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Did You Inherit Bad Financial Habits From Your Parents?

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iStock_000000187218_L3Have you ever caught yourself uttering a corny phrase that made you cringe when your parents used it during your formative years? If so, you know that the way your parents talked and acted can get wedged pretty deeply in your subconscious. In the realm of personal finance, this can be especially true. If you’re like most people, the vast majority of the information you got about using money as a youngster came from your mom and/or dad. If your household was run with clock-like financial precision, you probably picked up some great money management skills. However, no parent is perfect. You may have also acquired some counterproductive practices without even knowing it.

Fear of credit
Parents want children to avoid the mistakes they have made. For moms and dads who had problems with credit cards or other unsecured credit, there can be a tendency to drive home the idea that using credit is tantamount to a cardinal sin. However, if you are looking to build a strong credit standing, this kind of avoidance isn’t really realistic. Credit, used responsibly, can be a great tool for getting what you want in life.

Lack of fear of credit
If you constantly saw a parent whip out the plastic to make purchases, it’s easy to grow up thinking of credit cards as a way to get things without really paying. Of course, as an adult you rationally understand that you will pay – one way or another – for the items eventually, but subconsciously you may still associate using the card with the freedom to buy whatever you want. Try using cash for a while to see if it changes how much you spend.

Retail therapy
Did you get dragged along as a child when mom or dad wanted to “blow off a little steam” with a trip to the store? If so, you may find yourself heading to a favorite retail destination after a tough day at work or an argument with a friend. Even if you tell yourself you’re just there to look, over time you will inevitably make purchases you wouldn’t have if you went for a walk in a park or read a good book.

Looking over the fence
Did your parents keep track of who had what in the neighborhood? Did they speak lustfully about the new car the Johnsons just got? Try to figure out how the Chens were able to afford renovating their entire house? If so, you may have accidentally picked up the lesson that success in life is measured by material possessions. If you find yourself coveting your neighbor’s deluxe hot tub, step back for a moment and think about what is really important to you. If you haven’t taken the time to write down your goals, do it now. This will help you stay focused on what is truly most important in your life.

Buying high, selling low
If you had a parent or two who closely tracked their investments, you probably heard regularly about what the markets were doing – whether via casual comment or desperate lament. Either way, what was being driven home is that investments need to be monitored like a newborn with a party balloon. As an adult, this may have you nervously logging into your retirement account daily to check your balance. Micromanagement of long-term investments is almost always going to be disadvantageous to their growth. This is because the tendency is to scoop up investments that have performed well and then panic and sell when they go down in value. This buy high/sell low approach is a guaranteed loser in the big picture.

Parents do their best to give you the tools to succeed in life. But keep in mind that no one makes all the right choices, especially with money. If you are concerned about your own decisions, aggressively track your spending for a while. Ask yourself why you use money the way you do, down to a micro level. You might find that some choices are made for reasons other than achievement of your goals. Work at rectifying these motives, no matter their cause.


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