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How to Analyze Your Financial Upbringing

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Studies have shown that most of our financial habits and money decisions that affect our financial health are largely influenced by our upbringing. Your parents largely influence the way you save, spend, or view money.

A quick look at your finances can help reveal your financial health. Your financial health considers your net worth, debt, retirement plans, emergency funds, and several other financial implications.

https://thinksaveretire.com/parents-money-habits/

Why You Need to Evaluate Your Financial Health

It is not out of place to see a doctor for a physical check-up. In the same way, a routine fiscal check is good for your financial health. It will help you make the necessary economic adjustments.  

Here are Three of the Most Popular Ways to Assess your Financial Health

#1. Figuring Out Your Net Worth 

Determining your net worth is the first step in assessing where you stand financially. You can do this by adding all your assets and subtracting your liabilities.

Don’t beat yourself up. It’s completely okay to have a negative balance now. The goal is to write it down and work towards increasing your assets.

Action plan

Your net worth serves as a personal measuring tool that should spur you to take action. Focus on increasing your net worth by 5% to 10% every year. Your net worth is personal so remember never to compare yourself with someone else. 

#2. Take a Closer Look at Your Income to Debt Ratio

After figuring out your net worth, the next step is to calculate your income-to-debt ratio. Calculating your debt-to-income ratio helps you keep your debt under control.

You can get this by dividing your income by the total amount of debt you have. For example, if your monthly gross income is $6,000 and you have a total debt payment of $2,000, your debt-to-income ratio is 30%.

Action plan 

A high debt to income ratio means you need to exercise caution. Experts advise you keep the ratio to 20% or lower. You could pick on a side hustle or take on another job to help you pay up your debts. But most importantly, work on reducing your expenditure.

Identifying how you were raised could help you put things in perspective and set you on track for the future.

#3. Take Budgeting Seriously

If you aren’t tracking where your money is going, you need to start now. It is not enough to save. Make sure you know where every single penny comes from and goes to.

What to Do After My Emergency Fund Is Fully Funded?

Action plan 

Create a budget and stick to it. This might seem time-consuming, but there are lots of platforms offering automated solutions. 

3 Common Financial Upbringings | How They Affect Your Money Habits as an Adult

After evaluating your financial health, it is important to consider your financial upbringing. Growing up, it is natural to look up to your parents and immediate family and want to be like them.

So, it is not unusual for you to pick up the money habits of your parents or guardians. It is also possible to be negatively affected by their money habits.

#1. Little Financial Education

Some parents never saw the need to educate their children about financial literacy and good money behavior. This could be because their parents also never taught them.

Effects 

Adults who grew up with zero financial education end up not knowing how to strike the right balance. They could develop unhealthy financial habits like overspending and undersaving. Others hoard money and live miserly.

Solution 

Seek to acquire financial knowledge. You could enroll in finance courses, read investment books, or enlist the help of a portfolio manager to help you best manage your finances. 

32. Frugal Upbringing

A lot of families fall within the low to middle-income bracket. This means prioritizing the family’s needs over luxuries. It’s not uncommon for kids from such homes to have their requests for expensive gadgets denied or replaced with a cheaper alternative. 

Effects

If you are from a frugal family, you might splurge on wants rather than needs to compensate for childhood luxuries you never had. You might end up accumulating debts to fund this lifestyle. On the other hand, you could also choose to emulate your parents’ financial discipline.

Solution

Analyze your money habits. Are you embracing unhealthy money habits just to make up for your childhood? If you are, you could draw up a savings and investment goal.

You could also get an accountability coach to keep you in check or join groups of like-minded individuals.

#3. Luxurious Childhood 

If you grew up in rich homes, it is easy to emulate your parents’ lavish lifestyle. You even grow up with a sense of entitlement, expecting things to be easily handed to you.

Effects 

If you are from a well-to-do upbringing, there is a temptation to live above your means. You might want to match the luxury you enjoyed while living with your parents. If you are not careful, this could you lead you into debt, especially if your financial situation changes.

Solution

Keep a distance from friends and environments that cause you to overspend. Reduce the urge to splurge; rather, Indulge yourself occasionally.

Final Thoughts

Tracing your financial upbringing may help you improve your future. Take a holistic look at how you were raised, identify harmful money habits you have picked up, and work on replacing them with healthy financial habits.

Image Credit: [Thiago Matos]

5 Essential Business Principles from the Bible

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5 Essential Business Principles From The BibleThe Bible is full of advice on how to handle money. Every business owner can (and should) build their business on these essential principles straight from the Word of God. As you read through these Bible verses and associated principles, ask yourself where you see room for improvement in your own business dealings.

1. Conduct your business with humility.

Be realistic about your human nature. Everyone makes mistakes, and I’d venture to guess you’ve made a few. Humility causes us to listen to our customers, to hear their concerns, and to address their problems. Having a large ego won’t get you anywhere and can cause your business to stumble.

Pride goes before destruction, a haughty spirit before a fall. – Proverbs 16:18 NIV

Does someone not like your product? Give them a refund. Show your customers that you want to make sure they’re getting value for their dollars. In several of my eBooks, I suggest that if the buyer dislikes the book that they send me an email requesting a refund. I want my work to be worth the cost. Don’t you?

2. Be diligent and avoid laziness.

If your job is draining you of your energy, and you can’t seem to work as you should, it might be time to change jobs. Find work that you can be passionate about. But in whatever you’re doing, be diligent. Laziness won’t bring in the money – customers pay for results.

Lazy hands make for poverty, but diligent hands bring wealth. – Proverbs 10:4 NIV

Some practical ways to boost your energy include getting adequate rest to avoid exhaustion, exercising regularly, and eating foods as close to their natural, God-intended state as possible.

3. Be fair and don’t cheat in your business dealings.

Do not have two differing weights in your bag—one heavy, one light. – Deuteronomy 25:13 NIV

Standardized weights and measures were used in Biblical times to conduct business transactions. The Bible here is speaking out against cheating others in business dealings. Both parties – the buyer and the seller – should “be on the same page” regarding a transaction, each understanding exactly what they are to receive as a result of the deal. Selling a product or service? Thoroughly describe what it is that you’re selling. It’s also a good idea to “test” your description by having potential customers ask questions about the product or service before selling it to them. The less questions they have, the better job you’ve done at describing what it is you’re selling.

4. Gather little by little.

Television likes to tell the stories of people who encounter windfalls of cash: business ventures that are overnight successes, lottery tickets that bring in millions, and attic-retrieved antiques worth a decade’s worth of wages. These sudden windfalls probably won’t happen to you – the odds are very much against you. Instead, the Bible teaches to gather money little by little.

Dishonest money dwindles away, but whoever gathers money little by little makes it grow. – Proverbs 13:11 NIV

There are honest circumstances under which one might earn a windfall, but the Bible tells us that our focus should be on earning money little by little.

5. Don’t be timid.

Be humble and bold at the same time. The Holy Spirit can give you power to run your business and self-discipline to manage your time.

For the Spirit God gave us does not make us timid, but gives us power, love and self-discipline. – 2nd Timothy 1:7 NIV

What is it that you’d love to do? In what areas of your business do you need more boldness? If you’re looking to improve your business and your life, make sure you stay rooted in the Word of God. The Bible has much more to say to those looking for help. Take these verses to heart, and seek the Lord. And if you only remember one piece of advice from this article, remember this:

So in everything, do to others what you would have them do to you, for this sums up the Law and the Prophets. – Matthew 7:12 NIV

What are some other Biblical business principles that you think should be practiced?

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Bob is the founder of Christian Personal Finance, a website helping people make more, save more, and give more away.

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Break Out of Your Personal Finance Slump

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This guest post was written by Go Banking Rates, bringing you informative personal finance content and helpful tools, as well as the best interest rates on financial services nationwide. Follow them on Twitter at @gobankingrates.

Personal finance can be very exciting. Unlike most things in life, the results of your efforts are crystal clear. If you’re working hard to battle your debt, you see the little increments of every dollar you pay down in the short-term. Over the long-term, you see the giant leaps you’ve made since you started your plan. The same goes for saving money. The experience of knowing that you have your finances in control can be very rewarding.

Yet, even the best of us sometimes lose track of our budgets and indulge in a little overspending. That’s usually not a big problem, but if you start cutting yourself too much slack too often, you run the risk of negating all the time and hard work you put into getting yourself fiscally fit.

Motivate Yourself Again

If you feel you’re suffering from personal finance burnout, set some time aside to regain your motivation. Whether you’re trying to pay down debt or save money, the key to personal finance is all in your desire and discipline. Once you lose sight of that, it’s very easy to fall back into bad habits that leave your debt spiraling out of control and you living paycheck-to-paycheck.

Matt’s note: Remember… those in the midst of financial slip ups need not be the only readers taking this to heart, others who can benefit greatly are those like myself, who have reached a financial plateau but could take things to the next level.

Ask yourself these questions again. Maybe your motivation has waned because you don’t remember the answers to them:

  • Why are you saving money/paying down debt? Maybe you’re saving for retirement or a house. Or maybe you’re paying down debt to build your credit score or so you won’t have to worry about interest piling up.
  • Why is it important to you? Only you can answer this question and that’s what makes it more special. The reasons are for no one else but yourself.
  • What are your goals to help you get there? Be realistic. If you set the bar too high, you can easily get discouraged when you don’t clear it. Aim low and accomplishing your goals won’t feel very significant.
  • How do you plan to accomplish these goals? This will serve as your guideline to follow as you execute your plan.
  • When do you want to accomplish them? Give yourself a deadline so you won’t put it off too much. Stay disciplined.

Use your answers to these questions to refocus your strategy and regain your motivation. The most important part to personal finance success is to want to succeed. As long as the want is there, the rest should fall in place.

Take Control of Your Money

Just like the way you can see your personal financial successes, you can also see your mistakes. It’s clearly listed for you in your bank statements and credit card transactions. Take these steps to get back into the driver seat:

  • Own your mistakes: It’s never easy to have to look back at your spending binges. It’s easier to just forget them, but you need to face them head on and identify what you did wrong and how you will prevent that from happening again. Analyze your spending habits.
  • Talk to someone: The buddy system works. Find a friend who’s also trying to get their money right and talk about your challenges and ideas. You can try seeking professional help like debtors anonymous meetings or a debt relief specialist if you feel the need. There are many non-profit organizations out there that can help as well.
  • Celebrate your wins: Fighting debt or saving money is about fighting a bunch of small battles that add up to a greater result. Take joy in those little wins and carry that momentum into the next one. It all adds up in the end.

So whether you’re saving cash for a big purchase or trying to pay off debt because of one, remember that money is only a means to getting what you really want. Don’t think about it as little green sheets of paper or just a number you have to monitor. Think of it as one step closer or farther away from your real goal.