Leaving Your Family Legacy Behind

This childhood imprint of how to deal with money cuts both ways. If you have solid financial habits — spending within your means, for example, or nipping small debts in the bud — you may be able to attribute this to smart money lessons picked up from your parents. If you tend to make fiscal mistakes, however, or stick your head in the sand to avoid budgeting and bank statements, mum and dad may be the reason.“Children primarily learn from modelling, and we all have a tendency to pick up the behaviors of our parents,” says Brad Klontz, Psy.D., CFP, founder of the Financial Psychology Institute and associate professor of psychology at Creighton University. “Money attitudes can be insidious in the sense that we may not be able to remember anything specific, but on a subconscious level, kids are very sensitive to that and pick up on this modelling.”Although environment is the number one driver of how our financial habits develop, genetics come into play, too. Research published in the Journal of Finance in 2015 found that people with a variant of one specific gene, as well as a higher degree of financial literacy, make better money decisions than other individuals.Another 2015 study published in the Journal of Political Economy concluded that about one-third of our approach to savings stems from genetics. DNA also predisposes us to having more or less self control, according to a University of Edinburgh study. That may be key in determining our likelihood to spend with abandon.While you can’t change your genes, you can learn to recognise and stop repeating harmful money habits your parents passed down to you. Here’s your three-step plan to escape from a legacy of financial mismanagement.To get a handle on the negative financial imprint left by your childhood, think back to how your parents influenced your money beliefs. Ask yourself a few questions: What three things did your mum and dad teach you about money? What is your earliest money-related memory and your most painful money memory? What is your biggest financial fear these days?“Addressing these can uncover deep-seated patterns,” Klontz says. “For example, if your parents never talked about finances, you may have interpreted that as meaning that money is unimportant. Whereas people who grew up with spendthrift parents who modelled excessive buying are at risk of inheriting the attitude that more stuff will make them happier. They’re likely to use money as an emotional Band-aid.”Connecting the dots between family members’ habits and your own is a powerful step to activating positive change. “It can be cathartic to grasp that you are playing out a script based on your experiences with parents and grandparents,” says Klontz. “Many people blame themselves for not living within their means or saving for the future, which leads to shame. They tell themselves that they have money problems because they’re crazy, lazy or stupid.” Recognising that your habits stem from your upbringing rather than some inner flaw gives you permission to forgive yourself — and forge better habits.