Inheriting poor financial skills is a real problem

Our parents and grandparents didn't face all the problems we do today as we try establish a financial foundation. The funny thing is that we brought these problems on ourselves by trying to simplify our lives. Our predecessors didn't have debit cards, lengthy credit terms, and interest-only loans. Rather, most of our grandparents (when they were our age) cashed their paychecks and put the household cash into different envelopes representing different budget categories. They'd pay bills out of those envelopes and always have enough money to cover the expense. It was hard for them to go backwards financially because they relied on cash. They couldn't, for example, buy fifty dollars of groceries with thirty dollars in cash.

What do we do now? We log onto our online banking accounts to see if we have enough money to cover the purchase we made earlier in the day. We spend first and worry about the consequences second. With this mentality, it doesn't matter if you are in the 1950s or 2050s, you’re going to go broke.

Yes, managing your financial life is harder nowadays. Yes, peer pressure is worse than ever. And yes, some people make a lot more money than you. But if you are truly focused on bettering your life, you will ignore what’s irrelevant. More money doesn't solve maladies caused by meager money management; more money only magnifies these money maladies. Mm-hmm!

Despite these money differences among generations, most of the skills that you need to function financially were instilled in you by your parents. And sadly enough, this is the root of several problems . If your parents didn’t know what they were doing, then your chances of innately knowing what you are doing are slim. And the problem gets worse when you factor in your parents’ level of financial confidence. Your parents’ financial aptitude can be classified into a few categories:

1. They knew what they were doing and passed it on. This is the best-case scenario. They had solid financial habits, they led by example, and they educated you along the way. In addition, they cut you off when they should have. They also saved money for you, taught you how to save money, and showed you exactly what to do with it.

1. They knew what they were doing but didn’t bother or didn’t have the time (for whatever reason) to teach you any of it. This is a pretty rare scenario, but definitely one worth mentioning.

1. They had no clue about how to manage money properly, and they set a bad financial example for you. You still love them. They still love you. We aren’t voting them off the island. We’re just agreeing that they didn’t teach you many good financial habits.

1. They had no clue what they were doing, but they thought they did. This is a flat-out dangerous situation for everyone. If you inherited a get-rich-quick mentality, a blame-other-people-for-your-financial-problems mentality, or a game-the-bankruptcy-laws mentality, then we have some serious work to do.

Not only do you need to learn how to budget, but how, in some cases, to reverse years of financial socialization. It’s time to face the facts of your financial upbringing. Bluntly, it may have sucked. That’s okay. But that doesn’t mean that you have to perpetuate the suckiness of the past. Standup for your present. Standup for your future.

And even more is at stake. If you are a parent, your children may already be picking up some of these bad habits. Your problem may have become multi-generational. Therefore, as you sharpen your skills as an adult, realize that your own children are watching you now—and they're making mental notes.

If you have a bad relationship with money, then your children will have a bad relationship with money. If you give your kids all the luxuries in life—but don't show them that luxuries come through hard work and wise investing—then they won't understand the value of a dollar.