You’ve inherited their eyes, their dimples and their nearsightedness, but could you also have inherited your parents’ financial habits? While you can’t blame your DNA for buying those new kicks, your attitude to money is linked to your upbringing in ways you wouldn’t expect. Here are some surprising ways your financial heritage impacts how you spend money today.
Attitudes toward money
The way we spend our money depends a lot on how we perceive it. Do you see money as something to worry over or be afraid of? Perhaps you learnt this through watching your parents struggle to make ends meet. Are you constantly trapped in a cycle of overspending? Maybe you grew up in a household where bad days were made better with toys, clothing and other rewards. A report by behavior experts at Cambridge University has illustrated that an adult’s core beliefs around money are formed by the age of seven years old. What is your first memory around money? Is it positive or negative?
If your attitudes to money get entrenched at an early age, so do your tangible habits around money. Often, this can be a good thing.
Lisa, a new mother from Fourways in Johannesburg says, “My father is an accountant and is fanatical about avoiding debt. He never let any of us take out store cards or any kind of credit. While this is on the extreme side of the scale, it has helped me keep out of debt until now and have a deep respect for the impact bad credit can have on your financial wellbeing.”
Sometimes, even good habits can have a negative impact on your current financial situation. Sometimes it is necessary to spend, invest or even take on credit to purchase an asset and grow your wealth.
Henry Ford, the quintessential entrepreneur and calculated risk-taker says, “We teach children to save their money. As an attempt to counteract thoughtless expenditure, that has a value. But it is not positive, it does not lead the child into the safe and useful avenues of self-expression or self-expenditure. To teach a child to invest and use, is better than to teach him how to save. Saving is a critical – but only the first step to creating wealth.
A habit is something we do regularly, often without being aware of it. A good way to understand your financial habits is to take a long, hard look at your personal spending. Where do you spend your money most? What is your attitude to saving? What items in your house can you not do without? Then, look to your upbringing to see if there are any similarities.
Checking your privilege
Even if you have grown up in a privileged household and continue to be wealthy today, your spending habits may have a ‘privileged blind spot.’ You could spend beyond your means because you are used to having certain things, even if your salary doesn’t meet your needs yet. It could also impact how you interact with others. Maybe you are used to getting a salary at the end of the month and pay your domestic worker a few days late, without the knowledge that she may be depending on that money. Privilege can also be a powerful force for good, if parents teach their children from an early age the virtues of gratitude and giving to those less fortunate.
Balancing what we’ve learnt and who we are today
Looking back at your financial heritage is not an exercise in blaming your parents or yourself. It’s simply about understanding the silent forces that impact how we spend our money. If we’re able to recognize where we are held back by negative attitudes towards money or unhealthy spending habits, we can make positive changes and prosper.
Disclaimer: The advice contained on this blog is for general purposes only and does not take into account individual circumstances, objectives or financial needs. Accordingly, readers are advised to seek appropriate advice from licensed professionals prior to making any investment, or taking up a financial product or service.