7 Signs You’re Breaking Your Parents’ Bad Money Habit Cycle
The money habits modeled for you in childhood can have a surprisingly long reach. If your parents struggled with debt, avoided talking about money or lived paycheck to paycheck, you may have carried some of those behaviors or emotions around them into adulthood.
However, you may also have found ways to break the cycle. Here are seven signs you’re building a healthier financial life than the one you grew up around.
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1. You Face Your Finances Instead of Avoiding Them
One of the clearest signs of breaking an unhealthy financial cycle is being willing to look at your finances honestly.
Taylor Kovar, CEO and certified financial planner (CFP) at 11 Financial, said pattern breakers are often doing so in ways that are “small and boring.” That can be the ability to open a bill without anxiety or talk about money with a partner.
In fact, people who came from challenging financial circumstances but can now embrace budgeting are already exhibiting a “willingness to look at their situation honestly,” Kovar added.
In a nutshell, according to Austin Kilgore, an analyst with the Achieve Center for Consumer Insights, awareness is the key sign that there’s a possibility for change.
2. You Budget With a Purpose
Having a budget is great but using it to guide decisions and work toward goals is a stronger sign that you’ve moved beyond reactive money management, according to Steven Conners, founder and president of Conners Wealth Management.
Kilgore agreed, adding, “If one did not have a budget before, and now has developed one that they consistently use, yes, that’s meaningful financial progress,” he said.
The key is in using it, which means keeping it updated with all expenses, and aligning it with goals you set for the things you want to do and have in life.
3. Unexpected Expenses Don’t Automatically Become Debt
If your family routinely relied on credit cards or borrowing whenever something went wrong, building even a modest emergency fund can represent a major change.
Kovar said even people who just have a thousand dollars saved are getting ahead of problems, because that’s enough to keep a car repair from becoming a credit card spiral, he said.
It also reflects a mindset adjustment, Kilgore said, in which “You know, understand and accept that there will be unexpected expenses that arise in life, no matter who you are and no matter how well you plan.”
4. You Think Before Taking on Debt
Breaking the cycle doesn’t necessarily mean refusing to borrow money altogether. Kovar said, “Sometimes it’s someone who used to borrow impulsively and now pauses before financing a purchase.”
In fact, learning to use debt responsibly is often a sign of financial health, he added, particularly people who “charge only what you’ll pay off in full and on time each month, and to benefit credit scores, keep that amount low.”
5. You Save Consistently, Even If It Isn’t a Lot Yet
Someone who grew up in a household where saving rarely happened may begin to show signs of cycle breaking just by learning to save consistently.
Whether that’s emergency savings, retirement savings or saving for other specific goals, “Consistency tends to be the real marker, not the number,” Kovar said.
Kilgore agreed, saying that “people who do so are more likely to up their savings when they can… and experience greater growth.”
6. You Can Talk About Money Without Shame
Families that can’t talk about money often end up making financial mistakes. So, “Comfort talking about money… without embarrassment is its own kind of progress," Kovar said.
Kilgore pointed out that asking questions and seeking financial knowledge is important for anyone at any age. “Most schools do not teach personal finance, but the basics are not difficult to learn for someone who wants to do so.”
7. You Measure Progress Against Your Own Goals, Not Your Parents’
Perhaps the biggest sign of breaking the cycle is recognizing that you don’t have to recreate your parents’ financial lives. Earning more than they did or owning a bigger house doesn’t automatically mean you’re financially healthier, just as reaching different milestones doesn’t mean you’re behind.
Breaking a bad money habit cycle may also not happen all at once, but over time, in a series of small changes.
This article was provided by MoneyLion.com for informational purposes only and should not be construed as financial, legal or tax advice.
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