Written by Alex Vazquez, ASSETS’ Credit Analyst and Financial Coach
As a child, I remember asking my parents every time we went to the store if they could buy me a toy. Their answer was always, “If it’s not expensive, we can buy it.” So, I would go to the toy section, pick out a toy, and ask my parents, “Is this cheap or expensive?” It seemed my parents’ answer was always, “It’s expensive.” Occasionally, they would reply, “That’s cheap” and would buy me the toy. At the time, I had no concept of what cheap or expensive meant. I only knew that if a toy was cheap, I could buy it. If it was expensive, I had to put the toy back on the shelf. Being conditioned to buy something based on whether it was cheap or expensive followed me into adulthood.
Fast forward 25 years. I’m now well into my adulthood, and twice a year I set aside a few hours to look at my personal finances and review the six months prior to evaluate my overall financial health. I compare multiple categories; savings, bills, and spending are my top priorities. A few years ago, I noticed I was spending a considerable amount of my earnings on miscellaneous items. You see, I had no problem spending two dollars every day on a cup of coffee or buying knick-knacks because they were cheap. What I didn’t realize was that my spending on “cheap” things added up and I was spending entirely too much money on “convenience” items. I tried different methods to keep track of my miscellaneous spending, but I continually felt an overwhelming amount of guilt every time I would spend money.
Money itself wasn’t my issue. It was my relationship with money that was the root cause of my guilt — an issue that stemmed back to my childhood when permission for spending was based upon the elusive categories of cheap or expensive.
In a 2013 article published in Psychology Today, author Brad Klontz, Psy.D. states that, “Money disorders are persistent patterns of self-destructive and self-limiting financial behaviors. They result from distorted beliefs about money we develop from our financial flashpoint experiences. Financial flashpoints are painful, distressing, and/or dramatic life events associated with money that are so emotionally powerful, they leave an imprint that lasts into adulthood”.
He goes on to say that, “Everyone has experienced a financial flashpoint in their lives. Recognizing them is the first step in stripping them of their power and overcoming our money disorders. Then we can learn to identify our money beliefs, spot them when they are creeping into our minds, and revise them into healthier, more productive ones.”
Our relationship with money has as much impact as our financial literacy on our overall financial health. At ASSETS, we believe that business plays a vital role in transforming our community for the better. But we also recognize that businesses cannot grow — in revenue, size, or in impact — without access to capital. Many small business owners face barriers to capital when their personal finances aren’t in order. Many entrepreneurs are unable to launch their businesses because of a low credit score caused by old medical collections or growing student loan debt. ASSETS provides financial counseling for business owners in order to break through these barriers. The Community Lending department exists to meet that need through innovative loan products and services including financial counseling and financial literacy workshops. We take a holistic view on finances in order to insure we create economic opportunity and cultivate entrepreneurial leadership to alleviate poverty and build vibrant, sustainable communities.
So, what allowed me to break through my money issues? Setting a monthly budget. I knew I had certain financial goals I wanted to accomplish within a certain amount of time, and the only way I could accomplish them was to control my spending. Setting a monthly budget allowed me to allocate my income towards specific categories and with time, I found myself feeling less guilty about the money I spent. Now I have a specific budget each month for “miscellaneous” items and am intentional with the money I spend. In a way, monthly budgets act as my checks and balances as to whether certain things are cheap or expensive. Monthly budgets have allowed me to save up for purchases that are more expensive and not feel guilty about the money I spend. At the same time, I give myself a certain amount of money each month to spend on “cheap” items. Rather than running away from the money issues that stemmed from my childhood, I now use those issues as a force for good.
You don’t have to do it alone, however. If you’re an ASSETS’ client looking for financial help, we can offer many resources and tools tailored to your specific situation. Obtaining maximum benefits from existing resources is what leads to financial success and ASSETS is proud to offer tools to help entrepreneurs in our community unlock their financial potential both personally and professionally.
For many of us, our childhood relationship with money was directly correlated with our parents. This is certainly true for myself — I was conditioned to spend based on the price tag of an item. As we grow, our relationship with money can be affected by additional “financial flashpoints” we experience. These moments in our lives shape our relationship with money either negatively or positively.
Although monthly budgets helped me with controlling my spending, realizing how to spend money is what allowed me to break away from my money disorder and create a healthier relationship with my finances. Similarly, ASSETS plays a role in helping entrepreneurs break away from their money disorders to create healthier relationships with money by setting goals, creating monthly budgets, and helping to improve credit scores through small credit-building loans. We also focus on developing relationships with our clients while instilling a holistic approach to personal finances. This intentional approach impacts our clients’ business finances as well, allowing entrepreneurs to access capital — either through ASSETS or traditional lending institutions — that leads to growth in size, revenue, and impact.
Ultimately, this healthier approach to money and the ever-expanding diverse business community makes Lancaster a prosperous economy that works for everyone.