Your Parents’ Money Habits and You

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Your Parents’ Money Habits and You

by Sharon Lechter Decisions you make today about how you spend and how you invest your money will affect you for years to come. Looking at how your parents dealt with money is an important starting point. Did they save money? Did they think of ways to make more money? Or did they agonize over never having enough money? Did your parents say, “We can’t afford it!” more than they said, “How can we afford it?” One statement is scarcity mentality, while the other is abundance mentality. A few triggers that may help you define your financial upbringing: •    Did your parents save up for your family vacation, or was it something you did and then stressed about how to pay for when the bills came in? •    Did one parent shoulder the bulk of the financial responsibility, and complain about it? •    Did your parents fight about money in front of you? •    Did your parents make sacrifices to provide for you? •    You may have been protected from family financial traumas. Ask your parents what they would have done differently with their money at your age. Did they have a budget, a savings account for a rainy day or invest early in the stock market, or did they live paycheck to paycheck? Let them know you value their insight and give them time to prepare for the conversation. Given the current economic crisis, they may be willing to share more freely with you. Now that you have analyzed how your parents dealt with money, how will you?•    You have a golden opportunity. Recognize the positive lessons you learned from your parents and keep them, but also commit yourself to not repeating the negative ones. •    Adopt the “pay as you go” plan and stay out of debt. •    Set a goal (taking a vacation) and then when you achieve it, celebrate achieving the goal. Enjoy the well-deserved vacation! It beats the alternative—going into debt for a vacation and then fretting over how you are going to pay for it for months after the good memories have faded. •    Start “paying yourself first” by automatically saving a percentage of your income each and every month. Will your mindset be one of scarcity (never having enough) or abundance (planning and achieving)? It is your choice. For now, you still drive your own financial future. Sharon Lechter is a CPA, author of “Three Feet from Gold” and co-author of “Rich Dad Poor Dad.”