American salesman and motivational speaker Zig Ziglar once quipped that money might not be the most important thing in the world but that it was “right up there with oxygen.” 

In other words, money might not make you happy, but being broke will definitely make you miserable. 

And even when you know how to manage your money in theory, it’s all too easy to fall back into bad habits. 

Why is this? Well, it could be because you're not paying attention to why you spend money the way that you do. Reflecting on your behavior, beliefs, and relationship with money will make it a whole lot easier to get a handle on your personal finances. 

Your view of money is shaped by what you learn about it as a child. 

For example Amanda has always loved to shop. For her, shopping isn’t just about finding great deals – it’s a sport. 

It gradually became more than that, though. Despite having a well-paying job, she regularly spent more than she was earning. By the time she was in her late thirties, her partner was growing increasingly frustrated with her financial behavior and her marriage was in trouble. Something had to give. 

After seeing a counselor, Amanda realized that her behavior was a reaction to growing up with extremely frugal parents – the kind of folks who save the bags from cereal boxes “just in case.” 

It turned out that overspending was Amanda’s way of rebelling against excessive thriftiness. This isn’t a unique experience – in fact, just about everyone’s relationship with money is shaped by their childhood. 

Financial decisions aren’t made in a vacuum. Some factors, like how much you earn, are obvious. Other factors operate in the background, but they’re no less influential. 

As the psychologist and bestselling author Henry Cloud puts it, “How you’re glued together has everything to do with how you spend your money.” If you want to make better choices and improve your personal finances, you have to first understand why you handle money the way you do. 

That’s where the concept of the money classroom comes in. This is where you first became aware of the adult world of personal finance. 

All children learn about money in two different ways. The first is what their parents communicate verbally. The second is what their parents communicate emotionally. 

Different households create different kinds of classrooms. Some parents never discuss money with their children; some don’t talk about money at all. This creates a verbally closed classroom. Others are open – parents bring up issues like bills or investments at the dinner table. 

Emotional communication meanwhile can be positive or negative. In some households, children feel a sense of calm when financial topics come up. In others, money is associated with stress and anxiety. 

These variables interact to create distinctive classrooms, but thinking about your childhood experiences in this way can help you explore your relationship with money in the present. How? Well, let’s take a closer look at three common types of classrooms and the challenges that come from growing up in them. 

Awkwardness and fear are the most common symptoms of the anxious classroom. 

 As a young boy, Sam went grocery shopping with his mother. She always bought day-old bread. He never gave that any thought until he went to the store with his friend’s mom one day. She took her bread from a different shelf after carefully inspecting each loaf. He wondered what she was doing. She told him that she was selecting the freshest loaf. 

When he later asked his mom why they didn’t also do that, a flash of anxiety crossed her face. She explained that expired bread costs half as much and it’s eaten quickly anyway. She also added that every cent saved helps to pay the bills at the end of the month. 

It was the first time he realized that money was a source of constant worry for his parents. He grew up in an anxious classroom. 

Financial behavior isn’t discussed much in this classroom. But while money might not cause loud arguments, it does inspire a visceral emotional response, and kids pick up on that. 

If you grew up in this kind of environment, it’s likely that you’ll face one major challenge later on in life: talking about personal finance at all. That’s hardly surprising. Why would you want to discuss something that caused people you love so much stress? 

Take some time to think about your relationship with money. Does your partner or your best friend know how much you worry about making ends meet? Have you ever talked about your fear of not saving enough for retirement? If the answer is no, it’s time to make some changes. 

That can be tough, so start slow. Tell someone you trust that you have a hard time talking about money and that you want to change that. Just saying this out loud can lead to a valuable conversation. When you feel more comfortable with the topic, try to articulate why you find it difficult. 

This will be awkward – initially, at least. But remember: fear thrives in the darkness. The more you bring it into the light, the less power it’ll have over you. 

The unstable classroom can lead to apathy. 

As we’ve just seen, some households are silent when it comes to money. Others are loud. But that’s not always a good thing. Talking honestly about financial matters can be instructive. But constant fighting can damage a child’s relationship with money. 

The problem with parents openly airing their grievances about the household finances is that kids are both highly receptive to negative emotions and incapable of doing anything to change their situation. 

The result? A sense of powerlessness in the face of instability and chaos. 

Call it the unstable classroom. In it, adults never stop talking – or shouting – about money, but they never seem to get a handle on their finances either. While there are plenty of issues, there aren’t a whole lot of solutions. 

Jill grew up in this kind of environment. Her parents constantly worried about money and they didn’t hesitate to tell their children about the family’s financial troubles. When times were bad, they were short-tempered and often fought. If one of the kids asked for a special brand of cereal or new sneakers, they were angrily told that such luxuries were out of the question. 

But when times were good, her parents were anything but frugal. Suddenly, everyone was in a good mood and there was cash for shopping sprees and treats. For Jill, these reversals were like whiplash. There was little rhyme or reason to her parents’ decisions. Looking back, she can see that they didn’t live “intentionally” with their money. It was like the weather: sometimes it was sunny and sometimes it rained. Either way, it was out of anyone’s control. The only difference was that, unlike running out of money, the rain didn’t make her parents fight.  

It’s easy to see why graduates of the unstable classroom tend to be apathetic about money. Having been taught that it both causes conflict and comes and goes spontaneously, they often try to avoid the subject altogether. If you grew up in this type of classroom, you might wonder, What’s the use in trying – it’ll only lead to a fight anyway. As understandable as these reactions are, you don’t have to accept the status quo. As we’ll see later on, things really can improve when you take control! 

You can’t understand how money works if you aren’t even aware of it. 

Anxious and unstable classrooms are all about the absence of money, but growing up with enough money – or at least the idea that there’s enough money – can also be an issue. 

Which leads us to the unaware classroom. If you grew up in this classroom, there’s a good chance you never worried about money as a kid. In fact, you probably never even gave it a thought. Money just wasn’t on your radar, which isn’t surprising given that your parents never seemed to talk or worry about it either. 

Some say ignorance is bliss, but that doesn’t apply here. At some point, you need to take control of your own money. If you haven’t been taught how, that’s going to be a tall order. 

Kids typically grow up in the unaware classroom for one of two reasons. 

The first is easy to guess: some people’s families are well-off. If money wasn’t an issue for your parents, it won’t be much of an issue for you either unless your parents went out of their way to educate you about personal finance. If they didn’t do that, you’re likely to have reached adulthood without really knowing how it works. 

Other people’s parents genuinely struggled to make ends meet but tried to protect their children. They saw a choice between burdening their kids with adult worries or keeping them in the dark and chose the latter option. 

Parents usually try to do right by their children in both situations, but their strategies can backfire. The most common issue? Lots of people feel betrayed. Some ask themselves why their parents didn’t bother teaching them this important life skill. Others resent the fact that their parents lied to them and pretended everything was fine when it wasn’t. 

Not being taught about money also has practical implications. Kids reach adulthood and suddenly discover that this thing they don’t know anything about is really important. Put simply, you don’t know what you don’t know. So, if you’ve never been taught about something like budgeting, there’s no reason why you should intuitively grasp the importance of a budget or its connection to your life goals. 

If any of the three classrooms we’ve looked at so far sound familiar, don’t worry – we’re going to look at some approaches that’ll help you get on top of your finances. 

Creating a $1,000 emergency fund is the best way to start getting a handle on your money fears. 

Fear is the body’s way of telling us that we’re in danger, and it’s a universal human emotion. When you’re scared, your brain releases hormones which sharpen your perception and allow you to respond to threats. This biochemical reaction is at the heart of the fight-or-flight response. 

But fear comes at a price. Heightened attentiveness to dangers narrows the mind: you don’t spend much time contemplating the meaning of life when you’re being attacked by lions. 

What’s worse is that fear can become paralyzing. And That’s anxiety – the unfocused fear that roots you to the spot when you can’t see an obvious way out of a dangerous situation. 

Wild animals aren’t really a threat these days, but this hardwired response kicks in whenever your survival is threatened. No wonder, then, that so many people live in fear of running out of money! 

Survey after survey shows that nothing worries people more than being unable to come up with money in a pinch. 

What if my boss calls tomorrow and lets me go? What if my kid gets sick and I suddenly have to pay lots of hospital bills? What if there are more pandemics and the economy keeps shutting down? What if my car won’t start and I can’t get to work unless I pay someone to fix it? 

These are the kinds of scary questions which trouble the sleep of millions of Americans every night. And for good reason. According to a 2017 CareerBuilder survey, 78 percent of Americans live paycheck to paycheck. The Federal Reserve meanwhile reports that just under 40 percent of Americans can cover a $400 emergency with cash. In other words, four in ten Americans are one run of bad luck away from a financial crisis that threatens their survival. 

So what should you do if you also find yourself awake at night worrying about those “what ifs”? The simple answer is this: create an emergency fund. 

Life is unpredictable, but there’s one thing that’s almost guaranteed: there will be times when you need cash to bail yourself out. A good starting point is $1,000, an amount that’s both low enough to be realistic with a bit of hustling, and large enough to cover a lot of unexpected expenditures like car repairs and smaller medical bills. 

Concentrating on low-hanging fruit can help you get out of debt fast. 

Elizabeth once owed $40,000. Elizabeth was a school teacher earning a modest salary and she made regular payments, but just couldn’t get on top of her debt. And it was actually growing thanks to the interest. Desperate to dig herself out of this hole, Elizabeth turned to a financial expert. 

The expert advice to her is to earn more. Elizabeth started looking for odd jobs to supplement what she earned teaching. She walked dogs, babysat, worked weekend shifts in a local bakery, and looked after people’s houses when they went on vacation. It worked: with her extra income, Elizabeth managed to get out of debt. 

She wasn’t just randomly throwing cash at the problem, though – she was following a tried-and-true strategy known as the snowball method. 

The snowball method is the simplest way of getting yourself out of debt. Here’s how it works. 

The first thing you need to do is take stock of your debts. What do you owe, and to whom? List every debt from smallest to largest, whatever the interest rate. Once you’ve done that, you’re ready to start. 

From now on, you have only one goal: clearing your smallest debt as quickly as possible while continuing to pay the minimum on every other debt. 

How? Well, that depends on your situation. In some cases, minor budgetary changes like eating takeout once rather than twice a month will free up enough cash. But if you don’t have that kind of leeway, you’re going to need a side hustle. The point is, do whatever it takes. 

Once you’ve cleared your first debt, you can move onto the second-smallest debt. And Once that’s gone, you’ll move on to the next and keep repeating this process. 

Keep in mind that when you move onto your third-smallest debt, you’ll no longer be putting anything toward minimum payments on your second smallest debt. This money is already accounted for, though, which means you can recycle it without feeling the pinch in your monthly budget. 

Like a snowball rolling down a hill, this approach to reducing debt is all about gathering momentum. The further you go, the easier it gets. And that’s not just great for your financial health – it’s also going to give you greater peace of mind. 

Cut expenses and avoid debt by only buying things you need. 

In 2019, the New York Times interviewed newlyweds about their honeymoons. The paper wanted to know why so many people have bad experiences. 

One couple who broke the bank for a trip to the idyllic Caribbean island of Aruba provided an answer. 

The thing the groom remembered most were the sunsets. It wasn’t their beauty that made an impression, though – it was the amount of time his wife spent photographing them for social media. Dinners in expensive restaurants were no different. Rather than ordering things she enjoyed eating, the bride picked dishes that looked good on Instagram. 

The honeymoon cost a fortune and almost tanked their marriage. What went wrong? Well, spending money to impress others is an expensive business. It’s also likely to make you miserable. 

Appearances deceive. As we’ve seen, around 40 percent of Americans struggle to come up with $400 in an emergency. This fact is disguised by easy access to credit. 

Households with credit card debt have an average balance of $14,500. Borrowed money doesn’t just cover essentials or unexpected bills, though – it’s also financing lifestyles that those same households can’t afford. The brand new SUV in his driveway may make it look like your neighbor has it all together, but the statistics tell us there’s a good chance he’s living paycheck to paycheck and carrying thousands of dollars of debt. 

That’s why it’s a terrible idea to make financial decisions based on what others have. Say you decide you also need a new car in your driveway. What you’re essentially doing is comparing yourself to someone who’s broke. Needless to say, aspiring to be like people who are broke is a terrible financial plan! 

The best way out of this trap is reflection. Think carefully about your purchases. To help you do that, ask yourself a couple of questions before you buy. First off, would you still want that trip to Aruba or that high-end European car if no one saw your vacation pics or if your colleagues took the train to work? Here’s the second question to ask yourself, Will this purchase really make me happy? 

If either answer is no, it’s likely you’re spending money to impress others. That’s a good reason to take a rain check and revisit this purchase later on when you’re in a different headspace. 

There’s a happy medium between penny-pinching and overspending. 

Mistakes with money are inevitable and we all make them. But not all mistakes are alike. Some bad decisions damage your financial health – like using your credit card to book a vacation you can’t afford, or buying a new car that’s out of your budget. 

Other decisions can be good for your bank account, but bad for relationships – like disregarding a tacit agreement to share a bill with your friends and insisting on only paying for what you’ve eaten. 

The solution? Find a balance between these two extremes. 

Big spenders tend to be overly forgiving. When they forget to pay bills and the late fees start rolling in, they shrug it off. If those fees start stacking up and their paycheck doesn’t cover the month’s groceries, they reach for their credit card with a breezy “Oh well, it happens.” 

True – it does, sometimes. But endless excuses perpetuate a self-destructive cycle. If you’re constantly overspending because you’re “not good at planning” or running up debt because you “deserve” a treat, you’re stopping yourself from building wealth. Keep doing that and you’re going to remain locked into a life that doesn’t make you happy. As harsh as it sounds, there’s no way around it: if this describes your relationship with money, you’re going to have to be stricter with yourself. 

At the other end of the spectrum, there are penny-pinchers, who are too strict. Take Joe for example,  when he got home after picking up takeout for his family, he realized the restaurant had forgotten two small items. There was plenty of food to go around and everyone was happy, but he couldn’t let it be. 

He spent an hour calling the restaurant, driving back, and explaining the issue. By the time he returned home, he had his $8 refund, but he was fuming. He’d also missed out on a family meal worth much more than those eight dollars. 

If you’re also a legalist, you can apply the five-year rule when you next find yourself in a similar situation. Ask yourself, Will this matter in five years? No? Take a deep breath and move on. 

Reconnecting with your dreams can make saving easier. 

Saving often feels like a sacrifice. After all, putting money aside for the future means that you’re limiting your options in the present. 

But that’s the wrong way to think about it. Saving isn’t actually a burden – it’s a source of joy. If it doesn’t feel that way, you might just have forgotten the connection between saving and dreaming. 

If you’re not saving money, you need to start – now. But this isn’t just about being prepared for life’s inevitable crises and emergencies. Saving is also about tuning into your dreams. 

Some people are die-hard savers. For them, saving for the sake of saving is motivation enough. That’s a rare state of mind. Most of us need something more meaningful to hang onto. And that’s where dreams come in. 

When you truly want something, nothing can stop you working and saving to make it happen. For instance, if you’ve got your dream retirement all worked out, you’ll likely find it’s easy to put away 15 percent of your income every month. The same goes for other life goals. If you’re passionate about fighting poverty in your local area, you’ll cut your expenses so that you can donate more money. Why? Well, saving is a form of freedom. It’s what lets you pursue the goals you cherish. 

How much should you be saving, though? Your best bet is to break your dream down into a series of achievable steps. Say you’ve set your heart on a move to a new city. What will it take to get you there, and how much will each step cost? You’ll need a new job for starters. Then there’s the new house and the moving costs. Finding a job costs more in time than it does in dollars, but you might still want to set aside $500 to buy lunch for those who are helping you search or to have your résumé professionally edited. For the house itself, you’ll need $30,000 for the down payment and closing costs. Hiring a moving firm meanwhile might cost a further $6,000. 

Add these all together and this is your savings target. Next, set yourself a realistic timeframe to achieve your goal. And now you have a plan. Stick to it and you’ll realize your dreams. 

What you learn about money as a child affects how you think about it – and spend it – later on in life. Some parents were open about the family finances; others never talked about the bills. Some spent money freely and recklessly; others were excessively frugal. These different money classrooms create distinctive challenges later in life. But whatever your fears or hang-ups around personal finance, you can start taking control. The best place to start? Create an emergency fund, analyze why you buy the things you buy, and get in touch with your dreams.