Posted By By Alex Lawson
Special to the Financial Independence Hub
Our parents are our first teachers. We learn our values, our habits, life skills, relationship skills, and many other things from our parents, long before we venture out on our own.
One of the things that people pick up on is financial habits, good or bad. If your parents were reckless spenders, chances are you’re already headed down the same path. The good news is that it’s possible to change your mindset and learn to manage your finances so that you don’t make the same mistakes they did.
Separate yourself from them
The first thing you need to do is realize that you are your own person capable of making your own choices. Don’t tell yourself you’re irresponsible with money just because that’s how you grew up. Make the decision to be different and start telling yourself the opposite. Reinforce the idea that you can be financially responsible and independent regardless of how you grew up, and you’ll be able to start making better choices.
Decide on your goals
Many people that had financially irresponsible parents have never been taught to think about the future. Planning for retirement should begin as soon as you leave college. Do you think you’ll want to retire with enough money to live comfortably as you have been, or are you planning on securing complete financial independence by the time you’re 30? The process for saving and investing will be completely different based on your goals. Begin saving aggressively when you’re young so that your money will have more time to grow.
Make saving a priority
If your parents were reckless spenders, they probably didn’t teach you anything about saving. One of the biggest keys to financial independence is learning how to save properly, so that you can be prepared for both unexpected problems and for your future. Build savings into your budget before you even look at what type of housing you can afford. A good rule is to start saving 10% of every paycheck and live off what is left over until you reach the goal of three times your monthly income. Then, when your car breaks down or if you lose your job, you will have an emergency fund to rely on without having to go into debt.
Avoid unsecured debt
While it’s good to develop credit, it’s not good to carry outstanding or revolving debt. Make sure that you pay off any credit cards immediately, and don’t use them to buy things that you can’t afford. Credit card debt is the number one financial problem facing most young people. The ability to spend more money than you make traps too many people in an endless cycle of debt and making minimum monthly payments, which can quickly eat all of your excess income.
Educate yourself
One of the biggest stumbling blocks for young adults whose parents were reckless spenders is that they never got the financial education that they needed to get started on the right foot. There is plenty of information out there that can help you learn to budget,
learn about things like interest rates, and learn about things like mortgages. If you find yourself puzzling over some aspect of your financial health, learn about it. There are plenty of classes or even just books and websites out there that can help you figure out the details of your finances.
Above all, however, simply remember that the fact that your parents were reckless spenders who have never managed to save a penny doesn’t mean that you are not allowed to gain financial independence. Find out what your parents did wrong exactly, learn to save and respect money, and educate yourself on how the financial world works. This way you will be on your way to achieving financial independence – and who knows – maybe even you can teach your children to do the same.
Alex Lawson is a financial blogger and mortgage experts, currently working at Brighter Finance and often working with young people on the threshold of their adult lives. Alex enjoys sharing his financial tips with others and might often be found online, blogging and discussing money-related topics.
