Write a plot twist for the better in your personal ‘money story.’
Stressed about your money? You’re far from alone. A new survey by Ally Financial found that 45% of Americans are concerned about their personal finances. Yep—almost 1 in 2 people are experiencing some level of financial pressure at any given moment.
And many times, they’ll tell you about it. A majority (72%) don’t find money a taboo subject anymore, and many actively seek out emotional support for managing their finances on at least a monthly basis. Generation Z is the most likely to do this at 55%, followed by 42% of Millennials, 33% of Gen X and 22% of Boomers.
We all know that the economy isn’t making things any easier right now. Many people are experiencing significant financial hardship due to things like inflation, cost of living, student loan debt, low or stagnant wages and other variables.
At the same time, if this many people are expressing anxiety over their financial situation, it may be time to step back and look at the bigger picture—or rather, the inner picture. What’s going on inside our heads that is making money so hard?
It’s these intrinsic money challenges that Ally Financial is interested in solving through its new MoneyRoots program. Launched with a ‘money tree’ giveaway last month at the World Trade Center in New York City, this program seeks to empower individuals to dig into the reasons they approach money the way they do—and how they can give their own ‘money story’ a plot twist for the better.
“Each person has their own money story with factors that contribute to financial stress or concerns,” says Jack Howard, Head of Money Wellness at Ally. “Finances are never a one-size-fits-all.”
I recently connected with Howard to discuss why so many people are worried about money—and how a psychology-based approach might just change the game. Here’s what we covered.
Digging into your story
Money anxiety is something almost everyone experiences, but individual circumstances and mindsets can have a big impact on how deep that anxiety goes. “We live in a society that makes mindless spending very easy with click-and-buy technology that makes it easier than ever to impulse shop, which may not reflect your personal goals and values, often leading to credit card debt,” says Howard.
Then, there’s the temptation to keep up with what seemingly everyone else is doing. “For many, social media is a highlight reel of all the positives in life—a trip to Italy, a new car or tickets to a weekend music festival, to just name a few,” says Howard. “Mindless scrolling through our feeds might have us feeling ashamed or depressed that we’re not doing the same things our friends are doing and can cause a spiral of overspending to try and keep up with what we see online.”
Add today’s external financial pressures to the mix, and it’s easy to see why so many people are finding it hard to relax about their money.
“There are many emotions, ranging from shame to fear, that cause people to ignore their money issues or change their spending habits,” says Howard. “By understanding the psychology behind a person’s earliest experiences with money and emotions tied to financial habits, we can start alleviating those feelings of anxiety—helping people rewrite their money story and beliefs to better align with their financial goals and personal values.”
Ditch the shame
Although most people will discuss money, the conversation can be hard to have. “Most of the time when people are feeling stressed or embarrassed about their past money history, it’s because they know the decisions and habits they’ve developed simply don’t align with their current values, beliefs and goals,” says Howard. In other words, they’re feeling shame.
Howard points to the example of someone who learned the lesson “money buys happiness” from their parents who used money as a form of retail therapy. “But as they got older and had more experiences with money, they realized this taught them to overspend as a form of short-term gratification,” he says.
The same can also be true for people who grew up in a family that did not have a lot of money. “You may see signs of hyper-saving as an adult despite having the income and net worth to enjoy money,” says Howard. “This person may fear ‘looking rich’ or have a scarcity mindset that creates the feeling that there will never be enough money.”
All of this, he says, can lead to feeling embarrassed, ashamed or stressed—especially when we get older and realize how the emotions that came from those early life experiences with money influenced bad financial habits that no longer serve us.
“Reflecting on these experiences and identifying ways to change those hard-wired behaviors is a crucial first step for those who want to feel more aligned to goals and values that reflect who they are today,” says Howard.
Gen Z’s new approach
In contrast to older generations who kept money matters more private, Howard says Gen Z has introduced trends like ‘loud budgeting’ that encourage people to take control of their money, stop spending frivolously and be proud of being money conscious. “Younger generations, especially Gen Z, are not afraid to tell their peers when they don’t have money to go out for a social event or pay money for a vacation with friends,” he says.
In many ways this frankness has been born of their financial experiences thus far, which have often been less than great. “Gen Z has gone through their fair share of economic crises—from seeing their parents grapple with the 2008 recession, to the COVID-19 pandemic bringing the world at a standstill, to rising college tuition and debt, to a tough housing market that is making it more difficult than ever for people to experience the American dream,” says Howard.
“This is a generation that understands that finances influence their mental wellbeing, and that’s why it was important for Ally to develop a financial wellness program that’s shame free, grounded in empathy and reflective of the younger generations’ goals to ultimately create a better relationship with money.”
Beyond ‘how’ to ‘why’
Howard points out that although there is no lack of tools and training in the ‘hard skills’ of money management, Americans are still racking up record-breaking debt and feeling financial stress and anxiety like never before.
“I’ve spent the last 14 years helping people better understand money through financial education initiatives at Ally,” he says, “and during my experience, I came to realize people not only need to understand the skills of money—how to save, spend and invest—but in order to create real change, people need to understand their mindset around money and the why behind their spending and saving decisions.
“Getting to the root of your money relationship creates the space to find the joy in money, and in life.”
In an increasingly complex and challenging financial landscape, it’s no longer enough to know ‘how’ to manage our money. We also need our personal ‘why.’