Understanding Your Relationship With Money

Journal of Financial Planning, May 2001
by Eileen Gallo, Ph.D.

In my last column, I talked about my two year (1995-97) study of sudden wealth.  An incidental side effect of that study was the development of a three dimensional model of money relationships that is the subject of this column. 

As  part of my doctoral dissertation, I reviewed the psychological literature dealing with money.  Prior studies had identified a number of emotions surrounding money which differ from person to person.  For some of us, money is a source of security or freedom, or a measure of self-esteem.  For others it is a cause of anxiety or dependence.   And then there were psychological themes identified in the literature.  Themes of frugality: "penny saved is a penny earned." Themes of overspending.  Themes of not having enough.  Themes of guilt over having "too much." Themes of philanthropy and sharing wealth with others less fortunate. 

Out of this combination of emotions and themes several psychologists had developed the concept that people have a "money personality."  Before going on, we need to define what psychologists mean when they talk about a personality.  A definition widely used is that developed by Theodore Millon, who defined a personality as "a pattern of deeply embedded and broadly exhibited cognitive (how we think), affective (how we feel) and overt behavioral (how we behave) traits that persist over extended periods of time."  So a money personality is how we think about money, how we feel about money and how we behave with money. 

I found the concept of money personalities useful and in fact use a modified version based on my three dimensional model of money relationships when Jon and I offer workshops and seminars.  But I had problems with the way the concept had been developed.  First of all, the commentators couldn't seem to agree on either how many different types of money personalities existed or what to call them.  Secondly, the categories seemed superficial.  Both my clinical practice and the interviews I had conducted convinced me that people had multifaceted relationships with money and could not be relegated to a single money personality.  Instead, I determined that each person develops a unique relationship with money in three separate dimensions: acquisition, use and management. The prior attempts to develop money personalities weren't working because they tended to focus on just one of these dimensions, rather than looking at all three.

You develop this three dimensional relationship with money largely as the result of two factors: the information we receive during childhood about money and values, and the way we organize this information in our minds.  We are barraged with messages about money and values associated with money from toddlerhood  to older adulthood.  For way too many children, the bulk of those messages are from the most sophisticated information delivery service ever invented: the modern marketing industry that inoculates our children with the message that consumption is good, that buying more will make us happy and that he who dies with the most toys, wins.   The way each of us processes and organizes these money messages and modeling behaviors is ve