How to Check Your Financial Baggage for the New Year

If you're already faltering on your financial New Year’s resolutions, here's a way to get to the root of the problem and learn a little about yourself along the way.

Whewww, the holidays are over — deep breath! The last of the wrapping paper went out with the trash last week, and the leftovers are in the freezer. Most of us have probably spent a little more, ate a little more and drank at least one more than we meant to, which means making 2020’s promises to ourselves may be on our minds.

New Year’s resolutions originated in ancient religious communities (opens in new tab), marking more resolve and higher commitment for the next year. The tradition still exists as a way to come back from the indulgence of the holidays and set our sights on a healthier year.

Financial resolutions are usually toward the top of the list (opens in new tab), following exercise routines and dieting. The very flat resolution to “spend less” often has as much shelf-life as we think it will — most resolutions find themselves broken by mid-February. So, rather than make another set of tighter restrictions and loftier goals, shouldn’t we stop and take a look at what kept us from sticking to our resolutions last year?

Subscribe to Kiplinger’s Personal Finance

Be a smarter, better informed investor.

Save up to 74%

Sign up for Kiplinger’s Free E-Newsletters

Profit and prosper with the best of Kiplinger’s expert advice on investing, taxes, retirement, personal finance and more - straight to your e-mail.

Profit and prosper with the best of Kiplinger’s expert advice - straight to your e-mail.

Sign up

Often, it’s baggage: the emotional programming you carry with you from one situation to the next, a subconscious effect on your behavior.

Do you have financial baggage? The emotional power of money isn’t news. It’s often cited as a leading reason for divorce (opens in new tab), even suicide (opens in new tab). We all have memories, behaviors and attitudes associated with money that developed during childhood, and this deep programming has more power over our financial plan than we’d like to admit.

Let’s take a moment during this time of year to look at how we think – and more specifically how we feel — about money. Armed with this awareness, we can make a financial plan this year that might make it to Valentine’s Day, or even well after.

How, Did You Grow Up?

Spend less. Save more. Pay down debt. Put money together for a house. These resolutions, especially the broken ones, can give you a vantage point to look back to where your financial baggage came from.

On the one hand, you could have grown up in the middle class or below, in a situation where money was a source of worry, bitterness and hope deferred. You associate payday with spending and the week before payday with concern, and the phrases “Money doesn’t grow on trees!” or “Do you know how much that cost?!” echo in your head.

On the other side of town, you may have grown up with money. Housing, college, connections — they’d all been “figured out” as soon as you could walk. Yet money still came with stress — a symbol of status, competition and anxiety. Your parents may have been constantly concerned about losing what they had worked so hard to get. Workaholism and the stress of gaining and losing millions, instead of thousands, were part of growing up.

The point being: Rich or not rich, have or have-not — the luggage might be different, but financial baggage exists for both. Here are a few of the heavier items you might find yourself carrying around.


If you grew up without money, you might feel guilty when your lifestyle changes, especially from that of your family of origin. Buying a hobby farm or cabin in the woods after you grew up sharing a bedroom with all your siblings can be a disorienting transition. Wealth shame is not uncommon, and keeping down with the Joneses might be tempting — compulsively giving away money or buying large gifts to assuage your discomfort.

If you grew up in a monied family, your guilt may take a different shape and be just as heavy. It may come to you in the form of pressure — if Mom was a big business owner, then you better be just as successful or more; if Dad was a successful investor, then you better finish at the top of your class. Whether explicit or implicit, your family may “guilt” you into bearing the family reputation on your own and locking you into a life plan without asking what you really want.


Competition is, of course, often a good impulse. Our economy is essentially based on it, and the competitive instinct has improved the world dramatically. But as part of your financial baggage, unhealthy competition can leave you racing in the wrong direction.

If you grew up without wealth, once you have it you may compulsively find yourself wanting more. After paying off your basic needs, and even wants, you find yourself buying not one summer home, but two, or having a backup Alfa Romeo gathering dust in the garage. You may even find yourself, ironically, going into debt to keep up with your spending habits.

If you look under this behavior, you might find your baggage — the kid who had to wear second-hand sneakers to baseball or whose parents couldn’t afford the senior trip. You’re not healthily enjoying your wealth, you’re trying to prove you’re not the “poor kid” anymore, to the point of workaholism and compulsive spending.

If you grew up well-off, you’re tempted to keep up with the Joneses to an unhealthy degree. Most people don’t understand the pressure of wanting to have a foundation in your name or your own private jet, but in some parts of society, these are real status symbols. Imagine the stress associated with having a multimillion-dollar price tag on being part of the in-crowd.

Don’t Let Your Baggage Dictate Your Financial Plan

If last year you resolved, again, to not overspend on cars, and you have a new Mercedes in your driveway, ask yourself why. Does it have something to do with the new Tesla in your brother’s driveway or the new car you never got as a kid?

Do your purchases truly reflect your values, or something else? If you know yourself, and honestly assess your personal history, you can create some financial goals that are challenging, yet achievable. Maybe this year you can resolve to put a certain amount away for a new car when the time is right.

You can also turn some negative financial peccadilloes on their head. One example is mental accounting (opens in new tab), a bias that means you treat some money differently than other money, even if the amounts are exactly the same. Like saving the hundred-dollar bill you got as a gift (because of your financial baggage about gift-giving) and blowing the hundred you earned without a second thought.

You can use mental accounting to your advantage by naming your bank accounts, a popular feature in banking these days. If you have an account labeled “kids’ college fund” with their picture on it, you are less likely to pinch money from that account to pay for an impulse purchase. If an account says “Puerto Rico Vacation Fund, July 2020” — as specific as possible — you might just have a paid-for vacation come summertime.

Know Your Money, Know Yourself

If you remember your New Year’s resolutions from last year, especially if you remember how quickly you broke them, maybe it’s time for a new set. Don’t let them simply “ride” another year, with the pre-guilt of not keeping them.

Look at yourself, reflect on your spending and saving habits from the last year, and set informed goals that are positive and achievable. You’ll be surprised what you’re capable of, and how your financial story can change for the better.

This article was written by and presents the views of our contributing adviser, not the Kiplinger editorial staff. You can check adviser records with the SEC or with FINRA.

Erin Wood, CFP®, CRPC®, FBSⓇ
Senior Vice President, Financial Planning, Carson Group

Erin Wood is the Senior Vice President of Financial Planning at Carson Group (opens in new tab), where she develops strategies to help families achieve their financial goals. She holds Certified Financial Planner, Chartered Retirement Planning Counselor and Certified Financial Behavior Specialist designations.