My meetings with students often start out with the disclaimer that “I am not good with money.” And that’s ok. Being “good with money” is a learned skill. But in order to learn this necessary skill, one has to be taught. And this teaching often happens without us realizing it. Many of our core beliefs about money are formed in early childhood by observing how our parents, friends, and classmates talk (or don’t talk) about money. Research has found that 58 percent of millennials describe their parents as having the greatest impact on the way they managed their finances. Millennials learned from the provision of financial advice (23 percent); from seeing how their parents effectively managed their own finances (19 percent); and from observing the way that their parents handled their financial mistakes (16 percent). Other research found that 68.8 percent of the young people surveyed indicated that they had learned everything, or almost everything, about the management of their finances from their parents.
This overriding attitude that we have about our finances is known as our money mindset, and it influences how we make key financial decisions every day. It is interesting to note that this core set of beliefs resides in our unconscious mind. Thus we may not even be aware of the impact that our money mindset has on our decision-making around financial matters.
I grew up in a one-income family. My father worked and my mother stayed at home until we were in junior high, at which time she got a part-time job. I don’t have explicit memories about conversations about money, but I can recall some memorable events from my childhood.
I remember my father working on the family finances at the kitchen table when I was in elementary school. He had a large paper ledger. I recall trying to help him by placing a period after the abbreviated months (e.g., Jan.); however, I placed the period after all of the months, including May, which was not abbreviated. I don’t know what I remember more – the ledger, or being corrected about the error.
My mother always had envelopes of cash in the house. These envelopes contained “grocery money” and “clothes money.” I remember when we were older, we could use our clothes money to make our own purchases. However, there was a finite amount of cash in the envelope, and it was not replenished until the following period. This was my first introduction to a budget; however, it was never labelled as such.
Whenever we asked for something – a new toy, for example – we were told to add it to our “wish list.” If something was still on our wish list after 30 days, the purchase would be considered. If we desired something, urgently, the first question we were asked was “is it on your wish list?”
My mother would take us shopping for clothes. When we came home, we tried on the clothes and showed my father. Before he would give an opinion on the purchase, he would always ask one question: “how much did that cost?” The cost of the items was never an issue, as my mother was a very frugal shopper. A lady that I worked with at my first summer job in university used to say “never pay full price at the Bay,” as your desired purchase would, inevitably, be advertised in an upcoming sales flyer at a lower price. My mother and I just had a conversation about this the other day, as I recalled this statement, and attributed it incorrectly to my mother (however, the sentiment is consistent with my mother’s shopping philosophy).
My first job was delivering the Metro One community newspaper. I think that I was around 12 years old. The job involved delivering the newspaper weekly to the houses on our street, and then monthly going to these houses to collect a voluntary payment for the “free” newspaper. I remember that it paid $1.20 per week. My second job was babysitting for a family on our street. It was the summer after grade 8, and I worked almost every evening. Babysitting paid $2.00 per hour at that time. I remember going to Canada Trust (before it was TD Canada Trust), and purchasing a Guaranteed Investment Certificate (GIC) with my hard-earned money.
It is interesting to reflect back on my childhood and recall these memories. Without explicit explanations (or perhaps there were explanations, but I do not remember them), I was introduced to the concept of a budget, consideration of needs vs. wants, being a prudent shopper, the value of work, and the importance of saving. I think that these lessons established a money mindset that has been very helpful in achieving my financial goals.
Some food for thought: I am the middle child with an older sister and a younger brother. I would say that my brother and I share a similar money mindset. My sister, however, has a different approach. I wonder if nature has an influence on your money mindset, in addition to nurture?
Life Lessons 