How your parents’ money habits impact you

We pick up a lot of our traits simply from the examples from our parents, that’s a given. Money, however, is one area where the influence and long-lasting affects of our parents’ habits cannot be overstated.

We may be focused on making sure our children appreciate everything they have in their lives, just like LeBron James does with his children, or like Shark Tank star Barbara Corcoran does by helping her 13-year-old daughter find a job so she understands the effort behind a paycheck. Others give their children money for chores and have occasional conversations about spending.

In fact, our young children are constantly receiving messages from us about money, even when that teachable moment is the farthest from our minds.

Basically, they’re constantly absorbing what they see us doing. “Your kids don’t do what you say. They do what you do,” says personal finance guru Suze Orman.

The thing is, kids don’t have a gauge that tells them the good from the bad.

And they carry it with them. “Our research shows that the money patterns we observe in childhood are the primary source driving our financial decision-making later in life,” says Edward Horwitz, Ph.D., associate professor of behavioral finance at Creighton University Heider College of Business.

We reached out to some entrepreneurs, creatives, and side hustlers to find out how their parent’s money habits shaped their financial habits.

Parent financial habits turn into hurdles for children

A number of our respondents talked about money habits and attitudes they internalize. Sometimes these examples didn’t originate from places of negativity.

Leaving a child in the dark may leave them to assume the worst

Jonathan Sanchez was raised by a single-mom, whom he said was extremely frugal and spent hours clipping coupons. “My mom never talked about money or discussed our ‘financial situation,’” he said.

“I grew up thinking we were poor,” Sanchez said. This took a mental toll on him. From a young age, he said he had a “bad” relationship with money.

“I didn't spend money uncontrollably. Instead, I would hoard money,” he said. Eventually he grew up and had a successful career, still, he said he was “scared to spend money. One time, I took a Greyhound bus for 10-plus hours just to avoid spending on a 45-minute flight,” he said.

When his wife opened up a discussion about money, it led to a deep conversation exploring concerns they had about teaching financial literacy to their young children. One thing led to another and soon Jonathan and his wife Jacqueline started investing their income in real estate. They also run a website for people looking to build wealth through real estate.

Sometimes, parents just flat out have a shortage of money and revolving debt that ensues from being economically underprivileged. The stress often is palpable.

Take financial literacy into your own hands

Shannon Serpette said she was aware how tight money was for her parents. “I knew it was a constant source of stress in their lives. We were living paycheck to paycheck with no protection in place,” said Serpette, chief editor of Mom Loves Best.

“My parents had many wonderful traits, but financial acumen wasn’t their strong point,” said Serpette.

After graduating college, Serpette said she’d developed one of her parent’s habits—carrying debt—and didn’t want to fall into the same traps as her parents.

“I was determined to do better, to get my finances in order so I wouldn’t face the stress they did and my future children wouldn’t feel that stress either. But the reality was, I had no idea how to manage my money. I’d never had anyone discuss it with me,” she said.

She swung into action—she said she began educating herself on personal finance, started building up an emergency fund, increased her retirement savings contribution, and, at times, had more than one job.

Today she has her own children and talks to them regularly about how to be financially responsible. “Because I don’t want them to be as clueless as I was about it when they become adults,” Serpette said.

Too much help can cause a struggle later

Overcoming parental influence on her finances happened later in life for Sabrina Hamilton, Creator of FinanceOverFifty.com.  

“Although my father was wise with his finances, he didn't pass down the lessons he learned,” Hamilton said.

Instead, Hamilton said she came to depend on her father to help her out financially once she was an adult. “He loved his children through giving generously and rescuing us from our own financial mistakes. Unfortunately, this led me down a spiral of increasing debt and poor money habits,” she said.  

When he passed away in 2008, the safety net vanished. “My father was my financial rescuer,” she said.

“Since then, I've learned how to budget, invest, and live below my means.  Now I help other late savers who are trying to plan for retirement. I only wish he were here to see it,” she said.

Being frugal isn’t always best

UK-based Peter Mann also had to reckon with his parent’s financial attitudes later in life. In his childhood, he said his extremely frugal parents shamed their children if they wanted to splurge or asked for something expensive that could be purchased at a lower price. “I picked up this habit from them and over the years I've learned that being excessively frugal can be damaging to my financial mindset and for my relationships,” Mann said.

Early on in running his business, SC Vehicle Hire, Mann aggressively applied the frugality he learned from his mom and dad. “Over the years, I’ve learned being excessively frugal can be damaging to my financial mindset and for my relationships,” he said.

“I have refused to throw celebrations for critical business achievements and employees did not feel appreciated for their efforts, while I used to try and pay them as low a salary as possible.”

Today, he’s put that mentality behind him. “I've learned the importance of hiring high quality employees and keeping them happy and engaged, but I had to unlearn my excessively frugal habits first.” Today, Mann also enjoys spending money traveling with his family on trips and on other splurges.

Lessons that give children a financial head start

Respondents also told us about habits they picked up from their parents—frugal and not necessarily frugal—that seem to put them on the right path from the very beginning.

Sometimes splurges can be justified

“My parents were really frugal and DIY-minded—sometimes by necessity and sometimes by choice, said Georgia-based dad blogger Evan Porter. “We did all the repairs and construction on our home, including renovating two bathrooms and our kitchen.”

During Porter’s childhood, the family applied frugality to their vehicle purchases. “We also had a revolving door of $1,000 to $2,000 beater cars that were always breaking down.

As a dad himself today, Porter is fairly frugal. “I have no room in my life for a cheap car I can’t count on!” Still he has dialed back some of the money-saving tendencies he picked up in childhood. “I’ve learned that the cheapest option isn’t always best if it breaks or doesn’t hold up and sometimes it really is smarter to invest in higher-quality purchases even when it costs more up front,” Porter said.

Some lessons really pay off

Emma Leigh Geiser, a nurse and financial coach, attributes lessons from parents for an attitude toward money enabled her to get serious a few years after college, pay off student loans and create a sound financial future.

“I watched my dad balance his checkbook at the kitchen table monthly and even though I didn't understand it at the time, watching this behavior instilled in me an expectation of myself as an adult for handling money,” she said.  

She said she also learned from watching her mom use cash for groceries and other household items. “Through her example, I learned how you manage a certain amount of money and spend what you have wisely,” Geiser said.

Learn what you can from your parents

Paige Arnof-Fenn, founder & CEO Mavens & Moguls, also has carried with her a number of specific examples from her parents that have guided her financial life.

Her top lesson? “Live within your means—you do not need the nicest apartment/home/car, so be responsible and do not overextend yourself,” Arnof-Fenn said. Additional lessons that have been instrumental for Arnof-Fenn:

• Pay off your credit card balance every month.
• Save something from every paycheck. Just get in the habit and funnel a set amount directly into an investment account. You do not spend what you do not see.
• Do not up your spending when you get a raise, up your savings instead.

Children credit success to the relationship parents had with money

Whether we all make the connection or not, more than likely the way our parents managed their finances and related to money ends up driving our career paths.

Let your parents inspire you

Daisy Jing attributes her upbringing with her success as a YouTube star turned beauty products maven. “A huge thing my parents have taught me is how to hustle and be scrappy,” Jing said. This was out of necessity. The family immigrated to the United States with $500 to their name. Because of this tenuous financial start, the family always focused on frugality. This played out in myriad ways during Jing’s childhood.

“My parents always taught me how to be independent, which also means not wasting time on something that requires money,” Jing said. She said she didn't go to movies and instead learned to do computer graphics, went to the library, and wrote books.

“I took pleasure in learning and not on spending money. My parents placed a huge premium on education, meaning they emphasized the value of education,” she said.

With encouragement from her thousands of followers on YouTube, Jing in 2012 launched a line of anti-acne skin care products. Today she is 30 years old and her company, Banish, is a multi-million dollar concern ranked 152nd on Inc. 5000.

She credits the parenting style of her mom and dad and their focus on frugality as the reason she was on a path for success. “My ability to be independent in learning and teaching myself things is why I’m in business now. My self-starter attitude got me here and it is thanks to the ‘independent’ environment my parents gave me.”

Save as much as you can, any way you can

Michael Hammelburger said he wished he’d received more knowledge around financial literacy when he was still at home. However, he received a piece of advice from his parents that has proven quite useful and could be seen as a driving force in his career.

“Save 5 to 10 percent of your salary and put it into an interest-bearing account. Investing in smaller amounts but at a consistent basis is more important and fruitful,” Hammelburger said.

This lesson, he said, led to a consistent dedication toward cost-cutting. Although he uses credit cards, in part to maintain a good credit rating, he weeds out ones that don’t compete for his business: “Those with limited rewards, high annual fees and even poor customer support hotlines are getting the cut.”

And he doesn’t pay for a gym. “I can jog early in the morning without having to pay for it on a treadmill.”

He also doesn’t let unnecessary food expenses slide either. “I bring your own lunch to work from Monday to Thursday and have a little reward on Friday,” he said.

He’s even made this vigilance into a business proposition: In 2019, Hammelburger founded the Expense Reduction Group. It is a consultancy helping companies improve their bottom lines by finding thousands of dollars in expenses often overlooked when leadership teams take on the task of cost-cutting.

Humble beginnings don’t mean you’re stuck

Lisa Schaefer, founder of ThinQ.tv, a video platform for activism, came from a household where money was scarce. “I grew up in rural Wisconsin. We rarely had money for things like shoes or pants. Luckily I had an older cousin nearby who gave me hers,” Schaefer said.

Yet, she had a financial vision for herself before leaving home. “I knew my parents would not be paying any of my living expenses after I turned 18. I got a job the summer I turned 16 and saved and kept track of every penny I earned or found,” she said.

Before high school, she moved to Arizona and knew that if she could achieve top grades, she’d have a way to college. “Graduation in the top 5 percent of an Arizona high school class meant four years free tuition,” Schaefer said.

So she did, as salutatorian. And she kept going: On her way to earning her bachelor degree at 19 years old, she got excited about compound interest, and started investing every extra dollar.  “I became a software engineer, earned a Ph.D. and by 33 I was a millionaire and now I’m a multimillionaire founder of a tech company,” Schaeffer said.

Take-away: Figuring out your own financial future is possible

The current generation of young moms and dads face financial challenges that recent previous generations did not—student loans, an uncertain jobs outlook and stagnant wages. Without a doubt, many are looking to instill in their children attitudes that put them on paths that lead to happiness.

It’s helpful to see that even when parents taught their children about money management in ways that later posed challenging, children still rise above the hurdle.

I’ve found these and other personal stories shared with us heartening. They reveal people find solid financial footing, regardless of upbringing.

Do you have a story about your financial attitudes and habits you’d like to share? Tell us in the comments—we might even feature you in a future post!