children to participate in the choices about how to spend money and the reasons behind them. In junior high or high school, let them in on how the family finances work. Let them sit with you while you pay the monthly bills. Let them observe you writing the checks. Or let them write the checks and record them in the register. You can show them how much will go for groceries, etc. and how much is left at the end of the month. This is not intended as a guilt trip, but as an education. It allows them to feel that they are included in the overall picture. And they will have a better understanding of why you sometimes have to say no. As a result of this involvement, they will develop an understanding of good money management that will be invaluable to them later in life.

By not giving your children everything they desire, setting clear financial boundaries, helping them learn how and why to save, as well as what it costs to run a household, you are likely to help your children develop a better relationship with money. They will be more apt to solve their own problems, earn their own rewards, and mature normally. When the inevitable day comes that they get in trouble, they will not need to turn to you for financial assistance because you’ve helped them to learn how to make good money decisions on their own.

Going through this process will teach your children important lessons they would not learn if everything were just given to them. We don’t include our children in financial discussions because we don’t want them to worry about money, but including them makes them feel more valued and respected. Don’t you sometimes harp on your kids to be more responsible? Involve them in family financial planning, and observe the result!

Helping Your Children become Financially Responsible Adults

One of the complaints of many people today is that the world is full of people who feel entitled, particularly Millennials. As parents, we often ask ourselves, in a world that seems to reward entitlement, how do we raise children who have a healthy relationship to money and teach them to be financially responsible? Most people first learn about money from their parents—not by talking about it in any meaningful way, but by observing. But our parents may not have been the best role models for managing and spending money. After all, they probably learned about money by observing their parents. But what if we broke the cycle and actually talked to our kids about money?

We don’t usually include our children in financial discussions because we don’t want them to worry about money, but including them makes them feel more valued and respected in addition to beginning to teach them valuable money lessons. You certainly don’t need to talk to them about mortgage ratesand retirement plans. But you can include them in discussions about the financial ramifications of some of the decisions you make. Kids can understand and handle a lot more than we give them credit for.

At what age can you start teaching your kids about money and choices? I suggest somewhere around age six or seven. This is when they start comparing what they have to what their friends have. At this stage, the habit of asking for everything to “keep up with the Joneses” sets in. Here are five tips that can increase the chances that you will raise financially savvy children who grow into financially independent adults.

1. Don’t give them everything they desire. We all want to be good parents. One way to be good parents is to say no to our children when it’s appropriate. We don’t have to give in to pressure. The fact that we live in a consumer culture is a surprise to no one.  Our children are constantly bombarded with product marketing messages, whether online via Facebook and other social media or television programming, which has shifted significantly since we were children.  In the 1950s, a half hour television program occupied about 27 minutes of narrative space, leaving three minutes for commercials.  Today, half hour programming is about 21.5 minutes, with 8.5 minutes of commercials. We live in an era where brand name logos are the “in” things to wear. This influence comes right into our living rooms.

Resist this influence. Saying “no” at times will set your children on a responsible course for the future, and it will make an extraordinary difference to your pocketbook.  Saying “no” does not mean you love your children any less, that you are depriving them, or that you have failed somehow. It means that you are establishing clear boundaries.

2. Set financial boundaries for your children. Kids need and love boundaries. When kids are given everything they ask for during their developmental years, it makes a strong imprint. They grow up believing they should have everything. It creates and reinforces a mindset that says the way to get something is to demand it—or always expect that it will be given to you. It eliminates the cause-and-effect relationship between productive effort and reward. It sets in motion a materialistic pattern that will cost both you and your children tens of thousands of dollars over the years. Make the boundaries clear. Tell them, “I can afford to get you this pair of roller blades. If you want that other more expensive pair, then you’ll have to help make it happen.”

3. Help your children set reachable financial goals. Have your kids create a list of their goals: getting a new soccer ball, taking rock climbing lessons, or traveling to Mexico. Then have them prioritize which of these are most important, and help them develop a savings plan to achieve some of their goals. As parent, you decide the goals to which you want to contribute. Tell them, “Okay, you want an iPhone. You want a guitar. You want every new X-Box game under the stars. You want a clubhouse in the back yard. Here’s how much money is available. You decide which of these things you want most. Or maybe you want to save this money and go to Disneyland next spring. You decide. It’s your choice. But you can’t have it all—unless you want to earn the money to pay for it.” This strategy also de-emphasizes a reliance on credit.  This teaches children not to go out and charge whatever they want, but to create attainable goals, and then save the money to buy the things they want.

If you involve your kids in financial decisions, you might even be surprised at what they come up with. A friend’s daughter thought of starting a silver polishing business. Around the holidays she distributes fliers in the neighborhood and always has plenty of customers.

Tune in next week for the final two tips on how to help your children become financially responsible adults!