Saturday, February 28, 2015

Your Financial Family Tree

While most of us would hate to admit this, most people imitate our parents. Our financial decisions are, in fact, heavily influenced by what our parents did. From the way we think about money to how it is spent, money is spent in a way similar to how we saw money flow when we were younger.

Think I am wrong?

Imagine back to when you were a child wanting to get a candy bar or your favorite toy. What situations would your parents let you have the gift? Now, how do you give your children gifts? My guess is it would be very similar.

Every person had to have learned about how to spend and save money somehow. There is a gap in society with financial education. Our parents filled this gap for us because we watched what they did.

In my personal experience, my mom seemed spend money frugally. However when it came to birthdays or Christmas, there always seemed to be the gifts I wanted most. Today, I have noticed myself to be tight with spending money, and when Christmas comes, I am more willing to spend money. In another example, I did not go out to eat a lot as a kid, but for birthdays, we would go out.

Trust me, it takes a great deal of reflection to realize how you are influenced by your parents. Having this understanding enables each person to make changes in our lives.

What is important about knowing where our financial decisions came from?

People today are trapped with their financial decisions. If a person wants to improve their lives, they must come to grips about how they see money. It is the reason why some people spend all the money they get despite being thousands of dollars in debt. There are high-income professionals that are no better off financially than low-income because of the way they see money. Understanding what decisions you make and why is important to righting your financial path.

Do you see your parents struggling with retirement? Start saving into a 401K.

Do you spend all your income immediately?  Pull money automatically from your paycheck.

Do you spend too much money on food? Start making a list and stick to it.

I challenge all of you to take a look this week at how you save and spend money and figure out if it is holding you back from building wealth in your life.
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