Many of us grew up relatively poor and we did not even know it. Not having money was a fact of life. Having parents who “paid on” the light bill, who bought “day-old bread” or who got groceries “on credit” was a common experience. I often heard my mother say she had to “take from Peter to pay Paul.” Since I didn’t know of them, I was always perplexed by her statement. As I got older, I realized that I sometimes had an unhealthy relationship with money and spent money before I had it and bought things that I could not afford. I also learned that there is a difference between being rich and being wealthy. Someone told me: “Kobe Bryant is rich-- the person who signs his checks is wealthy.” Most of us would be “aw-right” being in either position….but being and staying “broke”….well, that’s just plain unacceptable!
In a report entitled Income, Poverty and Health Insurance Coverage in the United States: 2009, it was found that among the working-age population, ages 18 to 65, poverty rose from 11.7 percent to 12.9 percent. That puts it at the highest since the 1960s, when the government launched a war on poverty that expanded the federal role in social welfare programs from education to health care. Additionally, while poverty rose among all race and ethnic groups, African Americans and Latinos were the hardest hit. Among Latino populations, poverty increased from 23.2 percent to 25.3 percent; for African Americans it increased from 24.7 percent to 25.8 percent. The number of whites in poverty rose from 8.6 percent to 9.4 percent. Furthermore, in an November 2007 report, "Borrowing To Make Ends Meet," investigates noted that as early as in 2004, 84 percent of the African-American households that carried credit cards, owed debt on them (when compared with 54 percent of white households).
So, it is no secret that we, as a community, have problems with money. Many of the clients who visit my clinic experience symptoms of depression, anxiety and interpersonal conflict because of their lack of money and the limited availability of high paying jobs. For example, it is estimated that for every dollar that a white American makes, an African American gets approximately 62 cents for the same work. Even education does not equalize this pattern as statistics show that with similar levels of education and work experience, women and members of communities of color are paid lower wages than their white or male counterparts. An exception is among Asian Americans, who tend to be better paid with increases in education. So, while many of our difficulties with money are systemic in nature, other problems exist because we don’t know how to manage the money we’ve got.
Susan Zimmerman, LICSW, wrote a book entitled: The Power in Your Money Personality. In her book she pointed out that the way that we spend is emotionally linked to our personalities. She stipulated that there are eight “money personalities” that describe our relationships with money. These money “rascals” are identified as: “flashers, rashers, ashers, bashers, clashers, dashers, cashers and stashers.” “Flashers” like to make flashy purchases and buy a lot of “bling-bling” for the purposes of boosting their images. “Rasher” make rash, poorly planned and impulsive decisions about spending their money. They often have buyer’s remorse. “Ashers” are often ashen and pale from constantly worrying about money. “Bashers” on the other hand, bash wealth and materialism.
“Clashers,” according to Zimmerman, have clashes between distinguishing what they want from what they need. For example, you may need a car, but want a Mercedes. You over-extend yourself by buying a car that you cannot afford when a basic car like a Ford Focus will do. Interestingly, another group of people are called “Dashers” because they dash around neglecting money tasks like paying their bills on time or balancing their checkbooks. “Cashers” are like our grandmothers who used to pin cash in their bras wrapped in handkerchiefs, or who put money under their mattresses. “Cashers” don’t like banks, but prefer to keep their savings in cash (just in case there is another run on the banks due to a depression). Finally, “Stashers” are the type of people who put money away for growth investing. They buy savings bonds, put money in stocks, or interest bearing accounts.
So, depending on your money personality, your spending priorities and patterns may shift. Some of these personality types can land you in trouble with bounced checks, money you impulsively spent and can’t get back because of refund policies, bad credit ratings and even coming home one evening to find your lights cut off (because you forgot to pay the bill!). While such problems arise from having a negative attitude about the money, there is hope. In her book, 5 Steps to Developing A Millionaire Mind: A Broke Man or Woman's Guide To Wealth, a colleague of mine, Linda Etim, MSW, LICSW, points out that we all have the ability to achieve wealth, but our feelings and emotions as related to money lead us to destructive behavior patterns that keep us broke and therefore, we must learn to re-program our patterns of behavior around money and create a plan about how we are going to create the wealth we desire.
As mentioned earlier, our attitudes about money were ingrained and derived from childhood. Consequently, these beliefs and practices may require professional counseling in order to be changed. As parents, we may have to work hard to intentionally teach our children (and ourselves) about finances. Here are some tips to help you (and your children) change your relationships with money and manage it better:
1. Make saving a habit. Make a house rule of everybody (including you) saving a percentage of your income, whether it's birthday money from relatives, earnings from a neighborhood lemonade stand, weekly allowance or a full or part-time job.
2. Open a savings account for yourself and one in your child's name. Bank savings accounts help children discover how money can earn money on its own -- through compound interest. Banks usually can provide you with a compound interest table so that you can see how money can grow over time if untouched.
3. Set a financial goal for yourself and encourage your children to do the same. Writing down a “wish list” of items desired and plotting a course of savings that will get you there is a great way of teaching yourself and your children to “delay gratification” and avoid impulsive spending.
4. Give regular allowances to yourself and your kids. For kids, allowances provide hands-on experiences with saving and planning their spending. For you, it limits your spending but gives you some feeling of not being financially trapped. You should also determine the amount of allowance that you think fits. For example, give kids an amount not over half their age per week.
5. Learn to budget. The most difficult aspect of money management is learning to budgets. Budgets should be realistic. If you know that you will need to get your hair done, buy groceries and gas for your car, don’t lie to yourself and say “I can still buy this Coach bag---I won’t eat anything but Ramen noodles for three months” when you know good a well, you will not follow through. Give yourself money for savings, charitable giving, entertainment and make priorities for your basic housing, credit cards and utilities.
6. Don’t spend what you don’t have. Ooooh, this is the hardest task of them all! Credit cards charge you interest, money doesn’t buy love and a new dress or pair of shoes won’t increase your value or self esteem! Possessions also won’t relieve your anxiety, depression, or loneliness. Seek counseling for those issues.
7. Avoid pay day lenders”….okay, these companies are like “loan sharks”…they are in the same boat as chocolate when you are dieting –so, don’t even think about it! Unless it is a life and death scenario (which it rarely is), you should try to pick up extra work, or even sell your un-needed possessions.
8. Know that there is help. Seeking financial advisors and mental health counseling saves relationships and stress.