When Bad Financial Habits Come From Home

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As a child, you watch how your parents manage their money and absorb those lessons unconsciously. And, sometimes those unspoken lessons can be damaging.

Financial adviser Cordi Powell once wrote a post for our SUM180 community, titled, You’re in love, but his finances are a mess: How to protect yourself – and thrive together. In her post, Cordi made it clear that our parents and family upbringing can have a long-term and sometimes detrimental effect on our financial habits as adults. I agree with Cordi, but let’s be clear: parents rarely set out to teach their kids unhealthy values or habits when it comes to money. As a child, you watch how your parents manage their money and absorb those lessons unconsciously. And, sometimes those unspoken lessons can be damaging. The good news is that, as adults, we are in a position to step back and dismantle the underlying influences from our parents that may be hurting us financially.

I’ve had different people talk to me about financial mistakes they’ve made that can be traced back to their parents. For example:

Playing it too safe financially. One woman whose parents had been very conservative or nervous about money repeatedly passed up career opportunities that were “too entrepreneurial” in favor of “safe” jobs that were less exciting or rewarding, but more predictable. Similarly, she avoided investing in the stock market, assuming as her parents had that it was too risky and not for amateurs like her. Everyone’s tolerance for risk is different, of course. The point is to understand your own risk tolerance and respect it, rather than live uncritically according to someone else’s.
Spending as therapy/reward: “You’re worth it.” I’ve heard about this one many times from both friends and clients. One woman’s mother regularly rewarded her children with money or gifts. Later, as an adult, that woman used shopping both to motivate herself professionally and as personal therapy. If she exceeded a work goal, she bought a new purse. If she was having relationship problems, she bought shoes. Unless you are good about watching your budget, this is the kind of habit that can easily get out of hand and cause big problems.
Giving yourself financial “freebies.” This is the habit of treating certain expenses as if they are non-negotiable and “don’t really count,” budget-wise. It is the financial equivalent of telling yourself that the food you eat on vacation has no calories. For one woman I know, the “freebie” is dining out at a nice restaurant every week. For another woman, the freebie is taking a vacation with her family every year, no matter what. If you learned as a child to associate these particular expenses with “family values,” then even as an adult the expenses can be easy to justify, no matter what your bank balance.

The key to breaking these harmful financial habits is self-awareness. It’s not always easy, but once you recognize an unhealthy habit in yourself, you have the power to change it. Sometimes this involves asking for help, and that’s fine. We don’t all magically know how to do things, especially when it comes to dealing with our finances. Forgive yourself (and your parents!) for past money mistakes, and move forward starting from where you are now.

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