When you think about financial planning, you might not realize that your childhood can have a big impact on your current finances. Eric Hogarth, CFP®, explains how our upbringing can influence our money decisions later in life. Understanding these money triggers can help us make more conscious choices about our spending and saving. Join us to learn more about how your own childhood may be impacting your financial planning today.
Hogarth explains that our financial choices and habits are strongly rooted in how we were raised. Some of us may have been instilled with the value of savings, while others may not have had the same experience. In this episode, we’ll share some of the things we’ve observed through the years from people we’ve worked with.
There are fewer and fewer people that lived through the Great Depression, but we know people from that era that carried that experience on throughout their life. That time created so much fear that people continued to be afraid to spend regardless of how much money they were making or had saved later in life.
We often talk about finding the balance between living for today and making sure your future is secured, but people from this era or those who had parents from that era struggled to live for today because of what they experienced.
Another upbringing that truly impacts the relationship adults have with money is growing up poor. Not having security early in life can teach you many lessons about saving to ensure you have a different experience. Often, the fear of starvation or homelessness teaches us to guard our money in ways we may not even realize.
On the opposite end of the spectrum are those people that grew up with plenty of wealth. The assumption is that those people don’t have the same appreciation for money or the same drive, but we’ve found that it depends on how the parents raised their children. Were they able to establish those core values so that wealth wasn’t taken for granted? We’ve noticed that people with access to resources sometimes struggle to manage their financial life because they don’t realize what it takes to make money last and sustain a lifestyle.
The final factor that will impact your view of money is the way your family talked about money. We know that many parents will disagree with many of the decisions their children make about money, but what does that communication look like? Are you have conversations with your children early on about money and finances? If not, you can expect them to make the best decisions because they never learned how.
When it comes to financial planning, understanding your upbringing and the values that have been instilled in you is important. Our childhoods have a bigger influence on our financial habits than we realize and by recognizing these triggers, we can make better decisions with our money and plan for retirement more effectively.
Here’s what we discuss in this episode:
1:22 – Those who lived through the Great Depression
4:29 – People that grew up very poor
9:09 – Growing up in a wealthy family
10:43 – The way families communicate about money
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