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5 taboos of generational money that must die

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Although we are often afraid of becoming our parents, the truth is that we usually inherit our relationship with money from them, just as they have inherited theirs. Many of us were raised to think that talking about money is taboo, but this idea perpetuates financial illiteracy, and avoiding conversations about money can have a lasting negative impact on our own attitudes, relationships, and goals. life in money. According to a report from the National Endowment for Financial Education, only 24% of millennials demonstrate basic financial literacy, meaning three-quarters of a generation are ill-prepared for retirement or other financial milestones. Having candid conversations about our finances can help us learn, grow, and better prepare for our future.

We didn’t really talk about money in my own family growing up. Growing up in an Asian household, the emphasis was on education, but oddly, no financial education. It wasn’t until I graduated from college and stepped into the “real world” (and had to pay my own bills) that I began to embrace my own basic truths. Since then, I have shared them with countless families over the years in my job as a financial advisor.

Simply put, some long held beliefs about money no longer hold true. Many of these ideas that have been passed down from generation to generation should be shelved. Here are five outdated taboos, in particular, that should be banned, followed by some more useful mantras that can replace them.

Many parents tell their children that being in debt is bad and should be avoided. But there are different types of debt, and not all are created equal. For example, most homebuyers will need to take out a mortgage when they decide to make the big purchase, which is an example of good debt. And student debt isn’t necessarily bad either, since it’s seen as an investment in your future!

Instead of grasping the idea of ​​debt, it’s best to educate yourself on things like interest rates, credit scores, and loan terms to make sure you can handle debt properly. In fact, if you’re disciplined enough and the type to pay off all credit card bills every month, you can use some of the rewards benefits to your advantage.

I have seen with my own eyes how difficult it can be for parents to financially interrupt their children. In fact, I have seen clients continue to pay their children a monthly allowance until their 50s! Now, being a parent myself, I understand how difficult it can be to distinguish between supporting and over-helping your children, which can often hurt them.

One of the essential lessons in life is to achieve independence, including financial independence. Encouraging your children to earn their own money and support themselves is better for their confidence and growth as an individual.

Many parents have the idea that they should leave something for their children when they die. The idea of ​​leaving a legacy in terms of financial or real estate assets is a common and long-standing tradition, and rings especially true with an emotional asset such as a family home. While this is a good idea, remember that these assets should not be put aside at the expense of your own well-being.

Most kids just want their parents to live their final years in comfort, so if you can’t afford to leave a legacy, more than good!

Many of our parents happily combined their finances in common accounts and shared everything. But that’s no longer the norm, as couples often keep their finances separate or take a hybrid approach: a shared account and individual accounts. One in five couples identify money as their biggest relationship challenge, according to a Fidelity survey. Communication about finances is necessary to strengthen relationships and keep your main goals in life in sync, as money is often one of the main causes of divorce. Do what works best for you and your partner. The important thing is to discuss your financial aspirations and to maintain open communication about finances.

The times have changed. It is no longer the norm to get married in your early twenties, buy a house right away, and have children. While this plan has worked for previous generations, it may not be the smarter or better approach anymore, especially as house prices skyrocket and our lifestyles change. Don’t worry, leasing may even be a better financial decision depending on your situation. It’s okay to let go of your parents’ dreams; what matters is that you have your own financial goals and a plan to achieve them.

According to research by Walden University graduate Audra Sherwood, “Differences in Financial Literacy Between Generations,” about four in seven Americans are financially illiterate and report being unable to manage their finances. On top of that, a FINRA study found that over 53% of adults say thinking about their financial situation makes them anxious, and 44% say discussing their finances is stressful. The cycle of financial illiteracy and negative emotions related to money will continue unless we learn to break the taboo.

The bottom line: Having open conversations about money is how we learn, grow, and build healthy relationships. Even though it was not part of my childhood, I try to consciously have these teaching moments around money with my 4 year old. It’s fun talking with him about how he’s going to split his birthday money and what he wants to save for next time. Even though he’s still young, I can see him already mastering some basic financial concepts. As for my parents, they have also become more open about money and finances over the years, and we have had many conversations about planning for the future. These discussions ultimately led to their retirement this year.

It’s also important to remember that while our upbringing influences how we view finances and wealth, we ultimately define our own stories and can change our mindsets. Find out what stories about money you tell yourself and where those ideas come from. Does a belief come from a particular situation or from a memory of a family experience? Does the belief conflict with your current life?

If the money stories you tell yourself aren’t working for you anymore, redefine your goals to align them with your values ​​and stop living by unwritten rules set generations ago.

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