Have you ever wondered why you approach money the way you do? Whether you’re a spender, a saver, or somewhere in between, the financial habits you learned in childhood likely play a significant role. Our early experiences with money—from how our parents handled finances to what we were taught about saving and spending—shape our relationship with money well into adulthood. In this blog, we’ll explore how childhood influences your financial habits, common patterns that carry over, and how to reshape them for a healthier financial future.
The Role of Your Early Environment
The way you were raised has a powerful impact on your financial mindset. Children often observe their parents or caregivers, picking up on subtle behaviors and attitudes toward money. For example, did your parents talk openly about finances, or was it a taboo topic? Were financial struggles a source of stress in your home? Did you see responsible saving habits, or was spending prioritized? These early impressions stick with us and influence our behaviors in adulthood, even if we’re not aware of it.
Common Financial Habits Formed in Childhood
The Saver vs. The Spender
If you grew up in a household where saving money was encouraged and prioritized, you’re more likely to adopt those habits as an adult. On the other hand, if spending was frequent and impulsive, you might struggle to control your finances later in life. Recognize your natural tendencies and find a balance between saving for the future and enjoying the present.
Scarcity Mindset
Children who grew up in financial hardship often develop a scarcity mindset—the belief that money is always limited. This can lead to fear-based behaviors, like hoarding cash or avoiding necessary investments. Shift your mindset by focusing on abundance. Educate yourself about building wealth and creating financial opportunities, rather than fearing financial loss.
Avoiding Conversations About Money
If money was a stressful or off-limits topic in your home, you might avoid talking about finances as an adult. Unfortunately, this avoidance can prevent you from seeking help or making informed decisions about your money. Open up about your finances with trusted friends, family, or professionals. The more you talk about money, the more confident you’ll feel in managing it.
Financial Overcompensation
Some adults overcompensate for their childhood experiences with money. For example, if you grew up without much, you might overspend to “make up for it” as an adult. If your parents were overly frugal, you might rebel against that mindset by avoiding saving altogether. Understand where your habits come from and focus on balance. Overcompensation can derail your financial progress if left unchecked.
How to Reshape Your Financial Habits
Recognizing how your childhood influences your financial behaviors is the first step to creating healthier habits. Here’s how to move forward:
Reflect on Your Money Story
Take time to think about your earliest memories of money. What did you learn from your parents or caregivers? How did financial struggles or successes shape your mindset? Understanding your story helps you identify the root of your current behaviors.
Educate Yourself
If you didn’t learn healthy financial habits as a child, don’t worry. It’s never too late to start learning. Read books on personal finance, follow financial experts who share practical advice, and seek guidance from professionals who can help you reshape your money mindset. For example, experts like Matthew J. Dixon, RFC often emphasize the importance of education and intentional planning when it comes to building sustainable financial habits.
Adopt New Financial Goals
Create clear, achievable financial goals that align with your values and future aspirations. Build an emergency fund, pay off debt, and start investing for long-term wealth. Focus on small, actionable steps that help you move toward financial security and freedom.
Model Healthy Habits for the Next Generation
If you have children, you can help break the cycle by teaching them healthy financial habits early. Talk openly about saving, spending, and budgeting. Involve them in small financial decisions, like comparing prices or saving for a goal. Lead by example—your actions speak louder than words.
Conclusion
Your childhood experiences with money don’t have to define your future. By understanding how those early habits were formed and taking steps to reshape your mindset, you can create a healthier relationship with your finances. It’s never too late to learn, grow, and take control of your money. Reflect on your past, set new goals, and take positive steps toward financial security—your future self will thank you!