Change Your Financial Family Tree

by Kevin on December 8, 2011

From the moment we come into the world we watch our parents closely. We learn how to navigate life. Whether it is how to speak politely or cook a good meal, our parents are there showing us the ropes.

Dealing with all facets of money and finances is no different. We learn how money works by watching our parents and the ways they interact with it. Whether good or bad, we see the decisions they make and we are learning from them. Our financial future is largely based on what we have witnessed and learned from our family. What if your parents don’t have a healthy relationship with money? What if you have watched them struggle through the years and know they have made poor decisions?

How can you avoid following in their path?

Change Your Family’s Relationship with Money

Avoiding the mistakes you’ve witnessed can be difficult to do unless you are making a conscientious effort to do so. To stop the cycle and alter your family financial tree, you will need to follow a process of four steps.


Take the time to look into what you’ve learned growing up. Did you see your parents using credit cards in excess? Were they always living paycheck to paycheck? Did they have to tell you that money was too tight for vacations or something extra that you asked about?

Think about their behaviors and how it affected your family. Evaluate what you saw and what the results were of those actions. Take notes and then divide them into two categories: what you do not want to repeat and what you would like to continue. Chances are, the categories will be disproportional. There may not be anything in the positive column. This part of the process allows you to really see how important financial literacy is to your life.

Set Goals

Now that you know what it is that you do not want to do, set some goals. These goals will lay out the path for how you would like your financial future to proceed. Do you want to own your own home some day? Maybe you’d like to become a landlord or have your own business. Does going to school without incurring debt sound like a great goal? How would you like your retirement to look?

Set short term goals that include an emergency fund. Plan the steps you will need to take in order to achieve your long term goals. If home ownership is in your future, decide when you will start a saving account to use as a down payment. These goals will serve as inspiration for you to continue on.


You have your goals set out and you know how you do not want to live. Now it is time to ensure you are successful. Educate yourself on financial literacy. Read books by a variety of financial advisers. Search out websites on how to make a budget. Explore the different ways to invest in your future. Meeting with a financial adviser would be wise as well. There is a host of information out there on the internet written specifically to help you improve your situation. Grasp it. Education is a key to your success.


You have your list of goals. You educated yourself on financial literacy. You’ve done your due diligence. You are empowered by the tools you have at your ready. Congratulations, you are well on your way to changing your family’s financial tree. It is time now to put these steps into action. Deal with the setbacks and relish the successes. Slowly, over time, you will develop great financial habits.

Ensuring the success of the future

While you have the ability to change your financial tree and correct what you’ve seen in the past, it’s also important that you ensure the success of the future. Your children deserve all the opportunites to be successful in life and that includes their own financial health.

It is important to have discussions with your children about money. Start early with a cash register for the pre-schooler, a small allowance (focusing on saving more than spending) for the school age child, playing games with the pre-teens like Monopoly and encouraging your teen to get a part-time job. Also, remember to educate your teenager before he or she leaves high school on how to budget their money properly.

Never underestimate the power of setting a good example. Your children are watching how you use money… just like you did. They are listening to your conversations with your spouse. And they are learning how to use money based on what they are seeing and hearing.

Changing your financial family tree is vital. The generations before you have made mistakes and probably lived a tough life. You can be the first person in your family to achieve financial success. You can show that it is possible and you can set the course for future generations to follow in your path.

Check out an interview I did recently with Bill over on the blog.

{ 1 comment }

Golfing Girl December 9, 2011 at 10:24 am

My husband and I couldn’t be more different from our parents with respect to handling money. My parents are polar opposites (one is a miser and the other a shopoholic and it’s “mine and yours” money) and his parents don’t track any aspect of spending or worry about things like life insurance, long term care, etc.

We have always pooled our finances and everything is transparent. We discuss all major purchases over $100 (excluding groceries, car repairs, etc.). We have monthly discussions about our goals and how they’ve changed. Basically I don’t know how we turned out so well given our family tree, but we’ve got a 6 month emergency fund and no debt besides a 15-year mortgage.

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