Are Some People Just Born Good Money Managers?

aaron_image1As I've thought more and more about money management and been witness to mine and others money habits, I've come to the opinion that I believe to be true:

Some folks are just better with money than others. In other words, they are born “money managers”.

And, before I offend anyone – let me offer a few reasons for why I believe this to be so.

The prefrontal cortex

I recently heard a psychiatrist lecture about addictions and why some people are more susceptible to them than others.

One of the main reasons for folks falling prey to gambling, drug, alcohol (and dare I say, spending/debt) addictions is due to the prefrontal cortex part of our brain. 

Our prefrontal cortex is in charge of “executive functions”. As Wikipedia lays it out:

[it helps] differentiate among conflicting thoughts, determine good and bad, better and best, same and different, future consequences of current activities, working toward a defined goal, prediction of outcomes, expectation based on actions, and social “control” (the ability to suppress urges that, if not suppressed, could lead to socially unacceptable outcomes).

You may have heard that the underdevelopment of the prefrontal cortex is why many teenagers often make poor decisions – and tend towards being impulsive/erratic.

This “underdevelopment” is also a reason given to why people become addicted: the region never fully develops – or doesn't “kick in” to override compulsive actions.

I'd wager the prefrontal cortex is a contributing factor to many who find themselves struggling with impulse spending and mismanagement of their funds.


A natural gift

On a few occasions, I've had the pleasure of watching Tiger Woods smash 300+ drives and consistently fire his golf ball at the flag time and time again. It is a thing of beauty.

He has a natural, God-given gift. Sure, he has worked long hours to hone that gift and become one of the best to have ever played the game – but what lies underneath it all is a “supernatural” ability.

We've all seen natural gifts / talents of others – even ourselves.

These thoughts lead me to accept that some are more naturally gifted with money than others. Why is it that one person (early on in their life – when there are no obligations) saves their money while the other spends it all like they're in some shopping spree competition?

Some might say this is just “learned behavior”. But, I could point to many folks who grew up with frugal parents – saw how they saved/spent their money – but did the exact opposite (I'm in that camp). :)

Is there any hope?

Many of us learn the hard way through piles of debt, bounced checks and overdue notices to finally manage our money better.

I'm living proof that you can start out poorly – having poor money inclinations – and learn to do it better.

What do you say? Is managing money well something we are naturally born with?

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  1. Money management skills though might be gifted, but a lot of time, it can be nurture also. As parents, if you start to teach your kid about money management and share with them your mistake in life regarding money management, they will grow up to be better at money management. This is what I think.

  2. Interesting. I’m not sure if people are born being good with money or just learned to be good early on in life. I was terrible with money until I decided not to be terrible anymore and learned some things. I don’t really feel any impulses to go back to my terrible ways so I think I just didn’t know how to do it. My fiancee is just good with money naturally, she has so much money saved up but she has never thought about saving money. She just didn’t really spend it. Maybe she’s born with it, or maybe is maybelline.

  3. I can say that experience and years is our best teacher when it comes to teaching, including dealing with money. It’s how you motivate yourself and learn from your past mistakes.

  4. I can say that I’m not really good with money too, I really had a hard time saving all the money and budgeting but still failed. But I don’t want to give up, I will try over and over again, I will learn from my mistakes until I will become very good at making a budget.

  5. Interesting idea with the prefrontal cortex — would certainly explain some impulse shopping decisions :)

    For me, I learned most of my financial behavior from my parents – they save a ton, only use credit cards if they can actually afford the purchase, etc. That’s the attitude I grew up on and I think it definitely shows in how I manage my money, but if we’re talking nature vs. nurture, I do think someone’s general disposition (and brain!) can have a huge impact on how they save/spend. Awesome post!

  6. I have definitely learned to save my money even at times when I wanted to spend my whole paycheck. I also make sure I don’t take any credit/debit cards when I go out to get a couple drinks with friends because I know my judgement is decreased.

  7. Interesting way to think about it. I think it comes down to the “marshmallow test,” which certainly has elements of predisposition. If you’re all about delayed gratification and self-control then you’ll likely be better with your personal finances.

    Or like just released, it can be determined by your relationship with time. If you’re a present hedonist, you’re probably not great as a money manager.

    • Good thoughts Broke Millennial. Thanks for stopping by.

  8. I’d like to see how money management is correlated with other things that require a lot of self discipline like staying fit. I know that for me, I’m really good about things I have a lot of control over like my health and my money.

    • Yeah, that would be interesting. They do both require a lot of self-control. It does seem some folks are more prone to being good at each.

  9. I disagree. I do think that many of us (myself included) get into money messes due to psychological reasons, but I think they’re more emotional (based on life circumstances) than physiological. And I also think there’s a bit of a lack of discipline involved there too, which causes us to justify unhealthy behaviors. This is the case with every poor money manager I know, and was the case with me too, until I diagnosed and corrected the problem.

    • I agree Laurie – that it is a complicated issue with a lot of moving parts. Yet at the same time, some folks just seem more inclined one way or the other based on their wiring. Certainly, they can overcome – or “get better” at managing money though – but may have to work harder at it than others.

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