Why you should forget what your parents taught you about money

As a young adult, I feared investing in the sharemarket. I grew up hearing that investing in shares “was like gambling”. No amount of research seemed to help. I was in a state of paralysis until I rewrote the beliefs I’d picked from my upbringing.

Consciously or not, your upbringing shapes your financial world view and sets an invisible benchmark for what you consider normal. Research supports the idea that parental influence, family structure and dynamics, and financial experiences all play a fundamental role in your financial literacy and economic behaviour.

Money lessons your parents taught you – both good and bad – could hinder you as an adult.Credit: Simon Letch

Often, these influences and experiences become your starting point for the financial reality you create as an adult.

Some of the financial world view you’ve inherited might work in your favour: a strong work ethic, an aversion to credit card debt. But other aspects might hold you back.

Without awareness of how your financial past is influencing your current reality, people often unconsciously end up recreating their past. Here are some signs you might be doing just that:

• Repeating familiar phrases: Do you find yourself saying (or even thinking) things your parents used to say, by default? “That’s too expensive.” “We can’t afford that.” “Money doesn’t grow on trees.” “No matter how hard I work, I can’t seem to get ahead.” You are probably carrying around and recreating your parents’ financial world view.
• Struggling to change patterns: You know you shouldn’t spend so much, you should invest and save more, but you can’t seem to stick to strategies or behaviour changes. There’s a gap between what you know you should be doing and what you’re actually doing. In that gap, psychological and emotional baggage often keeps you stuck in old patterns.
• Repeating emotional experiences: Are there parallels between how you emotionally experience your financial reality today and your childhood experience (despite better circumstances)? You might have a better job than your parents did, but the feeling of struggle is still there. You might have ample savings, but you can’t stop chasing more.

Rewriting your financial world view isn’t an overnight process.

Here are some steps to help you break free from your financial past so you can carve out a new financial path for yourself:

1. Build awareness of your financial “baggage”. For most of us, the influence of the past on our present reality is largely invisible. We’re like fish in water that don’t know what water is. Until you start to identify the ways in which your past influences might be holding you back, you might find it difficult to change them.

You can do this by asking yourself questions: In which ways does my current financial reality mirror my childhood? What beliefs and feelings about money (and various aspects of money – investing, saving, spending, debt) do I have today and where did they come from?

2. Evaluate costs and benefits. Once you’ve identified them, reflect on how well those patterns and beliefs serve you, and what are the current costs and benefits of holding on to them?

For example, maybe you’re scared of investing because your parents were. If you want to build financial security for the future, how well is that fear serving you now?

How are you benefiting from holding on to that belief? Perhaps it’s giving you a false sense of safety? Which is more important to you – preserving those benefits or overcoming the costs?

3. Envision your financial future. Map what your ideal financial future looks like. I don’t mean in terms of the tangible things such as assets, income or possessions.

You can start there, but focus on the financial world view of your future self. Compare this to the beliefs you hold.

For example, in your ideal financial future, are you scared of investing, or do you feel confident in your ability to take calculated risks? Do you see saving as a chore or struggle, or does it come easily and naturally? Do you try to penny-pinch or do you feel relaxed about spending?

The objective is to get clear on the gap between where you are and where you’d like to be – that will give you clarity on how to start changing. If you grew up in a penny-pinching household but you’d like to be more relaxed about spending, that is something you can start practising.

Rewriting your financial world view isn’t an overnight process. It is a gradual process of building awareness, gaining clarity and intentionally choosing something different.

This process is key to achieving real financial freedom beyond the numbers – one where you gain the mental and emotional freedom to create a more intentional and meaningful financial life.

Paridhi Jain is founder of SkilledSmart, which helps adults learn to manage, save and invest money through financial education courses and classes.

• Advice given in this article is general in nature and not intended to influence readers’ decisions about investing or financial products. They should always seek their own professional advice that takes into account their own personal circumstances before making any financial decisions.

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