On this episode of How To Money, Matt and Joel sit down with bestselling author Rachel Cruze, whose forthcoming book Know Yourself, Know Your Money dives into how our behaviors drive our spending habits, and what we can do to have a healthier relationship with our money. They get into all the major concepts of her book, like the four “money classrooms” we all grew up in and how they affect how we think about money in our adult lives, seven unique money tendencies we should keep in mind, the positive role of fear in our financial lives, and Matt and Joel’s biggest takeaway of all: the ultimate importance of dreaming big.
When it comes to handling our money well, only 20% of the equation is knowledge, Rachel tells us. Knowing about how to save well, where to put your money for retirement, and so on is very important, but 80% of our spending habits are governed by our behavior: our habits, our instincts, and our feelings about money that might be quite unconscious. This requires a little bit of a deep dive into ourselves, so we can pinpoint exactly where we’re good with money and where we’re struggling. That’s where the four money classrooms come in. Each of us grew up in an Anxious, Unstable, Unaware, or Secure money classroom, and each has its drawbacks. Even people who grew up in the healthiest, the Secure money classroom, might grow up feeling like they’ll inherit their parents’ wisdom with money without putting in the work themselves. Figuring out which one we grew up in can help us understand why we feel and talk about – or don’t talk about – money in our households.
Knowing ourselves allows us to be strategic with our money decisions; if we know that fear of a crisis makes us anxious and insecure, we can prioritize building a healthy emergency fund to address that fear. If we realize that we don’t talk about money with our spouses because our parents never talked about money, we can open up better communication so we can work together on financial goals. But most importantly, we should know our real goals and dreams. It doesn’t really matter what our money habits are if we’re not working toward something that really excites us. When we’re energized by the thought of building our dream house or moving to a new city or taking a cool vacation, we’re excited to save money, find ways to earn more, and make the sacrifices necessary to achieve that goal. And it makes the victory even sweeter. Listen to the episode for all this great information and much more from Rachel Cruze on How To Money.
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