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A classic and wise piece of advice from financial advisors is to live within your means. I have written often about the importance of frugality in building wealth and financial well-being.
Yet there is a difference between frugality by choice and frugality from fear. For those who grew up in poverty, the emotional impact of that early struggle can shape a reluctance to spend money even when their circumstances have changed and they have more than enough. A recent article by Christian Kelly in Silicon Canals discusses some of the factors behind this pattern of behavior.
Research published in the Journal of Consumer Psychology shows that childhood scarcity can wire the brain to experience spending as danger. Even when the numbers say you’re safe, the body may still brace for impact with a jolt of anxiety.
This was the case for a physician who recently told me that she knows she and her husband have ample funds in their investment accounts. Still, if her checking account doesn’t have a certain amount of money in it, parts of her are screaming, “We are going broke!” in a complete panic.
This isn’t the same as intentional frugality, which is a conscious choice. Scarcity conditioning is often an involuntary emotional reflex. It can show up as systemic panic, as continuing to use things long past their usefulness because they’re “still good enough,” as generosity toward others paired with denial toward oneself, or as hoarding.
Feeling a type of survivor’s guilt is also common for people who move into a higher socioeconomic bracket than they grew up in. This can show up as downplaying accomplishments, being unable to enjoy freedom from financial want, or giving based in guilt rather than generosity.
A strong work ethic is another frequent outcome of growing up poor. Many people watched parents work relentlessly just to survive. Developmental psychologists describe a “shift and persist” strategy — adapting to stress while staying hyper-focused on long-term goals. While this often produces capable, resilient adults, it can also lead to anxiety, impostor syndrome, job insecurity, burnout, the inability to rest or relax, and emotional distress.
Money conversations themselves may also feel charged. Financial psychology research shows that early money-related stress can cause the nervous system to link any discussion about money with danger. As adults, discussions about budgeting, financial planning, or negotiating may feel intensely emotional rather than practical.
