Discovering Your New Money Message

Over the course of the past couple months, we thoroughly explored the power that one erroneous, defining decision—our money baggage—had on the development and expression of who we are and the life we created. How, gradually, that decision determined our actions, and those actions became the core reality around which our world shaped itself.

A new money message is the antidote to money baggage. It is the process of generating and activating a new language inside ourselves. It is a conscious infusion of the soul’s desire, a focal point in the form of a statement that we allow to guide our choices for the rest of our lives. It all begins with our thoughts, which become our words, and then our actions.

The words we think and say to ourselves influence our lives profoundly. Our world conforms to these words. One of my friend’s daughters who is somewhat gifted in math uses her words and thoughts in a way that strongly influences her life. When asked what her favorite subject is, she replies, “I love math. I’m really good at it.” This response helps cultivate an attitude of curiosity and self-confidence, eagerness, and self-assuredness with regard to math. She approaches her homework and tests with the confidence that she can figure it out. Her actions are consistent with her deepest self, and her world gradually shapes itself to those actions.

Compare this to the woman who, as a child, was also good at math but who didn’t study for a test and failed it. When her teacher made a comment about the test being one that should be easy to pass, the student started doubting her math abilities, and gradually decided she just wasn’t good at math. Now, as an adult, she doesn’t balance her checkbook, freezes when it comes to reviewing loan documents, and procrastinates on paying her bills—all because her money baggage says she’s not good at math.

Our money baggage is about the past, and yet it defines our present circumstances and attitudes about money; it speaks in the language of fear and contraction. It comes from a forgotten place in childhood and has lodged itself in our subconscious.

Our new money message is about the world we will create; it speaks in the language of love and expansion. It is formed consciously in adulthood and will transform our subconscious and ultimately our outer life. It expresses itself from our soul.

When we create our money message we are generating and activating a new language inside ourselves. Our new money message is a fresh centering point. It is the energy that will shape and empower the rest of our lives.

Just as we formed a decision about money early on and then lived our lives in alignment with that decision, we can now create a new decision, a new thought—this time more consciously—and align our lives with it. If we take actions consistent with this new thought—our money message—our lives will never be the same.

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Read Karen Ramsey’s Column in U.S. News

If you enjoy the content on the RamseyInvesting.com blog and you’re looking for additional insights into personal finance, check out Karen Ramsey’s new column in U.S. News! Every month, Karen will provide advice and tips on investing, retirement, and more. This month, Karen discusses the benefits of creating a Personal Spending Plan in order to ensure a more secure retirement. Read more now! 

Our Money Baggage Is Formed In Childhood

Money baggage is the decision about money that we made when we were children. Early on, something happened to us or we were taught something about money or we saw something that led us to make a conclusion about it. We took this conclusion to be fact.

Throughout our lives we have taken actions consistent with this decision about money and these actions have shaped our lives. These actions, though arising from a false belief, influence our current attitudes and relationships with money.

From our early experiences, our money baggage might be:

Money is scarce; we can’t afford it.
I don’t deserve it.
Rich people are mean.
Money is not something to be talked about.
Girls are not good with money.
I shouldn’t spend money on myself.
It’s not okay to want things.
Save for a rainy day.
Get a good paying job.
If I am an artist, I’ll be poor.
Be responsible.
Money is power.

The message may not have been verbal, but we got the message just the same. From our observations and experiences, we formed conclusions about money that have run our lives ever since.

Everyone you know has money baggage. As I mentioned in the Introduction, even Dorothy in The Wizard of Oz has some. Let’s take a look at what conclusions Dorothy might have made about work and money.

As you know, Dorothy lived on a farm in Kansas with her dog Toto, and she found people around her too busy to deal with her. The story opens with Dorothy running onto the farm excitedly to tell Auntie Em about mean old Miss Gulch hitting Toto for running in her garden after her cat. But Auntie Em and Uncle Henry are too busy to listen and can’t be interrupted: the incubator has conked out and they have to count the chicks and get them into another pen. Dorothy urgently tries to convey the importance of what’s happened, saying that Miss Gulch has threatened to get the sheriff, but Auntie Em, preoccupied with her work, finally just tells Dorothy to be helpful and stay out of trouble.

This scene alone is enough to conclude that Dorothy might be getting the message that chickens (work and money) are more important than she is. This idea is reinforced later when she falls into the hog pen and hits her head. She is pulled out and is being tended to by the farmhands when Auntie Em comes over and threatens to fire them for “all this jabberwocky.” When they try to tell her about Dorothy getting hurt, Aunt Em will have nothing to do with it. She hustles them back to work because work is more important.

If we assume Dorothy grew up around this attitude and behavior over the years, it’s also safe to assume she might have ended up with some definite ideas about how much higher work ranks in the family than she does.

Few of us grew up on farms, but we might recognize the issue. How many of us learned early on that work and money took time away from the family? That work always came first. Being children, we took everything personally. If we did not get the attention, time, or love we wanted, it must have been because there was something else more important than us. Or we may have decided that there was something wrong with us. Or that we did not deserve love or attention. Whatever conclusion we made, we made it deeply; it formed the basis of our life.

Dorothy’s story goes on to illustrate another money baggage lesson that might have also informed her view of the world. When mean Miss Gulch storms into the farmhouse, she carries in her hand an order from the sheriff to take Toto away. Dorothy sees her aunt and uncle buckle under, and to her horror, they hand Toto over to Miss Gulch. But not before Auntie Em gives Miss Gulch a talking to, outlining her despicable qualities and noting that she only got that order from the sheriff because she owns half the county.

So what might Dorothy learn about the world seeing this? Miss Gulch may be the only rich person Dorothy ever knew. From her child’s point of view it would appear that money meant power and that rich people were mean. If you had money, you could even get the sheriff to take your dog away. How might something like this affect Dorothy later in life?

As we will see as we discover how money baggage works, someone who believes that money makes a person mean might end up creating a life where he or she becomes an honest, hardworking person but never allows himself or herself to have much money, for fear of becoming a bad person.

What exactly is money baggage? It is the set of beliefs you gained in childhood about money, which now operate subconsciously as automatic behaviors and attitudes in your life. And these behaviors and attitudes dictate all of your decisions about money. We create innocent but mistaken ideas about money and these ideas end up coloring our existence for as long as we let them.

To be continued next week… Part 2 of How Money Baggage Is Formed In Childhood.

Discovering Your Own Money Baggage (Part 3)

I remember being at a stoplight after another twelve-hour day thinking my usual: If I keep working I’ll be able to retire someday. I just have to make it through the next twenty-six years. I noticed how tightly my hands were gripping the steering wheel and how tense my shoulders were. The appalling reality of this future was weighing down on me.

I began to think about how my early life and experiences around money had shaped my adult life. I suddenly realized that although it was me behind the wheel, my money baggage was the real driver in my life. The idea—that I had to work hard and, no matter what, there would not be enough—was in control, not me.

Over the next few months, I began to get glimpses of how powerful and pervasive the conclusions I had made as a child were, and how strongly they influenced me. You have to work hard to make money, and even if you do, you’ll never make enough had led to an endless cycle of work and worry and fear. As I was looking out the window one day, pondering this, a question kept running through my mind, “What should I do with my life?”

I knew I had always been interested in the role money played in my life choices, so I decided to take some courses in financial planning. I found it so interesting that I continued to study and take more classes. I worked hard at it (naturally) and became a Certified Financial Planner™ professional. I hired a career counselor to help me develop a business plan and a marketing strategy. Three months later, I opened up a financial planning practice.

I was thrilled to be doing financial planning, something I loved to do. But I still found that life stubbornly held on to its tendency to make my money baggage come true.

My income would rise and fall on a monthly basis in direct correlation with my expenses. When I had a good revenue month, my expenses would also be high—the copier would break or quarterly taxes would come due. So I would eagerly look forward to the months when it looked like my overhead would be low, thinking if my revenue stayed high, I’d start to get ahead. But it never happened that way. In low-expense months, my revenue would dip, almost as if by magic, leaving me with my usual sense of scarcity. No matter what I did or how I planned, I could not get ahead. I could not shake my underlying fear that, even if I worked like crazy, there wouldn’t be enough.

My circumstances had developed in perfect harmony with my money baggage. It was as if my money baggage was the background music that had played in every scene of my life.

Discovering your own money baggage is the first step toward overcoming your struggles around money. It is not hard work to do. It’s just that most of us have never had our attention drawn to it. We have never explored our beliefs about money because we consider our beliefs to be complete fact, “just the way life is.” But you will find, as you do this work, that your money baggage is not true. You have simply lived your life in alignment with an erroneous decision you made as a child. Given that you’ve never examined your life in this way before, it’s easy to see how that could have occurred.

In the blog posts that follow, you will learn the three basic principles that underlie your money baggage. You’ll also examine questions that will reveal to you your own money baggage and how it has shaped every part of your life. Later on, you will learn about creating a new money message. By living your life in a way that is consistent with this new message, you will begin to manifest your dreams.

Next week: The Three Basic Principles that Underlie Your Money Baggage.

Discovering Your Own Money Baggage (Part 2)

In my adolescent years, I lived the only way I knew how to live: by working hard. I excelled academically. I joined the band and honor society. I was editor of the yearbook. On top of all this, from ninth grade on I worked twelve to sixteen hours a week in the lab of our local hospital cleaning test tubes. I tried to pretend that my family had money but—even if I fooled my classmates—I knew deep down it wasn’t true.

I carried my money baggage into adulthood. I worked hard and put myself through college, got good grades, and found my first job soon after graduating. I was the ideal employee, working my tail off, coming in early, and staying late. I worked through lunch. My boss knew if there was a job to do, I’d get it done no matter what it took.

For me, that’s just what you did in life—work hard. It’s how life was. Working hard wasn’t a conscious choice for me. It was a given—no questions asked.

I didn’t notice I was still “driving the tractor” from sunup to sundown. It was so automatic for me to work hard that the thought of not working hard made me panic. I thought I could lose everything at any time if I didn’t stay at it.

Despite my hard work and the fact that I made pretty good money, I was always haunted by the feeling I’d have to make that drive to the bank for a loan. Deep down I knew there wouldn’t be enough money to get me through. So I worked even harder. I started a business consulting practice and worked sixty to seventy hours a week. I went in early, I paid all the bills, and I arranged all the appointments. I prepped for client pitch meetings or for the consulting work.

While I was doing all this work, it seemed that my business partner, Nita, was always in one of three places: getting her nails or hair done, playing with her kids, or working out. I’d pick her up, we’d do the two or three hours of consulting with the client, and I’d drop her off at home. Then I’d go back to work. This went on for a year and a half. Finally the day came when I said, “Nita, this isn’t working for me.”

Nita, looking a bit confused, said, “What isn’t working for you?”

“Our business partnership—it isn’t fair. I’m working all these hours, but we both get paid the same. I work before and after you, getting ready for our client work, doing all this extra stuff…and then you just waltz in to do the consulting work. I’m working way more than you are,” I snapped.

Nita wasn’t the least impressed. She said, “Karen, it’s because you have it completely wired up that you have to work hard. I don’t. And even if I did work harder, you’d find a way to work just as hard as you are now. You’d find something else that had to be done. I let you do all that work, because you feel like you have to do it.”

“And it’s even worse than that, Karen,” she said. “Some people make a lot more than we do and they work a lot fewer hours. Maybe it’s not all about working hard.”

“Of course it is, Nita. How else can we have a successful business and make enough to support ourselves?” I replied indignantly.

I didn’t want to hear any more. I drove her the rest of the way home in silence. After dropping Nita off, I started to argue with her in the empty car. “How dare you say that to me? How the heck can you make money and not work hard?”

But Nita’s words haunted me. I respected her and her opinion enough that, even though I didn’t like what she’d said, I knew there had to be some truth in it. I’d seen my mom and dad work themselves to exhaustion and, trusting in them as role models, I didn’t know any other way. If working hard was not the answer, then what was?

Soon after this conversation, Nita and I closed our consulting practice and I took a job as a human resources director at an ad agency. Guess what? I worked really hard and very long hours . . . and never had more than enough money.

To be continued next week … Part 3 of Discovering Your Own Money Baggage.

Discovering Your Own Money Baggage

Most of my adult life you could have described me as a workaholic. Sixty-hour workweeks were standard. I was always the first to arrive and the last to go home at night, regardless of the job. I could never do enough. And yet, despite working long hours at good paying jobs, I never had more than just enough to get by.

I grew up on a farm in Loveland, Colorado, where we didn’t have inside plumbing until I was in third grade. My dad got up at four-thirty in the morning to milk the cows, seven days a week. He would work in the wheat, barley, or alfalfa fields all day and be back in the barn at five o’clock at night to milk the cows a second time. He’d come in for dinner. He’d eat. He’d sit in his easy chair exhausted and fall asleep. Around nine he’d get up and go to bed. At four-thirty the next morning he was up milking the cows again.

I remember wishing my dad would play with me, but he never had time for playing. If he wasn’t milking the cows, he was driving the tractor in the fields or working on the machinery. It seemed like the only time I spent with him was going to town to get a part for some machinery that was broken. I secretly hoped something would break so we could go to town together; a guilty wish since I knew fixing it would cost money, which was in short supply.

I remember only one vacation in my entire childhood, three days at a cabin in the mountains. I dreaded hearing my friends describe their vacations, praying they wouldn’t ask me what I did. Playing on our tire swing and reading library books always paled in comparison to their vacation activities. I wanted to fit in but knew I never would.

While my dad was tending the farm, I saw my mother work equally hard, raising us, taking care of everyone, and making sure that we had three square meals on the table each day. Growing up in this environment, I made a conclusion about life that, years later, I came to recognize as the first part of my money baggage. What I learned through observing everything around me was you have to work really hard.

But working hard is not the only thing I learned from my parents. I also observed how the constant struggle with money issues affected our lives, and this became the second part of my money baggage. Let me explain.

August meant harvest time on the farm. My father had the wheat and barley trucked to the granary. On settlement day, we received a check for the tonnage of grain delivered.

It was the happiest day of the year, and it started with a trip to the bank. The whole family drove five miles from the granary in Loveland to the town of Berthoud to deposit the check. We’d go out for an ice-cream cone afterward—something we didn’t usually do. I vividly remember riding in the back of my parents’ blue 1954 Ford, with the wind in my hair and feeling that everything was right in the world.

Months later, in January, February, or March, I would see my father at his desk poring over papers, sorting bills, running his hands through his hair, trying to make ends meet. His shoulders would be slumped and he’d shake his head a lot. Eventually he would throw his pencil down, push his chair back from the desk, and say, “Well, we just have to go to the bank and get a loan to make it through until harvest.” I could see the anguish in his eyes and, although he never said it aloud, I knew he felt like a failure.

In the kitchen, I saw my mother crying. I loved my mom so much. I wanted her to be happy and it broke my heart to see her cry. It made me feel alone and really sad for her. And scared—scared that we wouldn’t have enough to eat, that my parents wouldn’t ever be happy again, that I’d never have a life like other kids, that life wasn’t going to turn out.

The ride on this second trip to the bank, to borrow the money to get us through until the next harvest, felt much different. The three of us rode in silence: my father gripping the steering wheel and clenching his jaw; my mom looking out the window with a resigned look on her face; and me in the back seat, hoping she wouldn’t start crying again.

Every year, this boom and bust cycle repeated itself. Happiness on settlement day; fear, sadness, and frustration on loan day. I vividly remember the day my dad sold the farm. To get out from under the debt that had accumulated over the years, he was forced to hand it over to a banker from Denver who wore fancy cowboy boots that had probably never seen the inside of a barn. From a distance, I saw him hand my dad the check for the farm and, even from where I stood, I could see the relief in my dad’s face—finally he could get out of debt. But I knew deep inside he was humiliated to have “lost” the family farm. From that moment on we were tenant farmers—living on the farm that had been in my dad’s family for more than forty years. But instead of my dad working hard to make money for us, he was doing it for the rich businessman.

From watching and experiencing all of this, the second part of my money baggage emerged. I concluded there is never enough. I put these two innocent conclusions about money together at an early age and they became my money baggage: You have to work hard to make money, and even if you do, you’ll never make enough. This simple and erroneous conclusion became the unconscious burden I carried around for the next thirty-plus years of my life.

To be continued next week … Part 2 of Discovering Your Own Money Baggage.

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!