Financial Incest: The Behavior That Can Set Kids Up For A Life Of Money Issues

Every year since 2007, the American Psychological Association has commissioned a survey to identify the leading sources of stress in America, and nearly every year, no matter what the economy is like at the time, the Stress in America survey finds that money is a top stressor.

That stress can cause people to exhibit problematic or inappropriate behaviors. And when those behaviors show up in families ― especially between adults and children ― it can become what’s known as financial incest.

What Is Financial Incest?

Brad Klontz, who is both a psychologist and certified financial planner, coined the term “financial incest” as a type of money disorder. But because the term is so “ew”-inducing, he ultimately decided to rename it “financial enmeshment.” No matter what you call it, there’s no question the behavior can cause chaos and lasting damage within families.

In the findings of a study Klontz and his team published in a 2012 issue of the Journal of Financial Therapy, financial enmeshment was described as “the inappropriate involvement of minor children in parental financial matters, including conversing with one’s minor children about one’s financial stress and using children as messengers to pass along financial messages between adults.”

In other words, it’s when there’s a violation of boundaries between a parent and a child, in which the parent uses the child to meet the parent’s needs in the area of finances, Klontz explained.

One common situation in which it arises, Klontz said, is during a contentious divorce. For example, a child’s mother might say that he can’t get braces because his father hasn’t paid child support. In this case, the parent is sharing inappropriate information with her son regarding her relationship with his father and its effect on the household finances. “What’s an 8-year-old supposed to do with that information?” Klontz said.

Another common situation is when parents who are being hounded by debt collectors make their kids answer the phone and act as intermediaries.

Finally, another major example of financial incest is what Klontz calls TMFI. For instance, you might explain to your kids that the bank is taking your house because you failed to make payments. You gather them around, cry and share your fears and anxiety about how you’re going to take care of them now.

“That’s too much financial information,” Klontz said. “You’re basically using your child as a therapist. … You’re going to probably feel better because you just got it off your chest, but it’s the wrong audience. And what you’ve done is created a terrible mess for those children who are going to feel anxious and insecure.”

A deeper investigation of financial enmeshment by researchers at Kansas State and Creighton universities found that those who display enmeshment behaviors often see their net worth and self-worth as being intertwined. Interestingly, males with higher incomes were more likely to exhibit these behaviors. The study also found that financial enmeshment or incest was highly correlated with other disordered money behaviors, including compulsive buying, gambling disorder, hoarding disorder, workaholism, financial dependence and financial enabling.

It’s important to note that financial incest is not an empirically validated mental health diagnosis, according to psychologist Christine Manley, owner of Nashville Therapist LLC. As such, it doesn’t appear in the most recent edition of the Diagnostic and Statistical Manual of Mental Disorders, the main reference used by clinicians and insurers. Rather, financial incest describes a group of problematic money behaviors. “Depending on the individual being evaluated, the behavior of financial incest may be indicative of another valid diagnosis, such as a personality disorder, addictive disorder or impulse control disorder, to name a just a few,” she said.

How Financial Incest Impacts Victims

Klontz said financial incest doesn’t always have long-lasting consequences for victims, but it can.

“What I’ve noticed is it leads to a certain level of financial insecurity and fear and anxiety around money,” he said. “It can be traumatizing for an adult to lose their job, or have to declare bankruptcy or lose their house. … And the more that an adult passes that anxiety to the child, the more that child is likely to carry that anxiety and that fear.”

Klontz said that as a result, kids will often end up with very distorted and rigid beliefs around money as adults, which can lead to extreme behaviors.

One of those common beliefs is that there will never be enough money. And often the response is to give up trying. “If you get money, spend it. If you can get credit spend it. There’s never going to be enough anyway,” Klontz explained. “It’s a learned helplessness.”

On the other end of the spectrum, a person who believes there will never be enough money might develop hoarding behaviors. “They become workaholics, money hoarders ― Ebenezer Scrooge types,” he said.

Avoiding Financial Incest In Your Family

Klontz said that when it comes to dealing with tough financial situations with your kids, you have to think about their developmental age and share appropriate information with them. It’s also important to emphasize that they don’t need to worry about it ― you will handle whatever challenges come your way and it’s not their burden to bear.

“You have to make them feel secure and not transfer your anxiety and fear onto them,” Klontz said. “Because you’re going to feel better after you do, in a sense. But that’s where your need is being met inappropriately by your children.”

There’s no doubt that as a parent, the responsibility of caring for another young, developing human can be tough when you’re only human yourself. So if you’re worried that you display some of the behaviors mentioned above, what can you do to stop?

It’s all about self-care versus relying on your children to care for you, according to Klontz, whether that means going to counseling or simply venting your fears and frustrations to an adult friend.

“Therapy is certainly my highest recommendation,” Manley said. But you don’t necessarily have to drop big bucks to get help. “There are usually many community mental health clinics in urban areas for individuals with a low socioeconomic status, where people can get free or low-cost mental health care.”

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