Overcoming Family Financial Habits

While doing some reading on finances, I came across this article. I think you might get something from it.


Whether you realize it or not, your parents likely had a major influence on your financial habits. Studies, including the recently published
"Habit Formation and Learning in Young Children," show that the ideas about money you pick up during childhood tend to stick with you for life, whether you grow up just like mom and dad or have made choices in reaction to them.

"Most of our beliefs and habits take shape well before the age of 12, and that includes money habits," says Keith Whitaker, Senior Family Dynamics Consultant with Abbot Downing. "Most people may not want to believe that, but they know in their heart that it's true."

If your parents didn't talk about money, for example, you also probably feel uncomfortable when the subject comes up. If your family was always trying to keep up with the Joneses, you may equate money with success, and you may feel like you can never have enough.

If you strongly disagreed with your parents' financial habits, you may have reacted by choosing to take the opposite approach. But that too can be harmful when taken to extremes. For example, some people who grew up poor, or whose parents were extreme penny-pinchers, hated feeling deprived, so they may spoil their own children by giving them too much.

• Potential harmful money habits you may have picked up from your parents include:
• Overspending to show love
• Extreme penny-pinching
• Believing that money is the cause of world problems
• Equating money with success and happiness
• Associating money with personal conflict
• Reluctance to talk about money

Whatever your money baggage, fortunately, you aren't stuck with it forever. "It is possible to change," Whitaker says, "but it takes a lot of work." He recommends these five steps:

1. Reflect on your behaviors and feelings about money. Think back to your childhood and your parents' attitudes about money. Were they constantly fighting over money? Did they overspend and go into debt? Or were they extremely frugal? Try to recognize both the positive and negative lessons you learned from your parents, and how they affected your beliefs and feelings about money. "The first step in changing bad financial habits is becoming aware of your deep-seated beliefs about money and where they come from," Whitaker says.
2. Focus forward and don't blame. While it's important to recognize your parents' influence, it's equally important not to assign blame, Whitaker says. "Blaming others won't help you move forward," he says. "Try to empathize with your parents and accept that they probably did the best they could do and, like all of us, they had their limitations. Show yourself grace, too."
3. Clarify your goals. After you identify any bad financial habits that come from your upbringing, make a conscious decision to change. "Ask yourself, 'What are some other ways I can act?'" Whitaker says. If you tend to spoil your spouse and your children with monetary gifts, commit to spending time and having experiences with them instead. "Maybe you suddenly realize that you've been spending all this money on your child, but he's acting like a spoiled brat," Whitaker says. "It may be time to stop giving materially and start giving emotionally."
4. Break big changes into small steps.  Rather than trying to change all at once, commit to taking a series of small steps in the right direction, Whitaker advises. If you're reluctant to create a budget with your spouse because your parents fought about money, start with one small piece of a budget. "Maybe you can do a better job of tracking your spending on just one type of expense, or saving for something specific," Whitaker says. "Instead of taking it all on at once, take on a manageable piece." If sharing specific numbers — such as the size of your estate — makes you queasy, you can start by talking about your estate in a more general way, without the dollar signs.
5. Get help. Connect with people who can help you talk through your money issues and help hold you accountable. Friends, professional colleagues, counselors, or members of shared interest groups can help reinforce your desired behaviors and give constructive, positive feedback. And, of course, your relationship manager is probably your best resource on making good financial decisions. "As hard as it is, you can do something about your beliefs and your behaviors," Whitaker says. "I've seen it happen."