Seven Deadly Sins: Passing your financial dysfunction onto your kids

30 Sep
what an original sin

Wow! What an original sin! Careful. If Adam and Eve, learned anything it's that you can't trust fruit salesmen with snake buttsand the sins of the parents can be visited upon their children. Guess what. This applies to money too.

(NOTE: This was originally written for a financial website, but it was ultimately rejected. I used the $20 kill fee to buy myself something pretty.) 

Warning: Your financial habits could be contagious. You could pass them on to your children.

This can be a good thing. However, financial scholars say it can also visit the sins (and financial miseries) of the parents upon the children.

Consider these Seven Deadly Financial Habits.

1. RELYING ON CREDIT CARDS. People often say they will only use credit cards in case of  emergencies.

But Dr. Deborah Thorne, a finance professor at Ohio University, says what they fail to realize is that credit cards create their own ongoing state of emergency.

“Credit cards are not inherently evil, but they can become that way,” Thorne says. Avoid them if you can. If you can’t, only use them for emergencies. First, she adds, have a talk with your kids.

“Have you really discussed what constitutes an emergency?”

2. MOOCHING. When you run into trouble, do you in turn run to your parents? Or are there other people you count on to bail you out?

Careful. One day, your kids will be coming to you with their hats in their hands. That’s because you never modeled how to make it on your own.

3. LIVING CRISIS TO CRISIS. Some people grew up in dysfunctional homes where they knew nothing but crisis.

Now they can only manage their lives and finances by moving from crisis to crisis. And if the crisis doesn’t exist, they somehow manage to create it. If this is your pattern, recognize it. Get help.

There are few viruses so virulent as family dysfunction.

4. LIVING OUTSIDE YOUR MEANS. You only live once, right? You can plan for the future but get hit by a bus next Tuesday. So live it up. Rent the kind of house you would want to buy. Drive the car you want to drive not the one that fits your budget.

Just be careful about the message you send your children.

“If the parents have trouble controlling spending, children will see it,” says Dr. J. Amanda Adkisson, a professor of finance at Texas A & M. “They will see both the cause and the parents’ response. That should give parents a firm incentive to learn to live within their means.”

5. PRETENDING EVERYTHING IS OK. Many people hide their financial distress, even from their children. They feel children should feel secure and not burdened with financial worries.

“I can’t tell you how many times I’ve heard parents say finances are a personal matter,” Thorne says. “Bull***t! It’s not a personal problem. It’s a family problem.”

Talking to kids about money is as important — if not moreso — than talking to them about sex, she says. “It’s a bigger part of your life than sex, and it affects more people.”

6. LIVING FOR THE SALE. If you don’t have the money, you don’t have the money.

The coat you want may be 30 percent off. Heck, it could be 80 percent off. But if you don’t have the money for it, you are not getting a bargain. You are getting in trouble. Adkisson says many people have a warped bargain mentality.

Experts suggest operating on a cash basis when shopping for anything beyond the necessities. Have a finite supply of money on hand and know that when it’s gone, it’s gone. Operating this way with kids breaks them of the we’ll-worry-about-how-we’re-going-to-pay-for-it-later attitude.

7. HAVING QUESTIONABLE ETHICS. When your back is against the wall, when the wolves are your door, it’s tempting to let your personal ethics slip.

You lie to a debt collector. You make pay arrangements you know there is no way you can keep. You ask your kids to answer the phone and say you’re in the shower. You have access to the office’s petty cash fund and, really, no one’s going to miss a few bucks before you secretly put the money back in.

Who is going to know? Unfortunately, it’s your kids.

They get the message from your behavior that the ends justify the means and it’s OK to lie and cheat just a little under the right circumstances. They learn not be rational about finances, but how to rationalize their financial choices.

“My own parents lived through the Great Depression, so they taught me good money habits from the beginning,” says Adkisson. “My parents always lived within their means, were generous with friends, family and worthy causes, but at the same, were dedicated savers and investors.

“Parents who have risen above less favorable economic circumstances may want to just give their kids everything all the time, but they need to step back and teach their children the skills they themselves learned through hardship,” Adkisson adds.

“When they simply indulge their children with gifts, they are actually impoverishing them in spirit. This interior poverty is just as bad as material poverty.”

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