Recognizing Scarcity And Uncertainty | Leisa Peterson
Episode 264
Episode Guide
Episode Summary:
Episode Timestamps
Show Notes for ChooseFI Podcast Episode [Episode Number TBD]
Episode Title: Understanding Financial Trauma and Childhood Experiences
Episode Summary: This episode delves into the relationship between adverse childhood experiences (ACEs) and financial behaviors in adulthood. Lisa Peterson shares her insights on how childhood trauma impacts money management and the importance of open communication about finances within families. Key practices include journaling and discussing personal money stories to foster understanding in relationships.
Key Topics:
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Introduction to Financial Trauma
- Overview of the discussion on financial trauma.
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Awareness and Healing
- "Awareness about ourselves reduces vulnerability to financial pitfalls." - The significance of understanding personal history in addressing financial challenges.
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Impact of Childhood Experiences
- Discussion on the CDC Kaiser ACEs study and its implications for financial behaviors.
- Adverse experiences can lead to unhealthy money habits.
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Communication in Relationships
- "Recognizing communication disconnect is essential for financial discussions." - The importance of understanding different financial backgrounds in relationships.
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Practical Strategies for Discussion
- Suggestions for fostering healthy conversations about money, including journaling and open dialogue with partners.
Key Quotes:
- "Money reflects user intentions, not mere wealth."
- "Scarcity mindset drives excessive purchasing behavior."
- "Understanding both ourselves and our partners is crucial in financial discussions."
Actionable Takeaways:
- Journal about past experiences to reveal insights into current financial habits.
- Encourage open conversations about money within families to foster understanding.
- Discuss childhood money narratives with partners to inform healthier decisions.
Discussion Questions:
- How do childhood experiences influence your financial beliefs today?
- What strategies can you apply to foster healthier money conversations in your relationship?
Related Resources:
Listener Action Items:
- Begin journaling about personal money stories and share them with your partner.
- Set aside time for a conversation around childhood money experiences.
Podcast Links:
Keywords for SEO: financial independence, childhood trauma and finances, money mindset, financial abuse, money management, adverse childhood experiences, trauma-informed finance.
Categories: Finance, Self-Improvement, Personal Development
Timestamp Summary:
- Introduction to Financial Trauma
- Awareness and Healing
- Impact of Childhood Experiences
- Communication in Relationships
- Practical Strategies for Discussion
Hosts:
- Brad Barrett - Co-host guiding discussions on financial mindsets.
- Jonathan Mendonsa - Co-host emphasizing the psychological aspects of personal finance.
Guest:
- Lisa Peterson - Expert on financial trauma and author of 'The Mindful Millionaire'.
Conclusion:
This episode brings to light the importance of understanding one's financial narrative shaped by childhood experiences and emphasizes the role of open communication in fostering healthier relationships with money.
Podcast Intro
Podcast Extro
Understanding the Impact of Childhood Experiences on Financial Behavior
The Connection Between Adverse Childhood Experiences and Finances
Financial independence is often seen as a straightforward journey of saving, investing, and managing money effectively. However, many of us overlook the deeper psychological aspects that profoundly shape our relationship with money. Research, particularly the CDC Kaiser ACEs study, highlights how adverse childhood experiences (ACEs) can influence financial patterns and behaviors in adulthood. It's crucial to understand that financial struggles may stem not just from external circumstances but also from internalized experiences during formative years.
Recognizing Your Money Story
Many individuals face challenges that can be traced back to their childhoods. It's essential to engage in self-reflection to recognize how these early experiences have shaped your current money mindset. Consider journaling as a tool to unpack your financial history:
- What were your early experiences with money?
- How did your parents talk about finances?
- Were there recurring themes of scarcity or abundance in your household?
These reflections can help you identify specific beliefs about money, like viewing it as a scarce resource or an endless supply. By gaining awareness, you can begin to challenge and redefine these narratives.
The Role of Communication in Financial Relationships
Open communication about finances is vital, especially in relationships. The disconnect often arises from differing backgrounds and experiences related to money. Acknowledge that your partner's views on money might differ significantly from yours due to their upbringing. To foster understanding, start having conversations centered around your financial stories.
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Ask questions that provoke discussion:
- "What was your first memory related to money, and how did it shape your views?"
- "Did your family experience financial stress or abundance, and how did that make you feel?"
By sharing and discussing these experiences, you build a bridge of empathy and understanding, making it easier to navigate financial discussions together.
Practical Strategies for Healthy Money Conversations
To cultivate an environment where money discussions can thrive, consider these actionable strategies:
Journaling and Self-Discovery
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Write About Your Financial History: Spend some time journaling about your past experiences with money. This practice can lead to profound insights and help you articulate your feelings when discussing finances with others.
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Encouraging Open Dialogue: Share your journal entries with your partner or a trusted friend. This exercise encourages mutual understanding and allows for a safe space to express feelings without judgment.
Using Compassionate Language
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Be Mindful of Your Language: The language you use when discussing finances can deeply influence perceptions. Instead of saying, "We can't afford that," try framing it differently: "That isn't a priority for our budget right now." This shift in language can foster a more positive discussion about money.
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Recognize Triggers: Identify phrases or situations that trigger anxiety or defensiveness about finances. Acknowledging these can help create strategies for more constructive conversations.
Transforming Scarcity Mindsets
Understanding and addressing a scarcity mindset is essential for enhancing financial decision-making. A scarcity mindset can lead to excessive purchasing behaviors, as individuals may feel compelled to hoard resources, believing there won't be enough in the future.
- Question Scarcity Beliefs: Challenge your assumptions about financial resources. Ask yourself, "Is this belief rooted in my childhood experiences?"
- Focus on Abundance: Practice gratitude for what you currently have. Writing down things you're grateful for can help shift your perspective toward abundance.
Fostering Financial Literacy Within Families
To create a generational shift in how money is perceived, it’s essential to foster financial literacy in your family:
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Model Healthy Financial Behavior: Demonstrate positive money management habits such as budgeting, saving, and investing. Engage your children in these financial discussions, ensuring they understand the importance of making informed choices.
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Create a Safe Space for Questions: Encourage your children to ask questions about money without fear of judgment. This openness helps instill confidence and understanding in financial matters early on.
Moving Towards a Healthier Financial Future
Recognizing how your past has affected your present financial behaviors can empower you to make informed decisions moving forward. As you embark on this journey:
- Be Patient with Yourself: Understanding your relationship with money is a process. Allow yourself the grace to learn and unlearn as you go.
- Commit to Ongoing Learning: Financial literacy is a lifelong journey. Seek out resources such as books, podcasts, and workshops that resonate with you.
Conclusion: Embracing Financial Empowerment
By understanding the interplay between childhood experiences and current financial behaviors, you can take proactive steps toward financial independence. This journey requires acknowledging the past, fostering open communication, and cultivating a growth mindset toward money. Remember, you're not alone on this path; seeking help from financial professionals or community resources can provide valuable support.
As you continue to reflect on these principles and integrate them into your life, you're not just building wealth; you're creating a healthier, more empowered relationship with money that can benefit generations to come.
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Leisa Peterson
Website: Wealth Clinic
Book: The Mindful Millionaire
What You'll Get Out Of Today's Show
Your money story informs so much of your life even if you're not aware of it. For 30 years, Leisa Peterson has been researching and studying how trauma in early life contributes to the money challenges faced later in life.
Growing up with a scarcity mindset, money became an escape that gave her motivation. Leisa decided in her mid-twenties that she was going to have money in her life and not have any stresses about it as her parents did. Earning money became an all-consuming response to the trauma she had experienced.
There's a very broad spectrum of trauma from mild to quite serious and not everyone reacts to it in the same way. Some people like Leisa may end up wanting a lot of money, while others are lead to feeling like they have no control over money.
An adverse childhood study from Kaiser was intended to understand how childhood trauma affected health. In Leisa's reading of the study, she found one of the findings included financial problems and realized this was something not a lot of people were talking about.
These childhood experiences become very disruptive, brings an uncertainty to how life is viewed and crushed the sense of self.
The concept of scarcity and uncertainty go together. This leads to struggling with either an extreme need to control or feeling out of control with money.
Because kids are absorbing everything we say, it's important to change the language we use around money.
When people become more familiar with their trauma backstory, they are better able to talk with their partner about their money challenges.
Disconnects in communication can occur when each other's backstories are quite different. We can only know what we know from our own perspective. The job in relationships is not just to understand ourselves, but to see the other person and how they are approaching money differently because of their backstory.
When people think of something as being scare in supply, they are going to buy more of it. Toilet paper is a relevant example of this for 2020. Someone coming from a home without enough money may have strange buying behaviors. Their idea of scarcity or uncertainty may be showing up in their daily behaviors with money.
For spouses or partners who have different money stories, Leisa encourages them to just start somewhere. Think about how money was treated at home growing up and have a conversation about it.
Questions to consider asking are: Did mom and dad talk about money? Did mom and dad fight about money? What is your first memory of money? When did you make your first money? How did that make you feel? Were you afraid?
It can be difficult to have these conversations for the first time with another person. Journaling is a way to privately have them with yourself first. The first person you share these feelings with should be someone you trust and it may be someone other than your partner.
Throughout her career, Leisa has found that people react to money very differently. The majority either hold it tightly or avoid control of it altogether, with a minority viewing it as a tool and are at peace with it.
Having one strong fire in your life influences the way you think about money in life. The earlier the influence in life, the better.
Parents sometimes joke or convey the wrong message about money. Leisa says it's important to go back and close the loop with children.
In the FI community, we want our children to have the skills to take care of themselves and be financially independent, but is it possible for them to have too much abundance? Leisa says she wants to be very open about what goes on in their home, discuss their failures, and teach them the value of money and hard work.
After reaching her goal of becoming a millionaire, Leisa made a massive change in her life. She and her husband sold it all and took a year off to travel with their son. The trip changed their entire approach to life.
Previously, Leisa's family had been consumers of their money. After the trip, they took their nest egg, created investments where their money began working for them.
A result of Leisa's drive to become a millionaire was that once achieved, people began to treat her differently. The outward display of wealth began to affect her friendships. It was then that Leisa realized the money was not all that important to her.
Leisa's book, The Mindful Millionaire, tells these stories about our money experiences, our relationships with money, and how we can transform them into thinking about money as a tool.
The key takeaway from this conversation is that words matter. It's important to think about the unintended consequences of the conversations we are having with our spouses, partners, and kids. Have humility in these conversations and be honest.