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Do you live paycheck to paycheck and can’t save anything? Or, on the contrary, do not allow yourself anything extra, although the means allow? You may have inherited this behavior from your parents. How to get rid of the family financial «curse»? Here’s what financial planners advise.
Marketer and social media consultant Maria M. thought she grew up in a poor family. Her mother, a housewife, managed the family budget extremely economically and practically did not spend money on anything other than food and utility bills. Family activities included walks in city parks and trips to birthday cafes.
Only after graduating from university did Maria learn that her father, a software engineer, made good money. Why was mother so stingy? The reason was her own poor childhood in the village: a large family could barely make ends meet. The feeling of a constant lack of money stuck to her for life, and she passed on her experiences to her daughter.
“I severely limit the budget,” Maria admits. She may well live in a big way, but the thought of exceeding the minimum expenses scares her: “I feel a strange mixture of horror and manic delight and I can’t make up my mind.” Maria continues to eat frozen convenience foods, does not dare to update her wardrobe and buy a new computer.
Your Money DNA
Maria was «infected» with excessive frugality from her mother and repeats the same behavioral pattern in which she grew up. Many of us do the same and do not realize that we are operating within a behavioral cliché.
“Our research shows that the attitudes we experience about money in childhood drive our financial decisions later in life,” says Edward Horowitz, a psychologist at Creighton University (Omaha).
Children’s impressions about handling money affect us in different ways. If you manage your finances wisely, spend as much as you can, pay off your debts on time, you can attribute this to good money habits inherited from your parents. If you tend to make financial mistakes, avoid keeping a budget and keep track of bank accounts, your mother and father may be the reason.
Not only does our environment shape our financial habits, genetics also play a role.
“Children learn from existing models. We imitate the behavior of our parents, explains Brad Klontz, a psychologist at Creighton University. “We may not remember the specific parental attitude towards money, but at a subconscious level, children are very receptive and adopt the parental model.”
Not only does the environment shape our financial habits, genetics also play a role. A study published in the Journal of Finance in 2015 found that people with a variant of one specific gene, coupled with a financial education, make better financial decisions than educated people without that gene variant.
The Journal of Political Economy published another study: our attitude to savings is one third dependent on genetics. Another study was conducted at the University of Edinburgh — it revealed the genetic nature of the ability to self-control. This can be a key ingredient in determining our cravings for out-of-control spending.
Getting rid of the hereditary model
We cannot change our genes, but we can learn to recognize bad financial habits imposed by our parental patterns. Here is a ready-made three-step plan to free yourself from the family financial curse.
Step 1: Be aware of the connection
Consider how your parents influenced your relationship with money. Answer a few questions:
What are the three money-related principles you learned from your parents?
What is your earliest memory related to money?
What is the most painful memory of money?
What are you most afraid of financially right now?
“Answers to these questions can reveal deeply hidden patterns,” explains Prof. Klontz. — For example, if your parents never talked about finances, you might decide that money is not important in life. Children who grew up with spendthrift parents run the risk of inheriting the belief that buying things will make them happy. Such people use money as an emotional band-aid for life’s problems.»
By comparing the behavior of relatives with our own, we open up a unique opportunity to make positive changes in the established model. “When you realize that you are playing the script of your parents or even grandparents, it can be a real revelation,” says Klontz. — Many blame themselves for living beyond their means and not being able to save anything. They think they’re in financial trouble because they’re crazy, lazy, or stupid.»
When you realize that your problems are rooted in the past, you have a chance to forgive yourself and develop better habits.
Step 2: Dive into the investigation
Once you figure out that your parents passed on bad money habits to you, investigate why they formed them. Talk to them about their childhood, ask what their parents taught them about money.
“Many of us repeat scripts from generation to generation,” says Klontz. “By realizing that you are playing the role of another actor in a hackneyed play, you can rewrite the script for yourself and future generations.”
Klontz was able to rewrite the family script. At the beginning of his career, he had serious financial difficulties after an unsuccessful risky investment in one of the start-ups of the 2000s. His mother was always careful with money and never took risks.
Klontz decided to ask about the family’s financial history, trying to understand his penchant for risky operations. It turned out that his grandfather lost his savings during the Great Depression and since then did not trust the banks and put all the money in a closet in the attic.
“This story helped me understand why my mother has such a reverent attitude towards money. And I understood my behavior. I thought that family fear led us to poverty, so I went to the other extreme and decided on a risky investment that led to my ruin.
Understanding family history helped Klontz develop less risky investment tactics and succeed.
Step 3: Reflash Habits
Let’s say that parents believed that all rich people are mean, so having a lot of money is bad. You have grown up and find yourself unable to save because you spend everything you earn. First ask yourself why you have formed this habit. Perhaps the parents condemned the more fortunate neighbors, trying to rationalize their own poverty.
Then consider how true your parents’ statement is. You can think like this: “Some rich people are greedy, but many successful business people try to help other people. I want to be like that. I will spend money for the benefit of my family and help other people. There is nothing wrong with having a lot of money.»
Repeat this every time you catch yourself reverting to old habits. Over time, a new train of thought will replace the inherited idea that fuels the habit of spending.
Sometimes it can be difficult to cope with the inherited behavior pattern on your own. In this case, psychologists can come to the rescue.
Author — Molly Triffin, journalist, blogger