Maybe your parents always had a balanced chequebook and an emergency savings account. Or maybe they declared bankruptcy after years of struggling with debt. Good or bad, their financial behaviour likely left an impression that affects the way you handle your finances now.
Writers for the Consumer Reports Money and Shopping blog recently began sharing family lessons about money, both positive and negative. It makes for fascinating reading. While many of the lessons learned are fundamental (such as pay your bills on time), they resonate at a time when many of us are trying to relearn the basics of money management.
I grew up in a frugal household. We rarely ate out at restaurants, bought our clothes off the sales racks, and our annual vacation consisted of a week at my great aunt Fay’s home in the Catskills. Yet my parents saved to spend on those things that they valued for the family – a house in a good neighbourhood, a solid education, and high-quality shoes.
Apart from the vacation in the Catskills, my young family’s financial portrait today looks very much the same. My father’s belief in the power of land and home ownership to build wealth stuck with me and I started saving for my first home when I was 18. I am also still drawn to high-quality footwear.
It seems that everyone has a story to tell about the financial habits they inherited.
One friend, a public relations professional, can recite the two key principles learned from his father, an accountant. First, be responsible for your own retirement, and second, give to charity, no matter how much or little you earn.
“He encouraged me to open up an RRSP when I was 18,” he says. “He also had me save for a portion of my living expenses for university. He had set up an education fund to pay tuition and books, but wanted me to take full responsibility for expenses beyond food and shelter. I still contribute monthly to my RRSP and maximize my kids' RESPs each year. I want them to learn the important lessons that I did.”
When it came to charity, my friend’s father insisted that he donate the small amount he could from the part-time wages he was then earning. “I argued I couldn’t afford it,” he says. But his father told him that if he didn’t make the commitment to charity, he would never be able to afford it, no matter how much he earned. “To this day, I give to charity monthly.”
The money lessons from our parents are incredibly powerful and can encourage, or discourage, financial attitudes and practices for a lifetime. As the mother to two young children, it makes me see my spending decisions through fresh eyes – theirs.
