4 Bad Financial Habits That Stemmed From Your Parents
Most schools don’t teach students how to manage their finances. So for better or worse, many of us learned everything we know about money from our parents. Depending on how your mom and dad managed their money, you may have learned the value of saving or picked up some bad financial habits from your parents. Here are four unhealthy money mindsets you may have learned from your parents and some tips on how to change them.
4 Bad Financial Habits Learned From Your Parents
Do you have a hard time spending money on anything but necessities and feel guilty when you splurge? Your spending anxiety may stem from childhood experiences like money always being tight growing up. If there was no room in the household budget for discretionary purchases, that could be why you have a tough time treating yourself as an adult. You might have a scarcity mentality and feel like you can’t afford fun experiences even if you have the funds sitting in your bank account.
But if you have an emergency fund and are saving money toward your financial goals, it’s ok to spend money on hobbies. Setting a monthly fun money budget can give you the permission you need to make some discretionary purchases without guilt. A therapist can also help you address the root causes of your financial anxiety and develop a healthier money mindset.
If you grew up in a household where money was tight, you may go the other direction in adulthood and spend irresponsibly. You might have a hard time saying no to impulse purchases because your parents couldn’t afford to buy you the things you wanted growing up.
Irresponsible spending and shopping addictions can also affect people who grew up in wealthy families. If your parents spoiled you as a kid or spent lots of money on themselves, you may model that behavior in adulthood.
No matter where your irresponsible spending habits came from, it’s important to put a stop to them before you rack up debt. One way to do this is by making a budget. Go through your bank statements so you can see exactly where your money is going every month.
Then identify areas you can cut back on, like shopping or eating out. Set a firm monthly budget for discretionary purchases that’s within your means. It may help to withdraw your fun money in cash and put it in an envelope. Once that money is gone, you won’t be able to go shopping for the rest of the month.
Investing Too Conservatively
My parents instilled the value of saving in me from a young age. But like most parents, they instructed me to sock away my money in a savings account and helped me open one as a child. They didn’t teach me about compound interest or show me how much my money could multiply by investing it in the stock market. So when I started earning money as a young adult, I missed out on a lot of investment gains.
If your parents taught you to stash money in a certificate of deposit or high-yield savings account, you may have to unlearn the habit. Although it’s good to have some liquid cash on hand for emergencies, most of your money should be going to work for you in the stock market. We have lots of articles here on Saving Advice that can help you get comfortable with investing, like this one on investment tips for beginners.
Discomfort When Discussing Finances
One of the worst financial habits I picked up from my parents is discomfort when discussing my finances. Outside of the value of saving, we rarely talked about money in our household. I was also taught not to discuss finances with friends and extended family members because it’s impolite.
This belief has held me back in my career as a personal finance writer. I feel awkward talking about rates with other freelancers even though it helps us all get better pay and charge what we’re worth. I also struggle to include concrete facts and figures about my finances in blog posts. Although I know it’s not rational, including details about my net worth or income feels like bragging. I’m slowly working on getting over this by sharing more about my finances in my writing.
If you feel uncomfortable discussing finances too, try to face your fears and talk to your significant other and friends about money. The only way to get over this discomfort is to make talking about money a routine thing, so keep those lines of communication open.
Did you pick up any bad financial habits from your parents? What are you doing to change them and develop a better money mindset? Let me know in the comments section below!
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