8 Ways Your Upbringing Can Affect Your Money Habits

Whether we realize it or not, how we were raised has a tremendous 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. This doesn’t mean that 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 money habits and what you can do to overcome them. Let the therapy session begin.

Your Parents Were Very Frugal

The behavior: Whether they needed to keep a tight budget, were trying to teach you a lesson or were choosing to put themselves first financially, they seemed to deny you of everything you wanted as a kid.
The influence: You overspend to compensate. Binge spending often occurs in response to feeling deprived as a child. Haven’t we all heard the story about the strict parents whose kid rebelled and went hog-wild? Perhaps you are acting out with your money choices because of your parents’ frugality.
The solution: Talk to your parents about the reasons for their choices. There may be more to their decision than you understood when you were young. Regardless, know that your real 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 to by setting up automatic savings plans whenever possible.
And don’t let the cycle continue: If you have kids, make sure you include them in the reasoning for being careful with money so that they can learn the benefits of saving and not feel resentful.

Your Parents Spoiled You

The behavior: Perhaps your parents were deprived as children themselves, and in response, they chose to overspend on you. You grew up living a life of abundance and not wanting for anything.
The influence: You feel entitled to have a luxurious lifestyle. Kids who are spoiled can often grow up to expect that they can — and should — still have whatever they want. The problem is that you might not have the income to support your ability to live large, which can lead to racking up unnecessary debt.
The solution: Shift your sense of entitlement from having a lot of “stuff” now to having financial freedom later. Challenge yourself to see what it’s like to live modestly and then put any savings towards more important goals like buying a home, a comfortable retirement or starting a family. Set up automatic retirement contributions to force yourself to make better money decisions for your future.

Your Parents Were Extremely Charitable

The behavior: Perhaps they grew up poor or experienced some kind of trauma firsthand. In response, they chose to invest their time and money in causes that they were passionate about.
The influence: Your heart is in the right place, and so were your parents’. But you may give more money away than you can really afford to out of guilt or obligation. Whether you feel obligated to because of your parents’ experience or want to match their generosity, you can’t seem to say “no” to most charitable appeals. Charity is a wonderful and noble concept, but it is easy to let your emotions get the best of you, which can result in saying “yes” too often and donating more than you can actually afford.
The solution: Decide which causes are most important to you and make a charitable gift budget now that is within your means for next year. This budget should include a little extra room for unexpected appeals that you may want to support. Then set up automatic payments through your bank to the charities of choice, either monthly or annually, depending on what you can comfortably afford, and let the charities know what to expect. This way, you know what you are giving and give ahead of time and you won’t be as tempted to give too much based on emotion and impulse.

Your Parents Never Taught You About Money

The behavior: This is a very common problem and often due to the subconscious perpetuation of their own parents’ lack of financial education. Money has a notorious reputation for being dirty and taboo to talk about. And of course women have a long history of being kept in the dark when it came to the household finances. So generations of parents have avoided discussing money matters with their children out of ignorance or preference.
The influence: You are money foolish — and probably in a variety of ways, whether it is overspending, undersaving or avoiding investing and/or financial planning in general. You have no foundation of knowledge when it comes to money management, so you are left to (hopefully) learn from your mistakes.
The solution: Get educated. Being a DailyWorth subscriber is a great start. You can also take it a step further by hiring an experienced, qualified financial advisor who can offer you personalized guidance, get you on the right track to achieve your goals, and, ideally, educate you at the same time. Get referrals from family and friends and interview several candidates until you find one you like and trust. If you have kids of your own, make it a priority to talk to them about money and involve them in your financial planning activities so they can break the cycle.

Your Parents Badmouthed the Stock Market

The behavior: Whether they lived through the Great Depression, took a big hit during the Great Recession or made bad stock-picking decisions in the past, they have chosen to put their money in the safest place possible … under the bed.
The influence: You avoid investing in stocks altogether. This may seem 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 at a comfortable retirement. That leaves you with few options other than investing in the stock market and real estate.
The solution: Be careful and strategic with your investing decisions. This means doing sufficient research and asking questions, if necessary, to make sure you know what you’re getting into and whether it’s appropriate for your objectives and risk tolerance. You also need to make sure that your total investment portfolio is well-diversified so you don’t subject yourself to any unnecessary risk.

Your Parents Lived Large

The behavior: Maybe they were compensating for being deprived as kids or they felt the need to keep up with the Joneses. Whatever the reason, your parents spoiled themselves and probably spent more than they should.
 
The influence: You live beyond your means, too. As much as we try to avoid turning into our parents, it often happens. Growing up in a home where your role models lived a lavish lifestyle would make it particularly challenging for you to adopt a modest one. The unfortunate result is that you are likely not just trying to keep up with the Joneses, but with your parents as well.
The solution: If you can’t go as far as physically removing yourself from an environment that tempts you too much to overspend, then you need to put constraints in place to force yourself not to. That means setting up automatic transfers to save money you would otherwise spend and dedicating an account and debit card just for discretionary spending with no overdraft protection.

Your Mother Was Dependent

The behavior: Whether she married one man of means or multiple men, your mom was taken care of and did not have to worry about money. (At least, as far as you know.)
The influence: You too are expecting Prince Charming. Why should you have to struggle if your mom didn’t have to? This subconscious question commonly results in procrastination and irresponsible money behavior because, in the back of your mind, you assume that someone will eventually save you financially.
The solution: Wake up from this unrealistic fairytale! Stop waiting to be saved and instead, save yourself. The end result will be much more satisfying, and you can take pride in being a model of financial independence and inspiration to your own children and others.


Your Parents Divorced

The behavior: This is an unfortunate reality for so many families and a major contributor to all kinds of psychological issues in kids, including those that fuel poor money decisions.
The influence: You are determined to live happily ever after. This isn’t necessarily a bad thing, but it can also lead you to jump into marriage, buy a house and start a family prematurely or for the wrong reasons. That can easily lead to living beyond your means, racking up debt, enduring financial stress — and can ultimately result in divorce. The vicious cycle continues.
The solution: Make a commitment to always be financially independent even if you do marry or are already married. This means maintaining your own separate accounts for spending, saving and investing and making it a priority in your relationship to contribute to your own personal retirement account as much as possible (even if you are not the breadwinner in your relationship or have left the workforce to be a caretaker). If you happen to significantly outearn your potential mate, you may also want to consider a prenuptial agreement as a practical, protective measure.