8 Ways Your Childhood May Be Affecting Your Money Habits Now


By Jocelyne Black Hodes

Whether we realize it or not, the way we were raised has a huge impact on how we make decisions as adults. Sometimes the results are positive, certainly. But other times, the results are detrimental to our well-being, especially when it comes to our financial health. That doesn’t mean we can just blame mom or dad (or both) for our money mistakes and leave it at that. But once we understand the root of our bad habits, we can take ownership of them and make a conscious effort to change them.

Here are eight common parenting behaviors that can negatively influence your financial habits and what you can do to overcome them. Let the therapy session begin.

1. Your parents were very frugal

The behaviour: Whether they needed to keep a tight budget, were trying to teach you a lesson, or chose to prioritize themselves financially, they seemed to deny you everything you wanted when you were a kid.

Influence: You spend too much to compensate. Overspending often occurs in response to feelings of deprivation in childhood. Haven’t we all heard the story of the strict parents whose child rebelled and went wild? Maybe you act out with your money choices because of your parents’ frugality.

The solution: Discuss with your parents the reasons for their choices. There may be more to their decision than you realized when you were young. Either way, know that your true revenge for childhood deprivation is financial prosperity. Channel that inner rebel as best you can to save instead of spend. If your will isn’t strong enough to stop overspending, force yourself by setting up automatic savings plans whenever possible.

And don’t let the cycle continue: if you have children, be sure to include them in the thinking about being careful with money so they can learn the benefits of saving and not feel resentment.

2. Your parents spoiled you

The behaviour: Maybe your parents were deprived themselves when they were kids, and in response they chose to spend too much on you. You grew up living a life of abundance and lacking nothing.

Influence: You feel entitled to a luxurious lifestyle. Spoiled brats can often grow up expecting that they can — and should — have whatever they want. The problem is that you may not have the income to support your ability to live large, which can lead to unnecessary debt piling up.

The solution: Change your sense of entitlement from having lots of “stuff” now to having financial freedom later. Challenge yourself to see what it’s like to live modestly and then spend your savings on bigger goals like buying a home, retiring comfortably or starting a family. Set up automatic retirement contributions to force you to make better financial decisions for your future.

Related: 10 reasons why you are not rich yet

3. Your parents were extremely charitable

The behaviour: Maybe they grew up in poverty or suffered some kind of first-hand trauma. In response, they chose to invest their time and money in causes they were passionate about.

Influence: Your heart is in the right place, just like your parents’. But you can give more money than you can really afford out of guilt or obligation. Whether you feel compelled to do so because of your parents’ experience or want to match their generosity, you can’t say “no” to most charity appeals. Charity is a wonderful and noble concept, but it’s easy to let your emotions get the better of you, which can lead you to say “yes” too often and give more than you can really afford.

The solution: Decide which causes are most important to you and set a charitable giving budget now that’s within your means for next year. This budget should include a small extra margin for unexpected calls that you may want to support. Then set up automatic payments through your bank to charities of your choice, either monthly or annually, whichever you can comfortably afford, and let charities know what to expect. This way you know what you are giving and giving in advance and you won’t be as tempted to give too much based on your emotions and impulses.

4. Your parents never taught you about money.

The behaviour: This is a very common problem and often due to the unconscious perpetuation of their own parents’ lack of financial education. Money has a notorious reputation for being dirty and taboo. And of course, women have long been kept in the dark when it comes to household finances. Thus, generations of parents have avoided discussing money matters with their children out of ignorance or preference.

Influence: You’re crazy about money – and probably in a variety of ways, whether it’s overspending, undersaving, or avoiding investing and/or planning your finances in general. You don’t have any basic knowledge of money management, so you have to (hopefully) learn from your mistakes.

The solution: Educate yourself. Being a subscriber to DailyWorth is a great start. You can also take it a step further by hiring an experienced and qualified financial advisor who can offer personalized advice, put you on the right path to achieving your goals, and ideally educate you at the same time. Get recommendations from family and friends and interview multiple candidates until you find one you like and trust. If you have kids, talk to them about money first and involve them in your financial planning activities so they can break the cycle.

Related: The 6 worst money mistakes you can make in marriage

5. Your parents said bad things about the stock market

The behaviour: Whether they’ve been through the Great Depression, been hit hard during the Great Recession, or made poor stock picking decisions in the past, they’ve chosen to put their money where it matters most. safest possible… under the bed.

Influence: You completely avoid investing in stocks. It may seem like a safe choice, but the reality is that you need to grow your money as much as possible in order to have a fighting chance for a comfortable retirement. This leaves you with few options other than investing in the stock market and real estate.

The solution: Be careful and strategic in your investment decisions. This means doing enough research and asking questions, if necessary, to make sure you know what you’re getting into and whether it suits your goals and risk tolerance. You should also ensure that your total investment portfolio is well diversified so that you don’t expose yourself to unnecessary risk.

6. Your parents lived tall

The behaviour: Maybe they made up for their deprivation as kids or felt the need to keep up with the Joneses. Whatever the reason, your parents spoiled themselves and probably spent more than they should have.

Influence: You are also living beyond your means. Even if we try to avoid becoming our parents, it often happens. Growing up in a house where your role models lived a lavish lifestyle would make it especially difficult for you to adopt a modest one. The unfortunate result is that you’re probably not just trying to keep up with the Joneses, but your parents as well.

The solution: If you can’t go so far as to physically remove yourself from an environment that tempts you too much to overspend, then you need to put constraints in place to force yourself not to. This means setting up automatic transfers to save money you would otherwise spend and dedicating an account and debit card only to discretionary spending with no overdraft protection.

Related: 10 habits of wealthy women

7. Your mother was addicted

The behaviour: Whether she married a wealthy man or several men, your mother was taken care of and didn’t have to worry about money. (At least, to your knowledge.)

Influence: You too are waiting for Prince Charming. Why should you struggle if your mother didn’t have to? This subconscious question usually leads to procrastination and irresponsible financial behavior because in the back of your mind you assume that someone will eventually save you financially.

The solution: Wake up from this unrealistic fairy tale! Stop waiting to be saved and instead save yourself. The end result will be much more satisfying and you can be proud to be a model of financial independence and inspiration to your own children and others.

8. Your parents divorced

The behaviour: It’s a sad reality for so many families and a major contributor to all sorts of psychological problems in children, including those that fuel poor financial decisions.

Influence: You are determined to live happily ever after. This isn’t necessarily a bad thing, but it can also cause you to get married, buy a house, and start a family prematurely or for the wrong reasons. This can easily lead to living beyond your means, accumulating debt, enduring financial hardships and can ultimately lead to divorce. The vicious circle continues.

The solution: Pledge to always be financially independent even if you get married or are already married. This means maintaining your own separate accounts for spending, saving and investing and making it a priority for your relationship to contribute as much as possible to your own personal retirement account (even if you are not the breadwinner in your relationship or if you left the job market to be a caretaker). If you happen to earn significantly more than your potential partner, you may also want to consider a prenuptial agreement as a handy protective measure.

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