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Inherited Money Attitudes – Are Good Financial Habits Nature or Nurture?

How we are raised – and by whom – has a major influence on whom we become as adults. Our parents shape us, in both good and bad ways. Give your children chores and they’re more likely to become independent workers as adults. Raise them in a household where you’re constantly arguing with your spouse, however, and they may struggle to form healthy relationships at work.

The link between our relationship with our parents and our adult personalities dates back to Sigmund Freud’s research, but what about other areas of our life, such as finances? Are money habits inherited? If they are, can we overcome bad generational money habits to build a better financial life for ourselves than our parents had?

To understand how our family can shape our money attitudes as adults and our capacity to do better than our parents did, we surveyed over 1,000 adults about their financial upbringing and where they are today. Read on to see what we discovered.

Early Money Memories

Our parents help shape more than our psychology or personality. According to our survey, parents have an impact on our financial behavior as adults, too. Over three-quarters of respondents said their parents influenced their financial habits as adults. Respondents with good current financial standing were the most likely to have had some parental influence. Unfortunately, nearly 2 in 3 respondents with bad financial standing also claimed their parents influenced their financial habits.

Parental Guidance

Despite the influence parents have on a person’s financial behavior, many parents shy away from money conversations with their children. Over half of our respondents said their parents never talked to them about the value of their financial accounts or life insurance or whether they had investments or debt. If these topics were discussed, it typically wasn’t until the children were adults themselves.

For those whose parents did talk to them about money, it was most commonly about their general financial standing. Most said these conversations happened during childhood. The average age respondents reported their parents talking about their general financial standing was 15.

Recession and Financial Emergency Discussions

Our research suggests that talking to your children about the scarier side of money can be quite impactful. Respondents whose parents talked to them about the possibility of financial crises or recessions as children were more likely to be in good financial standing as adults.

Prepared for the Worst

A key component of financial security is having cash resources you can tap in case of a financial emergency. This is why it’s important to talk to your children about financial crises or recessions, like the “dot-com bubble” that changed the way many baby boomers viewed investing, or the Great Recession that scarred millennials. Now, the COVID-19 global pandemic is likely to have a similar impact on Generation Z.

Discussing these worst-case scenarios increases the likelihood that your children will plan ahead with an emergency fund as adults. About 62% of respondents whose parents did not talk about crises currently had emergency funds, compared to over 72% of those whose parents did discuss these downturns.

Simple Principles for Financial Stability

Teaching your children financial life lessons could reduce the possibility of entering into credit card debt. According to our respondents, people whose parents taught them basic financial life lessons had less credit card debt than those whose parents didn’t teach them anything about money.

Financial Life Lessons

Millennials were least likely to say their parents didn’t teach them anything about money. Of the options provided in the survey, the most common financial lesson parents taught their millennial children was the difference between a need and a want.

The least commonly imparted financial lesson for all generations was how to invest. This is unfortunate, given those whose parents did teach them how to invest typically reported having the highest income and estimated net worth.

Parents were especially negligent on this topic where their daughters were concerned. Men were 35% more likely than women to have been taught to invest. Men were also more likely to have been taught about financial goal setting. One reason for the discrepancy could be that mothers are more likely to teach their daughters about finance, thus causing traditional gender roles to get passed down from generation to generation.

Despite having received the most financial education from their parents, millennials reported the highest instance of being worse off financially than their parents. There’s still time to improve, especially for younger millennials who are just starting their careers. Of the 59% of millennials who said they were financially worse off than their parents, only 9% didn’t think they’d ever be better off than their parents. This is significantly less than both Gen Xers and baby boomers, 16% of whom didn’t think they’d ever surpass their parents financially.

Millennials’ financial optimism may be due to the fact that nearly one-third of millennials received a pay raise in the past 12 months. Millennial women, in particular, have made strides in income and now earn more than their mothers.

Spending Styles

Our survey results suggested a connection between parents’ spending style and their children’s style. The more responsible a parent is with his or her spending, the more likely their children are to be responsible spenders themselves. Over half of respondents whose parents only spent money when they could afford it reported being debt-free today, compared to only 42% of respondents whose parents often spent beyond their means.

Following in Their Footsteps

Children whose parents were conservative spenders, often choosing to forgo luxuries even when they could afford it, were the most likely to have an emergency fund as an adult. Children whose parents only spent when they could afford it were slightly less likely to have emergency funds as adults.

Having a parent who often spent beyond their means can lead to more debt and less in emergency funds. The majority of children brought up in such households said they’ve done better for themselves as adults. Almost 51% of children whose parents spent beyond their means described themselves as responsible spenders as adults.

Children of responsible and conservative spenders were far more likely to emulate their parents’ spending habits as adults. Over 60% of people raised by responsible spenders described themselves as spending responsibly, as well. Over half of people raised by conservative spenders said they’d become conservative spenders, too.

Creating a Better Financial Future

How we raise our children has a formative impact on who they become as adults. Teach them how to save and invest, and they are more likely to become financially responsible adults. For parents who naturally want the best for their children, a financial education should be a key aspect of their upbringing. Still, teaching financial life lessons is easier said than done – especially if you aren’t sure you’re doing it right yourself.

At Personal Capital, our mission is to help you find honest advice for your money management. We’re here to help you create and stick to a plan tailored for your long-term goals, in prosperous economic times and harder ones. Our free financial tools will help you set up and track your budget, manage your finances, plan for retirement, and see a complete 360-degree view of your money. These free tools are designed to help you see all of your money in one place, so you can be sure you’re on track to meet your goals. You can also use the dashboard to give your family visibility into your finances and facilitate healthy conversations around money. Start planning the smart way at today.

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For this analysis, we conducted an online survey of approximately 1,000 adults. To obtain adequate sample sizes, we set quotas for the number of baby boomer, Generation X, and millennial participants. There were 406 millennials, 304 Gen Xers, and 300 baby boomers in the study.

50.3% of participants were women, 49.4% were men, and fewer than 1% were nonbinary. In some instances, we grouped survey responses to simplify the visualizations. People with “good” financial standing were those who said their finances were extremely, somewhat, or slightly good. Those with “bad” financial standing cited having extremely, somewhat, or slightly bad finances. We grouped similar responses to the question, “How is your relationship with your parents?” In numerical responses, we excluded outliers before calculating averages.


This study is based on self-reported data, which could be influenced by minimization or exaggeration. It is to be used for exploratory purposes only.

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If you’ve found this study insightful, we’d love for you to share it. We ask only that it be for noncommercial purposes and that you include a link back to this page to give credit to the team who worked hard to put it together for you.

The content contained in this blog post is intended for general informational purposes only and is not meant to constitute legal, tax, accounting or investment advice. You should consult a qualified legal or tax professional regarding your specific situation. Keep in mind that investing involves risk. The value of your investment will fluctuate over time and you may gain or lose money.

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