{"id":14318,"date":"2021-01-14T09:00:29","date_gmt":"2021-01-14T08:00:29","guid":{"rendered":"https:\/\/my-life.lu\/?p=14318"},"modified":"2026-04-20T13:15:46","modified_gmt":"2026-04-20T11:15:46","slug":"we-inherit-our-behaviour-towards-money-41011","status":"publish","type":"post","link":"https:\/\/my-life.lu\/en\/we-inherit-our-behaviour-towards-money-41011\/","title":{"rendered":"We inherit our behaviour towards money"},"content":{"rendered":"

While an inheritance may be a blessing, sometimes it can also be a heavy responsibility to bear. This particularly applies if a large sum of cash, an estate or a company is involved, but it also holds true in terms of a general approach to finances, since some aspects of our relationship with money are inherited from our family.<\/p>\n

Have you ever wondered why you tend to be a compulsive spender, or alternatively, why your main priority is building up your savings? Or, why do you always hesitate about investment, to the extent that you miss out on attractive opportunities? One possible answer is that your behaviour on financial matters stems in part from your family’s history with money. So it’s important to take the time to reflect on your own behaviour regarding money, understand it, manage it and change it if necessary, to ensure you are better equipped to handle your finances and investments in the future.<\/p>\n

Your behaviour on financial matters stems in part from your family\u2019s history with money.<\/p><\/blockquote>\n

Avid readers of the articles on behavioural finance<\/strong><\/span><\/a> on myLIFE will know that we are all irrational in one way or another when it comes to managing our money. Our cognitive biases<\/strong><\/span><\/a> make us over-confident, we are swayed by social norms or, more often than not, we put off to tomorrow what we should do today. Given this awareness, while the recommendation to seek the help of an objective and trusted financial adviser holds good, you will have also learned that, at the end of the day, you are the person best placed to know what is best for you and to decide on the best way to achieve your life goals.<\/p>\n

To take the right decisions, you must be able to reflect objectively on the most appropriate financial choices for achieving the life you want. And the first step in this process is take a close look at your past and assess your family’s history regarding money. As well as our values and principles in life, we also inherit a relationship with money. This is passed on to us in our family circle, where we first come into contact with money, and from a very early age, through the reactions of our loved ones to financial issues.<\/p>\n

Socio-emotional wealth is inherited<\/h2>\n

It’s not just material and financial assets that are handed down from generation to generation. The concept referred to by scientists as socio-emotional wealth is also inherited. This specifically includes feelings of influence and control associated with money, as well as feelings of identification, attachment and belonging, which money may play a part in strengthening or weakening within a family unit.<\/p>\n

Take the example of a family business handed down over the generations. Children may have seen how family life revolved around this business, whether by sanctifying its values and transmission through the generations, or depriving them of time with their frequently absent parents, engrossed in keeping the family business running at all costs. How will children who have experienced this behave?<\/p>\n

Relax \u2013 nothing is preordained. Some people may learn to manage their pocket money just like a company’s budget. Their studies, future investments and energy may all be focused on a single goal, to take over the helm of the family business and to make it prosper. Others may react to the absence of their parents with wholesale rejection of the entrepreneurial lifestyle and spend their money on enjoying life. Our aim is not to judge these lifestyle choices, but simply to state that inherited socio-emotional wealth plays a key role in both types of behaviour.<\/p>\n

The good news is that socio-emotional wealth, including a family’s relationship with money, is not set in stone. It may evolve and be adapted, as long as it is first properly understood.<\/p><\/blockquote>\n

The good news is that socio-emotional wealth, including a family’s relationship with money, is not set in stone. It may evolve and be adapted, as long as it is first properly understood. If you want to take control of your finances for the future, you must first take stock of your family’s history with money.<\/p>\n

Learn to heal your money wounds<\/h2>\n

Did your parents always argue about money? This doesn’t mean that you must necessarily be conflicted over spending or investment decisions. It’s possible to make a conscious break with the cautious approach you inherited and to manage your assets more smoothly, taking advantage of the investment opportunities suited to your investor profile.<\/p>\n

Did your parents teach you the importance of self-reliance, action and risk-taking if you want to succeed? You don’t have to apply the same level of confidence when investing your savings. Just because the risks you took in launching your own business may have paid off, that doesn’t mean you are a financial expert who can take similar risks on financial markets without any assistance.<\/p>\n

The key is to take some time for introspection, to reflect on your past in order to decide which aspects of your inherited socio-emotional wealth should be retained, and which are better jettisoned. This process should be a bit like a strategic audit, during which you assess your strengths, weaknesses, past successes as well as errors, with the aim of improving your future outlook on financial matters, in line with your life goals.<\/p>\n

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Parents can choose not to make money matters taboo, and to actively promote their family\u2019s financial education.<\/p><\/blockquote>\n

Once aware of the impact that a family’s history with money may have on future generations, parents can also choose not to make money issues taboo, and actively to encourage and participate in their family’s financial education \u2013 which is also the aim of myLIFE. But it may be more important to teach children to appreciate life’s little pleasures, especially those derived from their own efforts. This may be something purchased with pocket money that they have patiently saved up for months, or holidays spent with their friends and paid for by their first summer job.<\/p>\n

This point is worth emphasising, because many studies suggest that children from well-off backgrounds struggle to appreciate the small things in life. They tend to be blas\u00e9, and believe you can only be really satisfied if you spend a lot of money. This behaviour prevents them from appreciating things they have earned for themselves.<\/p>\n

A small pleasure achieved through your own merit brings greater satisfaction than having it all, immediately and effortlessly. If you take affluence for granted, it can result in outrageously profligate behaviour, focused only on the here and now, without any regard for the effort required to preserve and increase your wealth \u2013 a tip anyone hoping for \u201chappy money<\/strong><\/span><\/a>\u201d<\/p>\n

Make peace with your past to invest in your future<\/h2>\n

There are as many different approaches to money as there are family stories, and each of us must deal with our individual heritage. You can unconsciously perpetuate a certain family tradition relating to money, or you can cultivate a different relationship with money from the one you inherited. However, nothing is set in stone. If you choose to carry out an audit of your family’s history with money, it’s up to you whether to take a new direction or not. The important thing is to dare to face your past.<\/p>\n

So before a first meeting with your financial adviser, do carry out a short exercise and reply honestly to the following questions:<\/p>\n