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Did you know how you’re raised to approach money has a lasting impact on your lifelong financial habits?
Ever wonder why you're a savvy saver while your bestie's a shopaholic? Or why you break into a cold sweat at the mere thought of investing? Spoiler alert: It might have something to do with your childhood!
The Money Time Machine
Let's hop into our financial DeLorean and travel back to your younger years. Those early experiences with money? They're like the secret ingredients in your financial recipe today.
Family Financial Habits:
Did your parents budget meticulously or live paycheck to paycheck?
Was saving for the future a priority, or was instant gratification the norm?
These patterns likely left an impression on you. If your parents were careful budgeters, you might find yourself naturally inclined to track expenses. On the flip side, if spending was more spontaneous in your household, you might struggle with impulse purchases.
But how do I put this into practice? First, take that DeLorean for a spin around your block and reflect on your family's financial habits. Then, identify which ones you've adopted and which you'd like to change by letting them ride shotgun on your financial journey into the future.
Money Talks (or Lack Thereof):
Was money a taboo topic at the dinner table, or did your family discuss finances openly?
Did you understand concepts like budgeting, saving, and investing from a young age?
This openness (or silence) can shape your comfort level with financial conversations as an adult. If money was rarely discussed, you might find it challenging to talk about finances with your partner or seek professional advice.
We start to rewrite and reshape our comfortability by addressing the big, green elephant in the room. Start normalizing money conversations in your own life. Set up regular "money dates" with yourself or your partner to discuss financial goals and progress.
The Piggy Bank Effect
Your childhood allowance wasn't just about scoring that new toy. It was your first taste of financial independence!
Saving Superheroes:
Were you encouraged to save part of your allowance or gift money?
Did your parents help you open a savings account?
If saving was emphasized, you might have developed a knack for delayed gratification. This skill is crucial for long-term financial success, from building an emergency fund to saving for retirement.
Not everyone is an expert right off the bat, especially when it comes to finances. So, if saving doesn't come naturally, start small. Try the 50/30/20 rule: 50% for needs, 30% for wants, and 20% for savings and debt repayment. Plus, creating a resilient budget can do wonders for figuring out how to bucket out each of those.
Spend-Happy Households:
Was spending freely encouraged?
Did you learn to associate money with immediate pleasure?
If spending was the norm, you might find yourself more inclined to splurge than save. This can lead to challenges in building long-term wealth and financial security.
One super easy but effective way to keep yourself in check is to implement the 24-hour rule. Before making a purchase, give yourself a buffer period of at least 24 hours for all non-essential items. This pause can help break impulsive spending habits and give you time to reflect on whether that next dollar could be better used elsewhere.
Breaking the Money Mold
Feeling like your childhood money memories are holding you back? Don't worry, you're not stuck in a financial time loop!
Awareness is Key:
Recognize how your upbringing influences your money habits
Identify patterns that might be hindering your financial growth
Understanding these influences is the first step to financial growth. Maybe you avoid investing because your parents lost money in the stock market, or perhaps you overspend to compensate for childhood scarcity.
A great place to start is to keep a money journal for a week. Note your spending decisions and the emotions behind them. Look for patterns linked to your childhood experiences. When you can identify patterns that you want to change, it becomes a lot easier to recognize when and where to break those patterns.
Create New Money Memories:
Develop healthy financial habits, regardless of your upbringing
Educate yourself on personal finance topics
It's never too late to develop healthy financial habits. Start small, be consistent, and watch your money mindset evolve.
Choose one financial skill to master this month, whether it's creating/tightening a budget, understanding your credit score and how to build better credit, or learning about alternative investing options.
Your Financial Future is Yours to Write
Remember, your childhood experiences may have set the stage, but you're the director of your financial future. Here's how to take control:
Assess Your Current Financial Situation: Take stock of your income, expenses, debts, and savings. Knowledge is power!
Set Clear Financial Goals: Whether it's building an emergency fund, paying off debt, or saving for a down payment, define what financial success looks like for you.
Create a Budget That Works for You: Find a budgeting method that fits your lifestyle, whether it's the envelope system, zero-based budgeting, or a simple 50/30/20 split.
Automate Your Finances: Set up automatic transfers to your savings and investment accounts to make good financial habits effortless.
Continuously Educate Yourself: The financial world is always evolving. Stay informed through reputable financial websites, books, and podcasts.
Whether you're aiming to be a savvy saver, a confident investor, or just want to feel more in control of your finances, Pocketnest is here to help you write your own money story. Our app provides personalized financial guidance, helping you break free from limiting money beliefs and build a secure financial future.
Disclaimer: It is important to understand that nothing in this content should be considered personalized investment, financial, tax, or legal advice.