5 Ways Women Can Avoid Financial Mistakes Inherited From Parents
'It can be difficult for anyone to provide completely objective advice, but it's especially difficult to give advice to loved ones. They obviously want what's best for you, but that doesn't mean that they can give independent third-party advice,' Trevor Ausen, a Certified Financial Planner, RICP®, told me.
Relying on loved ones for financial advice can offer familiarity and a sense of security, but it may also unintentionally reinforce limiting money narratives. To avoid repeating inherited financial patterns that no longer serve us and prepare yourself for the opportunities the future will bring with money, evaluating and filtering the advice we receive is essential. Here are five key points to consider when filtering financial guidance from your parents and avoid making those inherited financial mistakes.
Before taking any advice, it's essential to be clear about what you're working toward. Having clarity on your specific goals allows you to filter the guidance you receive and apply it in a meaningful way. Whether you aim to pay down debt, invest more consistently, or start a business, knowing your desired destination helps you determine which advice supports that path and which may be based on priorities that don't align with yours.
'Our parents and us are family, but as individuals, we are different people with different goals and aspirations. Your parents' goal could be based on a leisurely retirement, while you want to take career breaks and never fully retire. In financial planning, we work backwards from our goals. Needless to say, if you want to go to different places, the paths you walk would be very different,' said Lei Deng, CFA, CFP®. Start with the most basic questions to define your long-term vision and goals, such as what kind of financial life you are trying to build and why.
The economic environment is one that could change drastically in a short period of time for a long time, thus different generations have been shaped by different types of environments, and those experiences inform the advice parents often pass down. Many lived through deep recessions, periods of high inflation, high unemployment, or even a cash-only culture. While their advice may come from their real experience, the financial landscape has shifted, and their guidance must be weighed against your current reality.
For example, your parents may express distrust in the stock market because of what they witnessed during the 2008 financial crisis. 'A parent who once lost money in the stock market (or heard horror stories from others) may discourage investing altogether,' said Janeil Pierre, an Accredited Financial Counselor. 'Instead of teaching their children how to evaluate risks, seek proper financial education, or diversify, they inadvertently pass down fear. As a result, their children may miss out on significant wealth-building opportunities,' she added.
Whenever possible, take time to explore the context behind the advice. Ask questions. What were they navigating when they developed this belief? Once you understand the root of their perspective, you will be better equipped to filter advice through your own goals, risk tolerance, and the economic conditions you are building in now.
Money has been a source of stress for many over the years; therefore, it has probably created an emotional blueprint in your parents' lives that may be reflected in the advice they give. Although it may be difficult sometimes to understand what part of the advice is emotionally driven, it is worth taking the time to dissect and break down the advice.
For instance, in my work with female entrepreneurs who are working to grow their businesses, I often see how beliefs, sayings, and habits around money stem from learned experiences passed down by their parents. These inherited patterns can unconsciously shape how they save, spend, or view financial risk, even when those beliefs no longer align with their goals.
If a conversation around money feels emotionally charged, it may be worth pausing to reflect. Ask yourself: Where is this advice coming from? Is it rooted in past experiences that are no longer relevant to my life today? Learning to separate emotional legacy from practical guidance can help you make more grounded, intentional financial decisions.
Parental advice often comes from a place of lived experience, but it should not be the only perspective shaping your financial decisions. To build a more complete and current view, it is important to combine that advice with information from professionals who have studied and have work experience about it, and can understand today's economic realities and your unique goals.
'I advise clients to be cautious with any financial advice, parental or otherwise, that is factually incorrect, fear-driven, or misaligned with their personal goals,' said Pierre. 'For example, if a parent advises against using credit cards without understanding how responsible credit use can build financial health, that advice could hinder their child's long-term credit profile,' she continued.
Today's financial tools, credit systems, and wealth-building strategies can be more complex but more accessible than before, and tapping into advice from professionals can offer updated frameworks, fill in knowledge gaps, and help you make informed decisions.
One of the most important financial skills you can develop is discernment, the ability to evaluate each piece of advice, suggestion, or opinion and decide what truly aligns with your objectives. The goal is not to reject everything your parents taught you, but to understand what better fits you. Many foundational principles are mostly shaped and shared by parents, like living within your means, saving for emergencies, or avoiding high-interest debt, which can be incredibly valuable.
But some beliefs may come from a place of hardship or fear, rather than opportunity. Ideas like 'never take financial risks' or 'don't talk about money' might have been protective in the past, but can become limiting in the present, especially if they discourage you from investing, starting a business, or seeking financial education.
'Parents who have successfully navigated economic downturns, grown wealth through investing or entrepreneurship, or demonstrated healthy money habits can provide a valuable foundation of wisdom and perspective,' said Janeil Pierre. The key is to recognize that you can respect your parents' experiences while choosing a different path.
Bottom line, as women continue to navigate a rapidly changing financial landscape, it becomes even more critical to examine the advice that guides our decisions. Turning to parents for financial guidance can offer comfort and perspective. Still, it also requires discernment to understand the roots of inherited money beliefs and filtering them through the lens of personal goals and personal financial vision to avoid financial mistakes that could impact your financial future.
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