Should you take money advice from your parents?
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In the past I’ve mentioned how I think it’s kind of messed up that financial education isn’t considered important enough to include in a lot of school curriculums. Money is something we use every day, and we’ll manage our finances until the day we die, yet most of us have to figure it out on our own.
Now, I’ve heard several arguments for “not including this education is school,” and one argument is that it’s a parent’s responsibility to teach life lessons. So ultimately, it’s their responsibility to teach their kids about money.
But I feel that argument is flawed.
If this was truly the case, why do we have sex education, and why did we have the DARE program, which was common in my day.
To be fair, some parents do have money-related discussions with their kids. But when speaking with people about the extent of these discussions I’ve picked up on a few things.
Although these lessons provided a foundation, the information received from their parents was often surface level. So while they were told to save money, invest, limit debt, or look for bargains, they weren’t always given advice on how to do this.
Along with that, another issue involved the reliability of money advice received while growing up. In other words, the money tips weren’t always the best advice, even though parents meant well.
I recall an old coworker briefly talking about an early money mistake involving credit. And the exact words were, “Yeah, I got myself into some financial trouble listening to my dad.” We laughed it off, yet there’s a lot of weight in that statement.
Parents can only teach what they know, and if they only know the basics, this is pretty much the extent of their financial lessons.
And if they’re not good money managers, meaning they’ve been doing things wrong over the past 30 or 40 years, you might have to take their advice with a grain of salt. I know that’s a hard pill to swallow.
Granted, many parents aren’t financial advisors and they’re doing their best. But at the same time, we can’t ignore the fact that bad money habits tend to pass down from one generation to the next.
To get an idea of some of the bad money advice floating around, I did a little digging and found a few examples. Here’s what some people were told by their parents:
“Buy the biggest house you can afford,” (even though they were single and didn’t need a lot of space)
“If you want to furnish your house quickly, apply for financing with a furniture store. You can use up the card’s limit and pay 0% interest”
“Don’t bank on the internet, it’s too dangerous”
“You don’t have to worry about saving and investing until you’re in your 30s”
and my personal favorite…“Investing is too risky, you only need a savings account”
I realize questioning parents might be a touchy topic for some. They give advice about everything else, so why wouldn’t you take their money advice?
When it comes to money, though, it’s not that simple. Because ultimately, these decisions affect you – not them. The truth is, it’s easy to give money advice when you don’t have to deal with the consequences. Therefore, you have to consider the entire picture.
Doing something because “you’re told to” isn’t the smartest approach to managing your money. And that’s regardless of who’s giving the advice.
Now, obviously, this doesn’t mean you can’t take their advice. What they’re saying might be spot on.
Here’s how to handle this situation:
1. Be honest with yourself
Take off the rose-colored glasses and ask yourself: How have they managed their money over the years?
And it’s so important that you don’t use material possessions as a gauge. Having a lot materially doesn’t mean they’re in a good place financially.
However, subtle clues can often indicate whether someone is good with money. So based on their actions or conversations you’ve overheard: Are they big spenders with little in savings? Do they have a lot of credit card debt as a result of being big spenders? And most importantly, how would you rate their financial health?
2. Ask questions
This is important because questions can shed light on their level of knowledge.
One thing I’ve noticed over the years is that many people – and I’m talking about people in general – like to make blanket money statement. Yet, they can’t provide much information to back up their claims. And more often than not, they’re simply repeating what they’ve heard a million other people say.
For example, someone might say, “Don’t get a credit card, you don’t need one and it’ll ruin your credit.”
But if you say, “Really, I heard it only hurts your credit if you’re not responsible? Do you know how to use them responsibly?”– they might stare back wide-eyed because they can’t give an answer.
My point is, some people will talk about topics they don’t understand. So you have to dig deeper to gauge whether they’re qualified to speak on a subject.
3. Listen
At the end of the day, it’s about respect, right? Parents truly believe they’re giving the best advice. And again, their advice might be spot on.
Therefore, hear them out – even if the advice is opposite of what you would have done. They might come from a direction you haven’t considered, or offer tips you haven’t tried.
Although it’s important to be respectful and listen, do your own research, too. I stress this point regardless of who gives the money advice – parents, friends, or coworkers. Not all money advice is good advice.
It literally takes a few minutes to enter a question in Google. And one benefit of research is that you’ll receive in-depth information on a subject.
The advice you receive from your parents might be a general overview. However, a thorough research might reveal pros and cons, step-by-step instructions, real life experiences, etc. You can gain a better understanding of the topic, and make a more informed decision.