In my work I have found that the world's most money-contented people grew up with parents who were very transparent about their money skills, whether they had them or not. This rare "honest house" either informs the right money skills, knowledge and habits OR the parents free the child to go off and seek mentors. Sadly, these transparent money houses are an exception and not the rule. Here are some signs that your parents had no idea what they were doing with money and how to recognize the patterns in yourself.
- Feast or Famine - One day your parents were out splurging, the next week they were wondering how to make the mortgage payment. This ying yang underlies some of the worst money behavior children are exposed to growing up because it feels like constant instability and guilt/regret. I have seen this instability play out in depression as well as eating or other control disorders as the child grows into an adult.
- The Perennially Anxious Stay At Home - A perennially anxious parent can be living in a high net worth household. This parent thinks that because they are not earning money it is not their right to have a say over how money is used or invested. Children in this house learn: 1. Money is something to be anxious about. 2. Dependency on others for money. Neither is helpful in the world we live in today.
- The Narcissists - Heard of the Joneses..well meet The Narcissists. Big talkers, big spenders. Presenting one face to the world, while behaving differently behind closed doors. The "success stories", grand trips and designer wear flow freely and often masks a pile of debt or minimally a lack of real financial security. Their children learn to buy their way into the world through labels, lying and tchotchkes but learn few practical skills around saving or investing.
- Treating Children and Spouses/Partners as if they are Money Dumb - I see a disproportionate number of spouses/partners and daughters of domineering breadwinners. So, these people (mostly women) pay me to teach them about money in a respectful manner because they are browbeaten about money at home. Browbeating leads to secret profligacy, outright money rejection, helplessness around money and other long term planning problems. It literally solves nothing but acts as a temporary ego boost for the brow beater. Which solves nothing.
- The Miser - At best a Scrooge will teach you to live within your means. At worst, the Scrooge Parent is going to haunt you as an adult because you will feel constantly anxious around money regardless of how much wealth you generate. And you will likely generate a lot having come from this family, as money is your route to freedom. The concept of "enough" however isn't clear. You may not enjoy what money brings or use it to support your life goals. But mostly you will not be charitable toward yourself.
- Financial Incest - This is a household where the parents are stealing from their children, often to feed an addiction. They will steal from piggy banks, ruin a child's credit and so on. This is seen in houses where there's an alcoholic, drug abuser or a gambler. The child does not understand that their parent has a disease and this can lead to serious problems with trust and money.
What are the signs you were raised in a house like this:
-You are anxious about money but do not know why.
-You lie about your spending.
-You are constantly fighting about money with your spouse.
-You feel you have to spend to impress other people.
-Talking about money makes you very uncomfortable or physically ill.
-You have control issues that make you domineering and unkind to family members.
-You are a money hoarder who needs to control all the spending in the house.
-You have difficulty taking the steps you need to in order to create financial security.
-You distrust pretty much everyone in connection to money.
In adulthood, children raised in these homes discover that their parents were humans who had problems, sometimes really serious problems. The good news is that every single problem above can be solved through education, some planning and therapy. Please know this: Learning about financial stability, financial security, money and investing is a universal right. Managing money well is not directly correlated with high levels of math skills or even earning power. Managing your own money well is directly related to your ability to manage your emotional state. Be good to yourself and you will be good to your money.
Andrea Kennedy, author of Own Your Financial Freedom, is a Singapore-based Certified Financial Planner and Asia's only Financial Behavior Specialist™.