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How Parents Financially Influence their Children
Mr. Canadian Dream, the blogger @ Canadian Dream: Free at 45, wrote last week about how his parents influenced his financial perspective and habits. How much do you think parents influence their children regarding financial issues? In my opinion, I think that parents have a GREAT influence on their children’s financial outlook and habits. Lets take a look at my personal scenario.
I grew up in a fairly conservative, middle class family within in a relatively small city called St. John’s. My family owned a small business where my Mom was as frugal as they got and my Dad, who was also frugal, was a big fan of investing his money. The only debt that they kept was the good tax deductible kind with their investment properties, everything else was paid in full with cash.
Starting at a very young age, my parents used to say to me, “young FrugalTrader, you need to save your money“. So that’s what I did! I remember opening my first bank account when I was around 7 years old, saving up birthday/holiday money and building up a whopping $100 nest egg not long afterwards. I don’t think I saved my money because my parents “said so”, I did it because I learned from example. My Dad was the one who taught me about investing, and how if I started investing at a very young age, I could be a millionaire when I got older through the magic of compounding. When I was 16 or so, I took that advice and started making small contributions to a mutual fund. In hindsight, I didn’t exactly pick the greatest mutual fund, but it was a start. Throughout University, I worked with the family business which along with my work terms, I managed to graduate debt free (my wife is another story). :) Fast forward a few more years, we’re quickly paying off the mortgage and have obtained considerable investment portfolios.
I remember growing up worrying if the business was making ends meet. Now that I’m older, I realize that my parents earned a very comfortable living, and they could have bought me a lot more toys. ;)
When I have kids, I plan to make financial education a priority. In my opinion, children learn best through example! As to HOW I’m going to do this, that topic is for another post.
What’s your story?
3 Comments, Comment or Ping
1. HalOtis
My parents were very quiet about money, there were several times growing up where they made financial decision that I felt would have been beneficial for me to understand. For example, when buying a car, I knew they were looking at one, but I never saw it, or knew how much they paid for the car until it showed up in the driveway one evening. It would have been nice to know, the price, how the paperwork was handled, and some insight into the buying decision.
The only advice I got about investing was that stocks were risky, mutual funds were risky (they got burned by the dot-com bust( and they never told me that until 2 years after the fact)) GICs from the bank were the best option for saving money in their opinion.
Recently I told my mother, that I had been reading books about making money voraciously over the past few months. the response I got was “You know money isn’t everything.. ”
I’ve come to take my parents financial suggestions with a grain of salt. I know that my parents were good savers and that has rubbed off on me. But I’m now working in a portfolio management company, implementing quantitative analysis of stocks software. It’s a completely different world from the one my parents live in.
Feb 26th, 2007 @ 1:56 pm
2. Common Sense
I think the key is to teach your children when they are young. The earlier the head start the better off they are. My parents didn’t teach me much about finances. The most important thing that influenced me was that I grew up poor, and so I knew the value of money.
http://wisdomfrommywife.blogspot.com/2007/02/teaching-your-kids-about-money.html
Feb 26th, 2007 @ 9:41 pm
3. FrugalTrader
Great post from your blog Common Sense. Perhaps you should consider teaching your kids to split their income into 3 categories, spending, saving, and charity. Perhaps having one of those piggy banks that are already split into 3 sections.
Just a thought,
FT
Feb 27th, 2007 @ 6:58 am
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