Growing Up Rich vs. Growing Up Poor: How Saving and Spending Habits Differ
A lot of how we view money stems from how we were raised. No matter how we cut it, growing up rich or poor directly influences our saving and spending habits.
According to experts, it all comes down to our psychology.
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“In my experience the most pronounced difference in psychology around saving and spending here is that the wealthy can often afford to put more money aside and, in essence, save and spend toward their future,” said Carter Seuthe, CEO of Credit Summit. “Once you’re wealthy, essentially, it becomes easier to build wealth.
“This can be a contrast to the way less fortunate families will spend, which much of the time is more focused on present needs like staying on top of bills, taking care of home and vehicle repairs, and putting food on the table. Poorer people might have much less of a drive or even the ability to save and invest for the future.”
Below are more ways these backgrounds differ when it comes to saving and spending habits.
It Impacts Your Mindset
“I have seen the financial education individuals receive greatly affects their saving and spending habits,” said Michael Benoit, CFP and founder of ContractorBond.
For instance, he said, those who grow up in wealthy families often have a different financial mindset and approach to money compared to those who grow up in poverty.
“From my experience as a finance expert, I have noticed upbringing plays a crucial role in shaping an individual’s financial mindset,” Benoit said. “Growing up in a wealthy household gives children access to resources, opportunities and knowledge about money management that may not be available to lower-income families.”
On the other hand, Benoit said, growing up in poverty can lead to a scarcity mindset, where individuals are more likely to prioritize immediate needs over long-term financial goals.
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It Impacts the Risks You’re Willing to Take
“I’ve seen firsthand how our childhood environments shape our financial behaviors,” said Rhett Stubbendeck, CEO and founder at Leverage Planning. “People from wealthier backgrounds often grow up comfortable with investing and taking financial risks, likely because they’ve watched family members navigate these decisions.
“At Leverage, we see these clients are generally less cautious and more interested in how to expand their wealth. On the flip side, I’ve observed that those from modest backgrounds, like myself, tend to be more conservative with their finances. Growing up, understanding the value of every dollar was crucial.”
Stubbendeck continued, “Early in my career, I focused on saving and building a safety net, which profoundly influenced my approach to advising clients at Leverage. We emphasize the importance of security and prudent financial planning, especially for those who haven’t had much exposure to wealth management.
“We also recognize the hurdles faced by individuals who didn’t grow up with financial literacy. It’s part of our mission to bridge that education gap. We’ve seen that without foundational knowledge, navigating investments can be daunting.”
It Influences Your Spending Power
Your economic background does always not determine how you spend, said Melanie Musson, finance expert with Clearsurance.
“Some people are poor because they spend money poorly, [but] some poor people do an excellent job of financial management,” she said. “Some rich people spend money well while others are wasteful.
“So, the habits learned growing up can differ greatly even between individuals who grow up in the same socioeconomic position.”
Still, she said, there are things about growing up poor that tend to stick with people regardless.
“For example, those who grew up poor are less likely to purchase a new car,” she said. “They always viewed that as something not for them. They’re also less likely to travel abroad. If you don’t grow up traveling, you may not have the experience that builds the desire to continue traveling.”
Musson also said people who grow up rich are used to spending money on things they want.
“For example, if they think their life would be better with a new lawn mower, they buy one” she said. “A poor person might get by with something that doesn’t work well, but a rich person will make their life easier by making purchases.”
Overall, she said, rich people are used to making money work for them.
“Poor people are used to money helping them survive.”
It Shapes the Way You View Money
According to Jonathan Feniak, general counsel at LLC Attorney, growing up in different economic classes can significantly shape saving and spending habits.
“For instance, those growing up in affluent households tend to have a long-term perspective on wealth and are often introduced to structured saving and investing at an early age,” Feniak said. “They are usually educated about finances, which fosters disciplined spending and a proactive approach to wealth generation.”
On the other hand, he said, individuals who come from low-income families often have a more immediate view of money.
“It’s not about long-term wealth creation but handling day-to-day necessities,” Feniak said. “The saving habit is usually reactive, triggered by immediate or foreseeable financial hardship, rather than a proactive approach.”
When it comes to spending, Feniak said, it might be more influenced by instant gratification since dealing with financial strain can lead to a “treat yourself” mentality as a coping mechanism.
He said, “The real power in understanding these differences lies in the ability to direct interventions and educational efforts precisely where they are needed — to empower individuals with the knowledge and strategies to break the cycle of poverty and build generational wealth.”
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This article originally appeared on GOBankingRates.com: Growing Up Rich vs. Growing Up Poor: How Saving and Spending Habits Differ
