Money habits are often passed down from parents to children. But what if your parents never taught you about money? Chances are, you’ve picked up a few financial habits of your own.
These habits may not necessarily be bad, but they aren’t always the best for managing your finances effectively. Whether it’s spending without a budget or not understanding the true value of a dollar, these practices can leave you in a tough spot.
In this article, we’ll explore 8 financial habits you might have developed if you were never taught about money. And don’t worry, we’ll also give some pointers on how to change them for the better. Let’s dive in!
1) Living paycheck to paycheck
If your parents didn’t teach you about money management, one of the most common habits you might’ve picked up is living from paycheck to paycheck.
Without a solid understanding of budgeting and saving, it’s easy to fall into a cycle of spending all your earnings as soon as they come in. This can lead to financial strain and limit your opportunities for growth and investment in the future.
A lack of financial education often leads to a “spend now, worry later” mentality. And while it may be fun in the short term, this pattern can quickly lead to debt and financial stress.
But don’t worry, breaking this habit is possible. With some simple budgeting techniques and a bit of discipline, you can start to build a healthier relationship with your money.
2) Ignoring the importance of a good credit score
Speaking from personal experience, not understanding the importance of a good credit score is a habit that can sneak up on you.
Growing up, my parents never really talked about credit scores or how they affect your financial life. So, when I got my first credit card, I saw it more as a ticket to easy spending rather than a tool for building financial credibility.
I made some late payments, maxed out my card a few times, and before I knew it, my credit score took a hit. It wasn’t until I tried to get a car loan that I realized just how crucial maintaining a good credit score is.
A poor credit score can make it difficult to secure loans and may even affect potential job opportunities. Thankfully, with time and disciplined repayments, I managed to turn my score around.
If you’re like me and didn’t learn about this growing up, it’s never too late to start improving your credit habits.
3) Neglecting to save for retirement
The concept of saving for retirement is often overlooked, especially by younger generations. It’s easy to push it to the back of your mind, thinking it’s too far off to worry about now. However, the earlier you start saving, the more time your money has to grow.
Did you know that if you start saving $200 a month at age 25, you could have over $500,000 by the time you retire at 65, assuming an average 7% annual return? But if you wait until you’re 35 to start saving the same amount, you’d only have about $245,000 by retirement age.
This habit comes down to understanding the power of compound interest. Start saving for retirement sooner rather than later — your future self will thank you.
4) Not having an emergency fund
Life is full of unexpected events, and many of them can come with a hefty price tag. If your parents never taught you about the importance of having an emergency fund, you might find yourself ill-prepared for these surprises.
An emergency fund is a safety net that can cover anything from sudden medical expenses to unexpected car repairs or even job loss. Without one, you risk falling into debt, as you may need to rely on credit cards or loans to cover these unforeseen costs.
Building an emergency fund may seem daunting, but even saving a small amount each month can make a big difference in the long run. It’s all about creating a habit of setting money aside for the unexpected.
5) Believing that money equals happiness
Money is a tool, not a measure of happiness. Yet, if you weren’t taught about money growing up, you might have developed the habit of equating wealth with joy.
It’s easy to think that having more money will solve all our problems, leading to a happier, more fulfilled life. But in reality, true happiness comes from relationships, experiences, and personal growth — none of which can be bought.
Of course, money can provide comfort and security. However, chasing after it while neglecting the truly important aspects of life can lead to stress and dissatisfaction.
Remember, it’s not about how much you have, but how you use what you’ve got to create a fulfilling life.
6) Avoiding financial discussions
For some reason, money was always a taboo topic in my house growing up. We never talked about finances, which led me to feel uncomfortable discussing it as an adult.
This lack of communication can perpetuate financial misunderstanding and create a sense of shame around money. It wasn’t until I started actively seeking out financial education and opening up about my own money struggles that I began to feel more confident in my financial decisions.
Remember, there’s no shame in talking about money or asking for help. Understanding finances is a journey, and it’s perfectly okay to ask questions along the way.
7) Not setting financial goals
Without a clear financial goal, it’s easy to drift aimlessly from paycheck to paycheck. But having a specific target, whether it’s saving for a house, paying off debt, or building an investment portfolio, can provide direction and motivate you to make smarter financial decisions.
Setting financial goals gives you something to work towards. It provides a sense of purpose and helps you prioritize your spending. Without these goals, you might find yourself impulsively spending on non-essential items without considering their impact on your overall financial health.
So take some time to think about what you want your financial future to look like. Setting clear, achievable financial goals can be the first step towards better money management.
8) Avoiding investing
Investing can be intimidating, especially if you weren’t taught about it growing up. But here’s the thing: investing is one of the most effective ways to grow your wealth over time. It can provide a higher return than a traditional savings account and help you reach your financial goals faster.
Remember, investing isn’t just for the wealthy. With many investment platforms now available, anyone can start investing with just a few dollars. The key is to start small, learn as you go, and be patient — investing is a long-term game.
