Our childhoods exert a profound influence on our relationship with money, a fact that is often underestimated. Many of our fundamental money habits are already taking shape by the tender age of seven. Pause for a moment and reflect on this largely unknown yet highly significant revelation. Research from the University of Cambridge suggests that our approach to money is substantially established during this formative period.

Now, consider that most of us were neither socialised nor educated about money by our parents or teachers by the age of seven. I suspect our parents and teachers assumed we wouldn’t have the capacity to understand the topic as children. So, what does this imply for the habits that have already taken root? The likely outcome is that these early-formed habits may not align with what we should aspire to, as they are built on limited money knowledge. 

In essence, many money habits form by the age seven without any guidance from our parents or teachers. As such, those habits are largely bad habits. 

So, why haven't most of us received financial education at such a crucial stage? It's a complex issue. Some parents might feel ill-equipped to educate their children about money matters. Others might assume that children are learning these vital life skills in school, a belief that, unfortunately, is often not validated, particularly as schools are typically assessed based on academic performance rather than their capacity to produce life-ready students. So, it feels like the skill of managing our money is one that falls through the cracks—somewhere between school life and home life. 

Another critical aspect of our childhood shaping our adult money habits is our parents' attitudes towards money. Were your parents spenders or savers? Did they adhere to societal norms of wealth or perhaps they had unique money habits like gambling? 

During these formative years, young, developing minds behave like sponges, absorbing what our parents did with money and what they told us about it. We see our parents each and every day and their behaviour when it comes to money becomes our idea of  'normal.' Children tend to believe and internalise what their parents convey, making learning by osmosis an ongoing process that spans years. 

Take a moment to consider your own parents' money behaviours and think about your current relationship with money. Are there any synergies? Have you ever considered this thought before? Perhaps you've followed in your parents' footsteps, or you've rebelled against their influence by adopting the opposite approach.

More often than not, we unconsciously copy our parents' money habits, even if they are detrimental. For example, accumulating debt and avoiding money talk may seem normal when these are anything but. Identifying unhealthy money traits early can be a challenging task, which is why we frequently perpetuate these patterns.

The issue with adopting these negative traits is that breaking free from them is no easy feat, especially the longer we allow them to persist. If money habits are largely formed by the age of seven, anything after that age is an ‘undoing process’—to rewrite the habits in your mind. Therefore, the older you are, the more undoing work is needed. 

Now, ask yourself whether your parents discussed money openly or if it was a taboo topic. For many of us, the silence surrounding money left us with a sense of shame regarding the subject. It was not a topic of discussion in my household and therefore I too adopted many bad habits in this regard as a young child and into early adulthood. 

The good news is that you are not bound by past beliefs. You possess the power to make positive changes for you and for your children. 

But how can you identify whether your money influence was positive or negative and challenge some of these limiting beliefs? Consider the following:

• Reflect on your parents' relationship with money by jotting down five words that describe it. Then, write down five words that describe your own relationship with money. Is there a connection between the two sets of words? Consider what could link the two.
• If your parents were thrifty and rarely discussed money, engage them now you are an adult in a conversation to understand their choices better. There might have been circumstances you weren't privy to at the time.
• Involve your children in discussions about money, avoiding a repetition of history, and include them in financial decisions. These might include:
  – Grocery store shopping: Allow your children to review an item, for example tomato sauce, and ask your children to assess which one offers better value for money taking into consideration the size of the product and the cost
  – Holiday planning: Involve them in making a vacation spreadsheet and weigh up hotel, flights and other costs. I like to set a vacation budget and my children will try to make everything come under budget. They learn how to juggle money across different parts of the trip and think about where to place value and give extra budget and where to cut back
• Consider changing the language you use when talking about finances with your children to foster a healthy relationship with money, replacing phrases like "we can't afford it" with "I choose not to spend my money on that." 

You may start to recognise less-than-healthy money habits that you need to tweak for your own financial health and to ensure history is not repeating itself with your children. 

Wealth With Sophia also covers tips and tricks for teaching your children about money and empowering them with financial confidence.