The Money Era Effect: How the Economy You Grew Up In Shapes Your Relationship with Money
Money is not just personal, it’s also historical.
As a Certified Financial Therapist, I work with adults and couples in financial therapy, and a lot of my work centers on financial anxiety, money stress in relationships, and the lasting impact of financial trauma. I’m also an approved clinical supervisor in Washington State. So when I write about the emotional side of money, I’m writing both from clinical training and from the real patterns I see with clients every week.
The way you think about money is shaped by your family, your experiences, and the messages you heard growing up. It is also shaped by what was happening in the larger economy during your formative years.
Were your parents worried about layoffs? Did your family talk about inflation all the time? Did you grow up during a housing boom, a recession, or a time when college and homeownership seemed more reachable?
These experiences can become part of what I think of as your “money normal.”
Your money normal is the collection of beliefs, habits, and emotional reactions that feel natural to you. It can include how much you save, how comfortable you are with debt, whether you invest, and what you consider a reasonable amount to spend.
But where does that money normal come from?
My grandmother and the Great Depression
My grandmother grew up during the Great Depression. When I was a kid, I remember that she would save plastic sandwich bags and rubber bands to reuse.
At the time, I did not think much about it. It was just something Grandma did.
Looking back, I can understand it differently. Saving those items was connected to a time when waste could feel dangerous. When resources are limited, you learn to hold on to what you have. You repair things. You reuse things. You do not assume there will always be more.
That way of thinking made sense in the environment she grew up in.
The Great Depression included widespread unemployment, bank failures, and severe financial insecurity. Many families lost savings, homes, and jobs. Even after the economy improved, the emotional impact of that experience did not simply disappear.
There is research behind that idea. Ulrike Malmendier and Stefan Nagel’s well-known “Depression Babies” research found that major macroeconomic experiences can leave a long imprint on financial risk-taking, with people shaped by harsher economic periods tending to take less financial risk later in life (NBER working paper; later published in Quarterly Journal of Economics, 2011). Related work on “scarred consumption” also suggests that lived experiences of unemployment and economic distress can lead people to cut spending in durable ways and become more cautious in everyday consumption (NBER).
For many people who grew up during that period, money habits may have included:
Saving everything that could possibly be reused
Avoiding debt whenever possible
Preferring cash over credit
Focusing on job security and stability
Feeling uncomfortable spending money on things that were not necessary
Worrying that financial security could disappear quickly
These habits were not necessarily irrational. They were ways of creating safety in an unsafe environment.
The 1970s and the fear of rising prices
People who grew up in the 1970s had a different economic experience.
Inflation was high, and the cost of everyday goods changed quickly. People saw prices rise at the grocery store, at the gas pump, and in other parts of daily life. Interest rates also became a major part of the financial conversation.
When you grow up watching the value of money change, you may develop a different set of beliefs about saving and spending.
You might think:
“Cash is losing value.”
“I need to buy it now before the price goes up.”
“Owning property is safer than keeping money in the bank.”
“I need to pay attention to interest rates.”
“If I wait too long, I may not be able to afford it.”
Some people from this era may feel more comfortable investing in tangible assets, such as a home or land. Others may carry a deep fear of prices increasing beyond their control.
Again, these reactions did not come from nowhere. They developed in response to what people were seeing around them.
Research on inflation, uncertainty, and saving behavior helps explain why. Work published through the NBER found that inflation uncertainty tends to increase precautionary saving and reduce borrowing as people try to protect themselves when prices feel unpredictable (Wachtel, “Inflation, Uncertainty, and Saving Behavior”). Other NBER research on the Great Inflation found that high inflation also made housing and other real assets feel more attractive relative to financial assets, helping drive a shift toward real estate during that era (“Inflation and the Price of Real Assets”; see also “Inflation, Income Taxes, and Owner-Occupied Housing”).
At the same time, two people could grow up in the same decade and have very different relationships with money. One family may have benefited from rising wages or homeownership. Another may have struggled with job loss or increasing costs.
An economic era gives us context. It does not tell us everything about a person.
The Great Recession and fear of risk
The Great Recession of 2008 created another kind of money normal.
Many people watched the housing market collapse, retirement accounts lose value, and families lose their homes. Some people were laid off or had difficulty finding work. Younger adults entering the workforce faced an economy that did not look like the one their parents had described.
For people who were teenagers, young adults, or new professionals during that period, money may have started to feel uncertain in a different way.
They may have learned:
Debt can become overwhelming
A home is not always a safe investment
Large institutions may not protect you
A “good job” may not actually be secure
It is important to keep cash available
Investing can feel risky or confusing
Financial stability can change very quickly
Some people became very cautious. They avoided investing because they did not trust the market. They delayed buying a home because they were afraid of repeating what they had seen.
Other people responded in the opposite way. They started investing early, looked for ways to create additional income, or decided they could not rely on traditional systems.
There is research that supports this too. Studies on growing up in recessions have found that economic shocks during formative years can create lasting changes in beliefs, including greater skepticism about how the economy works and what institutions can be trusted (Giuliano & Spilimbergo, NBER). Research on the long-term consequences of recessions also shows lasting increases in risk aversion after severe downturns (NBER). And work on trust during the Great Recession found that trust in banks and financial institutions fell as unemployment rose, which helps explain why so many people came away from 2008 feeling more cautious and less willing to rely on financial markets (NBER).
Both responses make sense when viewed through the experiences that shaped them.
What money normal is the current era creating?
The current economic climate is still shaping people’s relationship with money. We may not fully understand the long-term impact yet, but we can begin to notice some patterns.
Many people are living with some combination of:
Higher costs for food, housing, and everyday necessities
Student loan debt
A difficult housing market
Remote work and changing job expectations
Gig work and multiple income streams
Buy now, pay later options
Digital payments that make spending feel less visible
Concerns about job stability and the future
What happens when you grow up in an environment where financial security feels less predictable?
You may start to assume that you need a side hustle just to be okay. You may feel that one income is not enough, even when your income is currently meeting your needs. You may have trouble imagining retirement because the future feels too uncertain.
You may also feel pressure to make the “right” financial decision all the time.
Should you pay off debt or invest? Should you rent or try to buy? Should you spend money on an experience now, or save it for a future that may not look the way you expect?
There is no single answer that works for everyone. The important thing is noticing what is driving the decision.
Is it connected to your values? Is it based on current information? Or are you reacting to fear that came from an earlier economic experience?
Sitting in tension with two ideas
I talk with clients about sitting in tension with two ideas.
With money, one side may say, “You need to save everything because you never know what could happen.”
The other side may say, “You are allowed to enjoy your life now.”
One side may say, “Debt is always dangerous.”
The other side may say, “Some debt can help you pursue education, housing, or other goals.”
One side may say, “Investing is too risky.”
The other side may say, “Avoiding all risk may also have long-term consequences.”
One side is not automatically right, and the other side is not automatically wrong.
A strong response often involves understanding both perspectives and deciding what fits your values and your present circumstances. The goal is not to shame the part of you that is cautious. That part may have been trying to protect you.
The goal is also not to let fear make every decision for you.
How financial therapy can help
Financial therapy helps us look at the “why” behind our financial decisions.
Sometimes that “why” is connected to what financial therapists call money scripts. Brad Klontz, Ted Klontz, and colleagues describe money scripts as beliefs about money that are often formed in childhood, passed through families, and operating partly outside of awareness. In other words, they can feel like “just the way money works” when really they are learned patterns. Their research on the Klontz Money Script Inventory in the Journal of Financial Therapy helped identify common script patterns such as money avoidance, money worship, money status, and money vigilance (Journal of Financial Therapy).
As a Certified Financial Therapist and Licensed Marriage and Family Therapist, I work with people who are trying to understand the connection between their emotions, relationships, and money behaviors. In my practice, that often includes treating financial anxiety, helping people process money trauma, and supporting couples who feel stuck in repeating arguments or patterns around spending, saving, debt, and risk.
We might explore questions like:
What did money mean in your family?
What happened when someone spent money?
Was money discussed openly, or was it avoided?
What economic events shaped your family?
What do you believe about debt, saving, spending, and risk?
Which money habits help you feel secure?
Which habits leave you feeling stuck, anxious, or disconnected from your values?
This is not about deciding that one generation handled money correctly and another generation did not.
It is about developing more awareness.
Your grandmother’s habit of saving sandwich bags may have been useful in her life. You may not need to carry that same habit in exactly the same way. At the same time, her resourcefulness and care may still be values you want to keep.
That is the work. Deciding what to carry forward and what to update.
If you are experiencing ongoing stress about money, you may also find it helpful to read more about financial anxiety and the emotional side of financial decision-making.
You can create a money normal that fits your life
The economic era you grew up in may have influenced you, but it does not have to control every decision you make.
You can respect where your money beliefs came from and still ask whether they fit your life today.
Maybe saving everything helped your family feel safe, but you now want to make room for reasonable enjoyment. Maybe your fear of investing began during the Great Recession, and you want to learn more before deciding what level of risk fits you. Maybe you grew up with financial instability and are working on building security without expecting yourself to be perfectly prepared for every possible problem.
There is room for both protection and flexibility.
There is room for planning and enjoyment.
There is room for caution and for taking thoughtful risks.
If you want support understanding your own money story, financial therapy can be a place to begin. We can look at the experiences and beliefs that shaped your relationship with money and work together to develop patterns that are more aligned with who you are now.
You do not have to figure it all out at once. Sometimes noticing the pattern is the first step.
