Would you describe your parents as impatient? Are they generous with finances? Some parents might be more inclined to give to charity on average; others may prefer to focus mainly on their own needs.
It might pay to take note of these things: it turns out that parental preferences can influence your choices when managing money – even more than whether they’re rich or poor.
That’s the conclusion of a 2018 paper by Shyamal Chowdhury, Matthias Sutter and Klaus F Zimmermann. They found that a family’s socio-economic status has less effect on the economic preferences of the children than how the parents think.
Haste makes waste?
One way this happens is that patient mothers and fathers who work consistently towards their future goals are more likely to have patient children who are inclined to do the same.
And if mothers and fathers are inclined to take risks – buying lottery tickets, for example – their children are likelier to fancy a flutter as well, the study learned.
What this means: it might pay to think more carefully about what your parents would have done when it comes time to make a money choice, and adjust your own response in light of that.
For example, if your parents would never take a calculated risk, perhaps examine your own views in relation to investing. It might be that your attitude is partly “inherited”. So it might sometimes make sense to break the mould.
A less controversial example might be gambling on your future by not putting money away in savings. Did your parents act like this? If so, how did it turn out? Should you emulate them, or carve out a different path?
About the research
Chowdhury, Sutter and Zimmerman studied 1,999 people in Bangladesh, including 544 pairs of mothers and fathers and 911 children from six to 17 years of age. No other experiments at the time had looked at this kind of information in the same depth.
Lots of earlier studies only focused on one parent, for example, or one type of economic preference, without examining a range of other factors that might influence the results, the researchers said.
They concede that the results might be different in rich countries; mothers in Bangladesh are likelier to stay home with the children, for example, and there’s less social mobility generally.
But they believe their findings will apply in other countries, not least because they controlled for so many other factors – such as IQ, the Big-Five personality traits, whether they felt in control of their lives, years of schooling, age of the parents and so on.
“A series of robustness checks reveals a few further noteworthy results: older siblings’ preferences are also positively correlated with younger siblings’ preferences,
[and] parents who are more similar in their preferences have a slightly stronger relation to their children’s preferences than parents who are more dissimilar,” they write.
“Parents’ preferences are [also] more strongly aligned with older children’s preferences than younger ones, and we observe peer effects in the village.”
Other ways family pays
Of course, we’ve long known that we learn a lot from our families, and that our family situation can affect many things in later life, including our finances. This can be either good or bad. For example, when money is tight growing up, children might learn that it pays to be frugal, having regularly been reminded that “money doesn’t grow on trees”.
However, some children might rebel, and instead grow up to be more spendthrift. This might suggest more of a role for personality or the nature of the people involved.
And if your parents expect you to go on to university, for example, you may well be encouraged to fulfil those expectations. This will probably affect your finances in a range of ways, from the potential to acquire student debts in hopes of a higher-paying job down the track.
The above article also cites a Harvard Business School study which concluded that daughters of working mothers were 23% more likely to go on to a supervisory role at work and earn more money.
Copycat or character?
It’s often assumed that what we learn from our parents is mainly about how the child is brought up. But the Chowdhury, Sutter and Zimmerman research suggests that, specifically, parents’ basic attitudes (regardless of what they actually tell their children, or their circumstances) contribute in an important way. This could be a peer effect of sorts, if not biologically inherited in any way.
Perhaps we should all think beyond the money messages we receive as children as a result of training, education or environment; it might pay to have a closer look at your own natural feelings on the matter too. Have you “inherited” any feelings on finance that could work against you in the long run?