Learning From Literature

Know Yourself Know Your Money by Rachel Cruze

Cover of Know Yourself Know Your Money by Rachel Cruze

Know Yourself, Know Your Money: Discover WHY you handle money the way you do, and WHAT to do about it! by Rachel Cruze is a personal finance book published in 2021.

In the game of life, you can’t opt out of financial matters, whether you try to ignore them or not. Therefore, it’s imperative that you opt in as soon as possible. To succeed, you have to be committed, like with running. Will you be passive or proactive?

Rachel Cruze describes how understanding your financial tendencies (often shaped in childhood) can guide you to better financial decisions and healthier communication with significant others, families, and friends. I have found that Cruze’s ideas apply not only to money matters but also to tendencies & mistakes in general.

Purchase the book by clicking this link!

Enjoy!

Table of Contents

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Your Childhood Money Classroom

“Childhood either enables you or stunts you; it doesn’t create you.”

Rachel Cruze
  • We all have different childhood experiences (not necessarily worse / better)
    • Spaghetti can be made with short noodles, long noodles, bright-red sauce, brown sauce, ground meat, meatballs – not one, single way
  • Each person internalizes these experiences differently
    • Siblings can grow up with completely different beliefs
  • These experiences subconsciously influence our mindsets later in life
    • Cruze’s friend had a shopping addiction – realized with therapy that her problem stemmed from an excessively frugal upbringing – when she turned 18, she started buying just because she could 
  • 2 ways we learn as a child
    • Emotionally (stressed vs. calm)
      • Positive / Negative feelings around a subject, even if we don’t know exactly why
    • Verbally (open vs. closed)
      • What was / wasn’t said
      • Open → ongoing conversations
      • Closed → absence of communication (commonly with money, religion, politics, and sex)
  • Environments can be categorized into 4 quadrants
    • Unstable — Open & Stressed
    • Anxious — Closed & Stressed
    • Secure — Open & Calm
    • Unaware — Closed & Calm
Stressed Money Classrooms
  • Unstable — Open & Stressed
    • Constant fighting & yelling — definitely open, but in a negative manner
    • Biggest challenges later in life
      • Expectation of conflict & correlating fear
      • Tendency to ignore money matters
  • Anxious — Closed & Stressed
    • Observed parents’ habits rather than hearing them discussed
    • Felt tension rather than hearing arguments
    • Might have felt to not ask questions
    • Biggest challenges later in life
      • Opening up about money
      • Fear about lack of money
Calm Money Classrooms
  • Secure – Open & Calm
    • Discussed topic often & openly, everyone on the same page
    • Does NOT mean financially strong, but simply in control with intentional decisions, therefore not causing stress
    • Ex → included the children on a journey to get out of debt – life was not luxurious but the family was in control
    • Biggest challenges later in life
      • Underestimating all it takes
      • Feeling entitled (unrealistic expectations)
  • Unaware – Closed & Calm
    • Never knew specifics about your family’s financial situation, but always felt you had what you needed & never worried (“ignorance is bliss”)
    • Emotionally great short-term, but long-term the child has no concept of how financial matters work
    • Biggest challenges later in life
      • Feeling betrayed (misconception of family finances) 
      • Right-sizing your sense of responsibility (financial health of others isn’t your responsibility)
      • Behaving responsibly (not intentional – you don’t know how things work)
      • Avoiding finances all together
      • Necessary conflict (uncomfortable because your environment wasn’t open)
      • Transparency (no one talked to you, it can be difficult to talk to your kids)
Your Unique Money Tendencies
  • Regardless of your environment, each person deals with money uniquely (no right or wrong, just different)
  • 7 Most Common:
    • Saver vs Spender 
    • Nerd vs Free Spirit 
    • Experiences vs Things 
    • Quality vs Quantity 
    • Safety vs Status 
    • Abundance vs Scarcity 
    • Planned Giving vs Spontaneous Giving 
  • Find a balance
    • Ex → If you save everything, you’ll miss experiences
    • Ex → If you spend everything, you’ll be broke
  • Experiences / current needs can distort what you would naturally do, think about what’s instinctive or what you would do as a child
  • Knowing you & your partner’s money tendencies helps you both understand the other and communicate about financial decisions – you know where the other is coming from
  • Nerd vs Free Spirit
    • Affairs in control & orderly, naturally proactive & intentional
    • “Let’s enjoy this life”, being too detailed sounds too boring & controlled
  • Quality vs Quantity
    • Heavy research before buying, not impulse shopper
    • Loves the creativity / possibility that variety offers 
  • Safety vs Status
    • What does money mean to you on a motivational level?
    • Peace of mind (watch out for living in fear) 
    • How you measure success (watch out for money defining who you are)
  • Abundance vs Scarcity
    • “It’ll all work out”, always going to be more in the future – glass half-full
    • Finite limits, play it safe – glass half-empty
The Best Way To Respond When Mistakes Happen
  • Too much grace → Enabling
    • Enables another to persist in self-destructive habits by making it possible to avoid the consequences of such behavior 
    • Usually no boundaries & rarely take a stand
    • Solution — recognize it’s an issue, set a boundary & STICK TO IT
  • Can’t have anything at all go outside the rules → Legalism
    • Efficiency isn’t the highest good – love is
    • Don’t sacrifice relationships for being right 
    • Solution — remind yourself mistakes are okay & normal
  • Enabling points to grace & Legalism points to truth → know how much grace to offer & how much correction to give
    • Both concern boundaries – lack of vs excessive
Change Your Money And Your Life
  • It’s hard to change in an area of fear / conflict 
  • Push through discomfort and naysayers (change is always uncomfortable)
  • Be on the same page with your significant other
    • How you say it → just as important as what you say
    • Explain your why
    • Visuals help
    • Third parties can help

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