Last weekend, Kim and I flew to Utah for a reunion with friends from the 2016 chautauqua in Ecuador. While in Salt Lake City, we met up with Jesse Mecham (the founder of You Need a Budget), visited Utah Olympic Park, and attended a Sunday morning performance of the Mormon Tabernacle Choir.
Our group also spent an entire afternoon at the Mormon Family History Library, where we explored our genealogy. Not everyone was enthused about researching their family tree at first, but eventually even those who thought the exercise would be lame found themselves wrapped in it. It's fun — and enlightening — to unravel the threads of time and discover who your ancestors were and where they came from.
Flying home from Salt Lake City, I got to thinking about how our family trees don't just influence our genetics. We inherit more than physical features from those who came before us. We also inherit culture and psychology and values. And yes, we inherit financial habits from our parents and grandparents.
Each of us has a financial family tree.
My Financial Family Tree
I write often about our money blueprints, the set of subconscious “scripts” that define our behaviors and attitudes toward money. Society at large — our friends, co-workers, the mass media — plays a role in writing these scripts, but most of our money blueprints are inherited from our family — especially our parents.
In a way, it's as if our money blueprints are a product of our financial family trees. Our grandparents passed their feelings about money to their children, and these children instilled their habits and attitudes into us.
When I look at my own relationship with money, it's easy to see how my present actions and attitudes — even at nearly fifty years old! — were inherited from my parents.
Here are a few examples:
- My parents raised three boys in an 800-square-foot trailer house. My parents had 800 square feet for the entire family. The Portland condo that Kim and I sold last year was 1600 square feet. She and I had 800 square feet per person. But I don't need a big, fancy house. I'd be happy — might be happier, in fact — hunkered down in a single-wide trailer somewhere on a couple of acres.
- Likewise, I don't need fancy cars. Growing up, I don't think my parents ever had a new car. We had old beaters that went by names like “Dirty Red” and “Dirty White”. Now, as an adult, I'm perfectly content to drive a 15-year-old Mini Cooper. I rarely feel the urge to own a new vehicle.
- I inherited a similar attitude toward clothing. My father dressed like a farmer. My mother did her best to look nice, but on a budget. She bought clothes for us boys off close-out racks and at thrift stores. Although I do put some thought into quality and style nowadays, for most of my life I've been more interested in function not fashion.
Because of my meager origins, I'm willing to tolerate and accept certain things that others won't. I'm never frightened that I might end up poor because I've already been poor and have survived the experience. In some ways, my financial family tree set me up for success.
That said, my financial family tree also set me up for failure. I inherited some destructive habits.
- My father was a master of compulsive spending — especially on big-ticket items that he couldn't truly afford. He bought computers. He bought sailboats. He bought airplanes. He bought stereo equipment. Some of my fondest memories are hanging out with dad for hours while he shopped for something he shouldn't buy. Unsurprisingly, I've struggled with compulsive spending most of my adult life.
- My mother wasn't a compulsive spender in the same way my father was. Instead, she was something of a hoarder. She tended to buy more than we actually needed: more food, more clothes, more household supplies. This tendency became especially pronounced after dad died. When we moved mom to assisted living in 2011, her house house was packed with excess groceries and supplies. From mom, I've inherited a tendency to accumulate too much Stuff.
- My parents never saved. They were always living on their last five dollars. If they had money, they spend it. If they'd had credit cards, they would have maxed them out. When I left home, I too lived paycheck to paycheck, no matter how good my salary was. (And I did get into trouble with credit cards.)
Not all of my money habits came from my parents. Many did, it's true, but I've developed new habits of my own. I've also “inherited” habits from my long-term relationships with Kris and Kim. (Kris and Kim have remarkably similar money habits, by the way.)
Your Financial Family Tree
When I returned from Utah, I emailed family members to ask them what sorts of habits they'd inherited from their parents. My cousin Duane replied:
My dad had a huge impact on my relationship with money. He drilled holes through nickels rather than pay six cents for stainless steel washers. This was extreme and he did it more to be funny, but really illustrates how cheap he was. He strongly influenced my views of money. That's why I'm a cheap bastard.
My dad didn't feel he deserved money. Perhaps because he didn't like it. I have also felt I don't deserve money. I always give things away or sell them too cheaply.
I also asked members of the Get Rich Slowly group on Facebook about their financial family trees.
The answers — both in the group and via private message — were fascinating. For instance, Angela wrote:
Both of my parents worked as bankers when they were younger, so they talked openly about money when I was growing up and checked in with each other regularly regarding finances. I didn't realize how unusual that was until I was married and that was not the case with my husband and his family.
My dad was also self-employed, so they had to pay for many things out of pocket, like doctor's visits and dental. So my dad would barter for services. I grew up knowing that bartering is a possibility…
I really value the transparent attitude regarding money that they passed down to me.
Luke, too, learned the value of talking about money openly — but as a reaction to what his parents did not do:
My parents never talked openly about money, their situation, their goals. They both tried their hand at managing the house and both succeeded and failed in different ways, but it lead to a lot of fighting because they were never on the same page.
My wife and I are completely open and honest about how we spend, what are goals are, and how we will get there together. If I die tomorrow, she will know how to manage our money when I’m gone.
Rebecca's parents weren't transparent about money when she was younger. Now, though, they regret that.
I was raised that talking about money was in very poor taste. You never asked what people made, etc. That came from my dad's side of the family.
My mom didn't have much growing up and was very frugal (washing and reusing all the plastic wrap kind of thing). But my mom loves to “splurge” on things, so money was used to treat yourself, a definite reward system. I definitely fall into that trap, an engrained emotional response to treat myself.
My dad now says his biggest parenting mistake was to not to talk to us and educate us about money, saving and investing.
Some people come from families that had money and knew how to handle it. For example, Stephen's grandparents retired early back before the FIRE movement was a even a thing:
I only recently put two and two together and realized that my grandparents on my dad's side saved aggressively – invested the savings – and retired early – the early version of FIRE…
They influenced me greatly with their wisdom. I was advised by my grandmother that when it came to my diet, I should consider everything in moderation including moderation. My grandfather advised me to never carry debt, and if I had any to pay it off as soon as possible which I tried to follow, and my grandfather would often have BBC current affair programs on which I would watch with him.
But you don't have to be raised with money to learn good habits. Laronda's parents were poor but still set a good example.
My mom grew up dirt-poor as the twelfth of thirteen children in Appalachia. I learned to be resourceful from her. She can up-cycle, mend, and re-purpose with the best of them. She's a wonderful from-scratch cook and is able to turn inexpensive ingredients into tasty dinners. (I'm feeding my own family her stewed beans and cornbread this evening.)
My dad grew up slightly better off but I don't get the impression his family discussed finances much. He taught my brothers and I how to do basic home and auto repairs and gave me an outfitted tool box when I left home.
Growing up, we never discussed money or how to manage it. My brothers and I knew money was a tense, to-be-generally-avoided topic, and we knew not to ask for things.
I've graduated to the middle class and use many of my parents' frugal methods like scratch-cooking, mending and DIY home repairs, but I consciously choose to talk about money frequently with my own spouse and with my three children. I'm hoping my kids are better equipped with money management knowledge and skills when they strike out on their own than I was, but I also hope they benefit from their grandparents' gifts of resourcefulness and general competence in the face of any household challenge.
Finally, here's a story from a reader named Frank:
Neither of my parents had any real financial literacy. My grandmother was my real parent, and she taught me everything I know about money.
As a child, she escaped a war-torn country. She got married. She and her husband had a farm, but he killed himself after all of their chickens died. My grandmother was left to raise two kids alone.
Somehow, she scraped together enough to buy a hotel. She sold it and built a bigger hotel. She sold that and split the money with with my mother. But mom spent it all because she didn't appreciate the work and investment that had gone into building the fortune. Meanwhile, my grandmother quadrupled her half of the wealth.
I'm terrified to be my parents. I've tried to learn from my grandmother. The best thing she taught me was to live well below my means. I'm doing that and busting my ass to make my money grow.
Other members of the Get Rich Slowly FB group pointed me to longer articles they've written about this subject. At Choose FI, Chad shared what his parents taught him about financial independence. Fritz Gilbert from Retirement Manifesto has written about 18 lessons he learned from his dad. And Frogdancer Jones' parents taught her to approach retirement from a position of strength.
Finally, Tom Drake from Maple Money (my new collaborator here at GRS) told me: “My parents were always spenders, which led me to be a spender. However, seeing how that affected them in retirement has helped me realize the importance of reducing my spending to be able to save for the future.”
Final Thoughts
Although I can't recall having read any academic studies on the subject, I'm convinced that we do inherit money blueprints from our financial family tree. Your basic money habits are a product of what you learned from your parents and grandparents.
In some cases, these blueprints are a reaction against how your family behaved. Most of the time, however, you mimic what you saw when you were young.
The good news is that you're not doomed follow in your family's footsteps. Although these money scripts are deeply-ingrained and will always linger in the back of your mind, you have the knowledge and ability to create better habits, to draw a new, improved money blueprint.
From experience, I can tell you that the transformation takes time. It won't happen overnight. But with enough patience and effort, you can change your frame of mind. You can become a money boss and produce a new branch on your financial family tree.
Related reading: If, like me, you're fascinated by the idea of money blueprints and financial family trees, you might like this article on writing your financial autobiography.
Author: J.D. Roth
In 2006, J.D. founded Get Rich Slowly to document his quest to get out of debt. Over time, he learned how to save and how to invest. Today, he's managed to reach early retirement! He wants to help you master your money — and your life. No scams. No gimmicks. Just smart money advice to help you reach your goals.
Those were fascinating vignettes about inherited money habits. I don’t do Facebook so thanks for including them the one place I couldn’t miss seeing them, your blog! I’m grateful to my parents teaching me about working, saving and investing. It is easy to succeed with money when you are taught from birth to avoid debt and to give and save.
My family had good and bad when it came to money. My maternal grandparents both were split as my grandmother wanted to be posh, and all the best things but she married an electrician (grandma was a school teacher) who kept everything he could get his hands on due to the great depression. He would fix things with duct tape and bailing wire all the time. I learned a lot from them about keeping stuff around in case you need it. My paternal grandparents I learned not much from except what was passed down through my dad. They had enough (manager at ford, a nurse) so were squarely middle class, but kind of threw my dad to the wolves when he turned 18. An example was the day my dad graduated high school, he had been using a family car to get to work. My grandfather told my dad, who had a job lined up, that he was going to have to find his own car by Monday (it was a Friday), so he could get to work and find his own insurance as well. My father basically had to dip into his college savings (all his money he had saved) and get a $500 car, and $1100 insurance in a weekend, while using the money he saved from making $0.10 an hour.
This made my father very open with us kids since he would sometimes over explain stuff so we knew what to expect when the time comes. My mother was a little more closed off about finances but she knew how to save and pinch pennies. My parents were well off, and have done a lot for us kids. They helped us pay for our first cars (my dad being a GM exec, got a discount), they helped us with college, etc. They continue to help us in various ways.
The best example I can give of how my parents showed their prowess. We lived internationally as elementary/middle school kids. My dad had a 6 figure salary and my mother was a school teacher. My mother taught and we lived off of her salary for the 4 years we were in Singapore, and my dad’s salary, was put in a bank in the US, so it was not taxed by Singapore (only US taxes), and basically saved 100% of his salary. Most Ex-Pats in our position were living it up off the GM employees salary, but my dad, the head of GM for Asia, was living off $40k US that his school teacher wife made and saving the double taxes, etc. that come with being an Ex-Pat. We came home from Singapore, and my dad had saved $500k in 4 years.
I see my parents every week (or talk to them every week when they are traveling) and almost weekly we talk about something money related. XYZ law may affect this, I read this in Kipplinger’s or Motley Fool, etc. My parents cannot understand FIRE at all, but I am still trying to engage them on it. My siblings don’t talk much about finances just “things are tight” and other things like that. I have helped them out in the past and tried to talk to them but they each have their own issues to figure out 🙂
Jeez! Having to find a car and insurance in a single weekend is crazy!
I faced a similar situation with my parents…kicking me out, with no notice or great explanation. I was a bit older (20 and in college, working days, school at night and commuting from home), but had to find an apartment overnight. It was a tough situation, with no prior notice, and little explanation…it (and the ensuing conversations/arguments) led to a rift that never really healed, unfortunately.
Not quite the same as your Dad’s situation, but I’ve found more and more stories like this as I get older. It makes me wonder what situation or life event drives a parent to make such rash, unexplained and immediate decisions with their children that lead to such unwarranted hardships (both financial and otherwise), when a simple conversation prior to that date/event would give a child or young adult time to prepare and save.
Did your father ever get an explanation as to why he could no longer use the car he’d been using for so long?
Thanks for sharing the post I wrote in tribute to my father, JD. It’s one of my favorite posts I’ve written. Take time to honor the legacy left by your parents, and be intentional in the legacy you leave behind. Great post.
My parents were hopeless about money. They never had a budget and never saved for anything. I don’t think they ever had an idea of how much money was coming in and how much was going out. They’d just ask my dad’s father for money when they ran short (he was wealthy and generous). When he died, he left my dad a big stock portfolio. Dad had never owned stocks and had no clue how to manage that. He sold off Texas Instruments right before the hand held calculator came on the market. (Who needs instruments from Texas, right?)
They always lived from paycheck to paycheck and never planned for the future. The money would just fall into their laps, right? I got used to answering calls from bill collectors. Something that continued after I was out on my own, because my mother was forever giving people MY name and number as a reference.
Financial insecurity scares me. When my husband and I were first married we were living on next to nothing (even with two full time jobs we qualified for food stamps). But we always saved at least something out of every paycheck. We knew the difference between what we wanted today and what we would need tomorrow. We scrounged and made do and cobbled things together. We pinched every penny twice.
Being frugal and not blowing money on things we didn’t need and not having a spendthrift lifestyle worked out. Yeah, we did without a lot of the things our friends and relatives had, and while the kids were living at home we only took one vacation that didn’t involve visiting relatives. Our kids didn’t have the video games or the afterschool activities that cost money. We didn’t buy things we couldn’t afford. But now, my husband’s retired and we have enough money to last the rest of our lives in comfort.
One of my siblings learned our parents’ financial ways well. That one will be living hand to mouth and paycheck to paycheck forever. No work ethic and never saved up for anything. At least that one has learned never to ask me for money any more.
People tend to inherit default options from their parents, from financial habits to work ethic, parenting styles, or even fashion. To each person their experience is reality.
Once we pay attention we see what does and doesn’t work for our parents. Therefore you seem to wind up with a mix of “I’m just like my parents” or “I’m the opposite of my parents”.
My family might be a case study because this isn’t how we roll. My mom is tight with money, a solid budgeter, but super risk adverse and doesn’t invest much.
My sister has no clue what their finances are. She has some low level of interest and asked me to explain what overpaying their car loan would do for the length. But she has little interest and leaves it to her husband. They don’t overspend, but they don’t save much other than employer retirement.
Then there’s me. I’m the money person. I got my mom to open her brokerage account and am trying to get my sister to open one, if only to help me as a executor when my mom passes. I am a solid saver, but have a totally different approach from my mom.
We all have the filter of our personalities and perspectives we use to form opinions and decide actions. But so much of the information we take in, our experiences, are from and with our parents and families. So obviously we are going to learn the most from them.
My father grew up in the depression.He just celebrated his 91 birthday. His parents lost all there saving to buy a farm when the banks failed. Him and his older brother (94 and still alive) would go into the woods of Pennsylvania ( a coal mining town) and hunt for wide berries, wild asparagus, lettuce, tree nuts and anything they could eat. Walk along the railroad tracks with there wagon picking up coal that fell off the trains to heat the house. His older brother was drafted into the army and was in all three major battles of WWII of D-Day, Rhine and the Bulge. My father enlisted in the Navy even though he could not swim and was on an air craft carrier during the war. Both got the GI bill went to college and had comfortable middle class lifestyle as engineers. In my opinion millionaires from where they came from.
I learned a lot from my day in plan, plan, plan. I never had a spending problem,never in financial trouble to speak of. Lived comfortably pay check to pay check with some cash reserves when I first bought my house. The biggest thing I learned from my dad is if a person built it and it can be repaired then I can repair it. Saved me a ton of money but now I am too old to do it. My mom taught me how to cook so I would not have to rely on someone else make it for me. She save me a ton of money. Frugal from the get go and all ways will be.
My parents left me a very odd financial legacy. My mother never worked outside the home and was given an allowance every week and she tended to like to splurge if given the credit card. If she was “bad” the credit card was taken away. My father never budgeted, insisted on buying the “best” nonessential stuff like TVs, etc, while scrimping on groceries, clothing, and the heating and air conditioning bill. He also gambled a lot on the stock market and generally did poorly in the long run in that regard. I vividly remember his resentment on having to pay our school expenses and he would scream on the phone at the school principal for withholding our final report cards for lack of textbook fee payments. He complained a lot about the household expenses. My mother just complacently went along with it all other than a few blow-out arguments here and there over money. Neither I or nor my siblings decided to have kids as a result of all this dysfunction. I luckily found Dave Ramsey and Suze Orman in my early 30s and followed their principals to rescue my finances!
I am buying a share of Disney stock for each of my 4 nieces and nephews on their birthdays, starting in December. More contributions and reinvested dividends to follow, culminating in me paying the capital gains tax when he/she hits 18 and the custodial account transfers to them.
Oldest one is 12.
The looks and questions from my parents (married 52 years) and brothers have been numerous and quizzical. The money DNA is our family is “we will raise you, help you with expenses through college, then you are on your own.”
The concept of starting generational wealth and passing it down is a totally foreign idea in my family. I don’t have kids, and I still aim on changing that, starting this year.
Excellent post.
My parents didn’t talk about money at all, it was a forbidden topic. My Mom handled all the finances and my Dad worked like a typical traditional family. But my Dad worked his butt off and instilled the value of showing up every day in me.
I’m one of 6 children raised in a Catholic household. We were never “rich” but we had what we needed. We had “church clothes & shoes” in addition to our school clothes, but we also drank milk mixed with powdered milk to stretch it. We lived in home in nice neighborhoods, but my parents never owned anything but VWs. My Dad worked for a fortune 50 company and retired in his late 50s (Mom never worked). I doubt they ever had a car note or CC balances. In my teens, I’m certain we were the “poorest” people in our nice neighborhood because of how frugal they were. We NEVER dined out (even fast food) or went on vacations that weren’t camping.
I am not as frugal as my parents. I’ve carried CC debt occasionally (but not often and not high $). I probably won’t retire when I’m his age. However I do drive reasonable (and older) cars and haven’t had a car note in a long time (and those that I did were small and paid off early). I dine out at least once a week.
I’ve got children in their 20s. One of them is a car freak. He sells very high end cars in a big city. He leases a car that he can’t afford and I’m certain he’s racked up CC debt. The other just graduated from college and is finally out on his own. Too soon to know his $ habits.
I have a general sensibility of my parents/family, but I am not as frugal or disciplined as my parents. At least one of my kids doesn’t seem to have much of our sensibility or money habits (and my husband grew up in a very similar family — money habit wise — and he’s got better savings instincts than me.)
I’m sure we inherit habits from our parents, but I’m not sure to what extent. My kids couldn’t be more different (about anything) and they have the same parents.
My parents never saved. My father’s family was wealthy. He only worked for maybe 10 years? My mom on the other hand has worked as a teacher ever since college. She’s 65 now. My Dad has a host of mental problems and as they became more obvious and worsened, my grandfather wrote him a big monthly check. But my dad started spending all of it on compulsive spending. Now that my brother and I are adults and are cleaning out the house so my mom can sell it, we’ve seen just how much money he wasted. My parents had the opportunity to be wealthy but my father squandered the money and my mom didn’t have the knowledge to save for the future. “The man” was supposed to do it. That was the mentality in her generation. Now that there are no saving for her retirement and we’re scraping by to keep my dad in assisted living (he needs to be there for our emotional sake and his physical sake), I am so grateful my husband taught me a different approach to money. Save first, pay for your needs next, then use any extra for wants. I’ve tried to really diminish my wants over the years and derive pleasure from spending quality time with family, friends, and out in nature. No money is needed for that. I read FI blogs regularly as motivation to keep up this mentality. I would rather sacrifice now than wind up in a scary financial situation like my parents have.
Best of luck to your parents (and you) MK! I hope your Mom is getting a decent retirement for her time spent as a teacher! I have 3 siblings that were teachers, one retired in her mid 50s because she always lived w/in her means (probably helped she never married or had kids). The state in which she taught did not deduct for SS so she is solely dependent on her teachers retirement.
So much of my financial outlook has to do with my parents and my grandparents. I have so many early money memories. In fact, many of my earliest memories include trying to buy something or realizing we didn’t have enough money to pay for something I wanted like a grand piano.
Both parents were children during the depression. We didn’t talk finance, but I heard stories of their frugal mothers stretching a dollar until it screamed. The same stories we’ve all heard and Christmases when hard candy & oranges were their only treats. Dad was in the military, mom worked at a factory dressing dolls when they met in NY in the 50s, but not after they married.
Both were careful with money and never lived above their means. Dad worked on our only car and did his own home repairs – I honestly never remember a contractor in our home, he seemingly could fix anything. Mom was a fantastic cook and made at least 50% of my clothing while I was growing up in the 60s and 70s.
Dad was a cash only guy – you don’t have the money, you don’t buy it. He balked at getting a credit card when we moved back to the states, but needed it to cash checks. He used it only to replace the occasional appliance he couldn’t fix or a rare plane ticket, but you better believe the balance was paid off as quickly as possible. Our place was wiped out in a freak flood my freshman year of high school. No flood insurance. They recovered as best they could, but had to use most of their savings.
They taught me the value of hard work, having a budget and sticking to it, and saving as much as I could. When I got my first full-time job, my mom suggested I put a little money from every paycheck into a savings account and encouraged me to make a game of how much I could save in a year. Great advice for a 21 yr old. Dad had been burned once buying a few shares of stock in the early 70s and never went near the market again. He laddered CDs and started an IRA in his 50s. He died at 63, and I was shocked to see that aside from their home and car, they had saved almost $300,000 – a pretty good sum in 1992, especially considering their big setback.
I’ve tried to adopt their good habits throughout my life. My husband and I max out our 401ks and Roth IRAs and have a healthy cash cushion, but we’re both too cautious to put more into the market. We were too late for the FIRE movement, but feel really good about where we are at 55 and 58. We’ve decided to work a couple more years as a hedge against what might be coming with our economy (and banking the extra for healthcare premiums once we retire.) Honestly, we feel luckier than most. Thanks for sharing your stories!
I was lucky to be raised by parents who were careful with their money — because they had to be. They farmed 36 acres, but my dad also worked full-time as the service manager for my uncle’s Case tractor dealership.
My mom sewed — I do not believe I had a purchased outfit (except for cousins’ hand-me-downs) until I was a junior in high school But I didn’t know any differently! She pretty much cooked everything we ate, with one rare exception: the Thursday night special at A&W, when we would go get a rootbeer. (Our birthdays were often celebrated at Lanning’s. Do I remember the food? No…but I do remember the treasure chest that we could pick a free prize out of.)
I did not realize how tight their money was — firmly allocated to food, mortgage and so on — until high school, when I was earning my own money, and they finally paid off the farm mortgage.
There were certain ‘rules’ they urged:
*10% for the tithe
*50% for savings (primarily college)
And the rest could be used for clothes, Christmas presents and such.
I followed this pattern for a long time; after I married (fortunately, a guy whose parents were just as careful about money), we still tithed 10%, generally saved 10% — but the rest was eaten up. I tried to impress this on our daughters as they grew up and got jobs…sometimes I was successful, sometimes I wasn’t. They have noticed, though, that my folks’ patterns meant that even with a bare bones salary, they were able to save enough. My mom can live comfortably now because of it.