My great-grandmother Emma kept a $20 bill, neatly folded in thirds, pinned to her girdle. Grandmother Millicent steamed the stamps off envelopes for reuse. Mom gave me $500 to open a Roth IRA after college graduation, and still extols the virtues of doggy bags at restaurants.

These matriarchs have shaped my attitudes towards personal finance to this day. My thriftiness borders on eccentricity: I've squirreled away rainy-day money deep in a drawer, and I've cut open bottles to get that last dollop of hand lotion.

Research shows that what our parents teach us about money lays an important foundation for our future financial fitness. Some experts suggest that the lessons start even before we can speak: When babies accompany mom or dad to the market, they take in early impressions about commerce. And while there is no specific research that examines a mother's influence on financial literacy, conventional wisdom is that her advice goes a long way. According to my unscientific Facebook poll, the most commonly cited lesson from mom is: Money doesn't grow on trees.

Teach Your Children Well


"My mom taught me that money doesn't just appear in my account," says Alice Louise Kassens, an associate professor of economics at Roanoke College in Salem, Va. "She told me I have to earn it, and should never rely on someone else for it." Alice adds that her mother also taught her the value of investing early in her life to get the maximum benefits of compound interest.

Jennifer Peng, a schoolteacher in Brooklyn, N.Y., echoes that lesson. "My mother taught me the lesson: Less out than what comes in and you're good to go," says Jennifer. "Also, without a Roth IRA and 401(k), I might as well not be her progeny."

While anecdotal evidence indicates that savings and investing behaviors are often influenced by mom, empirical data shows that other areas of our personal finance profiles are shaped by our parents with meaningful results, too. A recent set of studies by Michal Grinstein-Weiss, an associate professor at the University of North Carolina School of Social Work and a faculty fellow at the Center for Community Capital, showed that what parents teach their children about money early in their lives will affect their credit scores and loan delinquency rates as adults.

Grinstein-Weiss and her co-authors asked 2,398 adults in low- and moderate-income households to rate how well their parents taught them about money management growing up using a three-point scale (low, medium, high). Their findings demonstrated that adults who reported having the most parental teaching had higher credit scores than those who had little or no teaching and less credit card debt. In a similar study, the group also had lower risk of delinquency and foreclosure compared to those reporting lower levels of parental financial teaching.

"This is an important set of outcomes," says Grinstein-Weiss. "These studies suggest that prenatal teaching early in life can help lay the foundation for better financial outcomes as an adult. Loan performance is very important in keeping a home later in life. Experiencing delinquency and foreclosure has both negative consequences and imposes lasting constraints on future financial health. Similarly, credit scores are a gatekeeper on the road towards building wealth, and impact many things, including housing and employment."

But some of the kitchen-table wisdom passed down from mother to child may have less to do with making money, and more to do with making a life.

"My mom stressed and demonstrated the difference between being rich, or having a lot of money, and being wealthy, like having nice things and having what you need and being happy about it," says Jimmi Hagan, a computer programmer who lives in Sonoma, Calif. "She taught me the importance of enjoying life. We never had much money, but we had horses."

Catherine New is a reporter with Huffington Post Media Group for DailyFinance.com.

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Steve

Im confused the article states that "adults who reported having the most parental teaching had lower credit scores than those who had little or no teaching. So if our parents don't teach us about money/finances we will bw better off? Im I missing something because if this is true we should not do what her mother did to her which she praises.

May 09 2011 at 11:07 AM Report abuse rate up rate down Reply
nail25

This article singly talks about mothers. Fathers are parents too, and can (and should) have just as much impact on the education of their children. How about an article talking about their influence on our kids?

May 09 2011 at 10:40 AM Report abuse rate up rate down Reply
rrarizona

Does Obama know "Money doesn't grow on trees?" Someone please teach him this lesson quickly, please!

May 09 2011 at 8:05 AM Report abuse +3 rate up rate down Reply
1 reply to rrarizona's comment
bigwave48

go to three trillion dollar war, if you really want to know where all the money went

May 09 2011 at 2:19 PM Report abuse rate up rate down Reply
expressflowersh

The visit was useful. Content was really very informative. From www.expressflowershyderabad.com

May 09 2011 at 7:01 AM Report abuse -2 rate up rate down Reply
expressflowersh

The visit was useful. Content was really very informative. From www.expressflowershyderabad.com

May 09 2011 at 7:01 AM Report abuse -2 rate up rate down Reply
Sherry

Steaming stamps off envelopes for reuse is a crime!

May 08 2011 at 11:27 PM Report abuse -1 rate up rate down Reply
James

It called the Obama tree

May 08 2011 at 10:49 PM Report abuse +1 rate up rate down Reply
1 reply to James's comment
bigwave48

If you have any interest in where all America's money went, google. THE THREE TRILLION DOLLAR WAR

May 09 2011 at 2:21 PM Report abuse rate up rate down Reply
landskp4u

I disagree with the title... I make my living on the fact that money does grow on trees. I get paid to plant the tree, rake the leaves off the tree, fertilize it, cut it down and sell it for firewood....ka ching!

May 08 2011 at 10:00 PM Report abuse +3 rate up rate down Reply
badman5150

Somebody needs to tell Obama.

May 08 2011 at 9:47 PM Report abuse +4 rate up rate down Reply
Franco

I thing everyone should play with the stock market, especially the game called, "Easy Come, Easy go."

May 08 2011 at 9:19 PM Report abuse -2 rate up rate down Reply
1 reply to Franco's comment
Franco

Shut up!

May 08 2011 at 9:20 PM Report abuse -2 rate up rate down Reply