Parent Affect on Money
By: Andrew Rosen, CFP®, CEP®

Financial psychology fascinates me. Every day I get to see it have real world implications during meetings with clients.  When I have the pleasure of working with ones parents and children (3 generations), it becomes a real social experiment. In this setting I see how these people are more alike than they imagine.  It offers itself as an interesting generational sample pool.

I’ll notice that because they came from the depression period, “mom and dad” counted every penny. Now “son” continues that cautious mentality towards his money. Sometimes, I find that he’s on the complete other side of the spectrum. Because they never had the luxury to spend; he is making up for lost time.

I’ve thought it over, since observing certain trends over the years. Below are the six most common ways (I’ve determined) your parent’s views on money helped shape your feelings towards it today. As you read through this, think about each question below.  You just might learn something about yourself in the process.

  1. How You Save – This seems obvious, right? We are not always cognizant that our parent’s saving habits shape us as adults. Did they talk about investments or retirement portfolios? Were they always stressed about not being able to save? Regardless of how they saved, it influences you in one way or another.


  1. How You Spend – Did your parents spend without thinking? Did they research every last purchase? Did they wait for sales, or did they haggle with every salesmen (something I enjoy myself)? I can still remember rolling my eyes when my dad would start negotiating. Now, I live for the excitement, too.


  1. How You Handle Debt – This is a big one. How do you (and your parents) view debt? Did they pay for everything in cash? Did they hate having any debt whatsoever? Did they force you to have student loans (and thus, you do the same with your children)? Perhaps they struggled with credit card debt and now so do you? Did they never touch a credit card? I learned respect for credit from my dad. I actually used to compare credit card points with my old man! In a weird way, it brought us closer together.


  1. How You Earn – How did your parents earn money? Were they hustlers and moved up the corporate ladder? Maybe they came home every night to have family time? Did you follow in their footsteps to become a doctor, engineer, or a lawyer? (Diversified has many clients who work for DuPont. Because of that, I’ve been able to witness, firsthand, financial stories about parents (and even grandparents) who all worked at the same company all those years. That, my friends, is a whole different blog/story in of itself.) Did your parents start their own business and refuse to work for anyone else? The way they earned likely influenced the core choices of your career.


  1. How You Vacation ­– Believe it or not, how you vacationed as a child leaves an enormous impact on you today. Did your parents spend on fancy vacations, beach homes, camping trips, or RVs to national parks? Maybe they instead vacationed to the mountains for skiing? Or, did they never go anywhere? I always kid saying people are born into boating and skiing. I mean otherwise who would think these things are good ideas? Whether you loved (or hated) the family vacations to the mountains, or to the lake, it affects the way you relax today.


  1. How You Watch Your Health – I listed this one last on purpose; it’s not that intuitive, normally. Yet, it was my initial motivation for this blog. Did your parents take care of themselves? Did they go for long walks, or dance often? Did they eat well? Or, were they the type to relax in their favorite chair and fall asleep with the TV on? These common differences set themselves in our subconscious and guide us one way or another in the health choices we make today. Clients whose parents died early (by accident or illness) think financially different. In my experience, they have a carpe diem attitude. They live for today and don’t worry about tomorrow. But, I also know clients whose parents are both alive at 90. These people worry more about saving for longevity. Crazy as it sounds, our parent’s health has an enormous impression on our finances.


What Can We Do?

It’s easy to say “your parent’s behavior affects yours.” Honestly, it’s sort of cliché at this point (however, I’m interested in which traits I’ll pass on to my kids.) Some children choose to mirror their parent’s financial tendencies, and some go the complete opposite way. But, there are always things we can personally do to help shape our financial health, and theirs, too. Be open to dialogue and lead by strong examples of a healthy financial lifestyle. Don’t be afraid to let your children be a part of some of these difficult conversations. Explain certain concepts early, like 401k, IRA, investment portfolios, and others. Remember, they are always listening (whether you like it or not), so don’t make it taboo.

We don’t realize how many of our lives have turned out like the Harry Chapin song Cats in the Cradle. I’m thinking about that one line: He’d grown up just like me, my boy was just like me.”

I know I did, did you?

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Andrew Rosen

In his role as Financial Planner, Andrew forges lifelong relationships with clients.  He coaches them through all stages of life and guides them to better achieve their life goals.  For more information about Andrew or the other firm partners, Kyle Hill and David Levy, click the link below.

Find out more about Andrew Rosen, CFP®, CEP®
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Financial planning and Investment advisory services offered through Diversified, LLC, a registered investment advisor. Securities offered through Securities Service Network, LLC, Member FINRASIPC .  Associates of Diversified are registered representatives of Securities Service Network, LLC, a registered broker/dealer, 9729 Cogdill Road, Knoxville, TN 37932. (800) 264-5499.