If imitation is the sincerest form of flattery, parents don’t always want to be flattered.
At least not when it comes to financial decisions.
For proof, all we have to do is look to our own parents. Sure, it’s true that in some cases Mom and Dad were beacons of fantastic financial wisdom, but other times, that just wasn’t the case.
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As we work through how to teach our own kids about money—and how not to pass on our bad habits—it can be helpful to start at the source. Today, we bring you five real people who share how their parents' money habits shaped their financial outlooks later in life. What's more, we'll give you advice on how to learn from their experiences.
1. I Watched My Parents Juggle Debt ... and Learned From It
Linda Atwell watched her parents struggle with debt all their lives and would have followed in their footsteps, but she married a man who couldn't stand the idea of debt. She compared the example set by his parents (who never owned a home but put five kids through college) to that of her own (who couldn't afford to take the family on vacations and limited the kids' school clothing budget to $25 per year).
She realized that, though she loves her parents, she wanted to break with their legacy when it came to money. Because of that, she and her husband now use one credit card and pay it off every month. Plus, they bought a house and paid for it in less than 10 years.
If you're concerned about teaching your kids about debt, you should show your kids that keeping a handle on debt is important, and allow them to get a feel for what it means to have some debt. Hollis Page Harman, an Emmy Award-winning financial literacy expert and author of "Money Sense for Kids," says that the Atwells are doing a great job living below their means. “However, parents should allow their children to feel [what it's like to overspend] their allowance and do without until they can repay their purchase,” she says. “That’s a teaching moment kids can really learn from.”
Real life example: If your kid comes into money, say, from an allowance or a birthday, and blows his cash immediately, let him flounder. Allow him to feel discomfort. Next time, that money won't disappear so quickly!
2. My Parents Sent Conflicting Money Messages
Colin Drake grew up in an affluent family with parents who had differing views on finances (Mom only bought sale items while Dad constantly splurged). That conflict made it harder for him to understand what was the best way for him to handle money in his own life; he and his siblings all have different money styles because there wasn't one consistent message taught at home.
He's taken that tension to task: As an adult, he is a financial advisor, and he incorporates the concept of money personalities—and how it's important for both parents to be on the same page—into his work.
If you and your partner are like his parents, you should try to send consistent messages about spending to your children. Because Drake’s parents had two very different money attitudes, they had no common ground about money to imprint on their kids. “Instead, the children adopted one way or the other without any understanding of the pros and cons of each,” said Harman. “As parents, it’s important to agree on how to raise money-smart kids [and stick together on it].”
If you and your partner have different money styles, be extra communicative (you can find a guide to that conversation here): What do you want your kids to learn from you? Keep your agreed-upon lessons in mind as you navigate money in everyday life. When you feel that you or your partner is veering from the plan, pick up the conversation to get back on course.
3. My Dad's Legacy Made It Hard to Leave My Job
While staying loyal to a company has its perks, Lisa Merritt found it hard to move on in her career after watching her father—a union worker and the family's sole breadwinner—stay loyal to his job from the time he was an apprentice at 15 until the day he died. "After I began my career with a Fortune 500 company, I assumed I would stay there until I retired," Merritt said. "It took tremendous courage, seven years later, to leave and become an entrepreneur. I’m so glad I did, because I learned many new skills, met new people and learned more about my capabilities.”
If you're like her dad, you should discuss with your children the jobs you have and why, says Harman, and explain that there are so many different kinds of jobs available. Parents “can encourage their children to identify what they might like to do, how they might prepare for that, what it would pay and where they might live,” she said. “They can even take them to experience a workday at their job, or visit the job of a neighbor to see how his or her job is the same or different.”
4. My Mom Taught Me to Save for Things I Love
Melissa Pearl grew up with a mom who taught the importance of saving up for things that make her happy. "Thanks to my mom, our family had some cool holidays and got some amazing gifts," says Pearl. "Plus, my brother and I got braces, which I’ll be forever grateful for!” Pearl now saves for the things she really wants: “My husband and I save everything. In addition to the essentials, we always have something fun we’re saving for, and it makes it a pleasure to squirrel the money away.”
If you're like her mom, you should impart that same great lesson to your kids! Show them that while saving for big future goals is important, that doesn't mean sacrificing everything in the short term. Pearl and her husband are what Harman calls “goal-oriented” because they delay instant gratification for the sake of a larger purchase or to fund a dream.
Talk to your children about how you balance a good mix of saving for big-ticket items and fun activities, and squirreling away for important goals like emergency savings and retirement. Try to balance fun with necessary tasks by using the 50/20/30 Rule and you should be able to have the best of both worlds.
5. My Parents Inspired Me to Work Hard
Marie Phillips's parents were self-sufficient, hardworking and entrepreneurial. So, when Phillips went back to work after taking years off to stay home with the kids, she kept her parents' example in mind. “I set up my own daycare business to earn money to get retrained as a computer programmer,” she said. “Programming paid well with the least training back in the early ’80s, and I viewed it as a huge opportunity. It did well by me, and now my two sons are pursuing careers in next-generation computer programming.”
If you're like her parents, you should explain to your kids the reasons behind your hard work, so they'll grow up to follow your lead. Strong role models and mentors are the key to successful financial futures, says Harman. If you’re currently a stay-at-home parent looking to get back out into the workforce, we've written about a recruiting firm that specializes in flexible jobs that are great for parents, and these five tips for re-entering the workforce.
Tell us: How did your own parents' parenting style affect the way you handle finances?