Money Lessons We Didn’t Learn From Our Parents

I’ve come to realize that managing money and achieving financial independence are essential skills, but they’re not always taught growing up. Like many people, I didn’t have a lot of open conversations about money at home. Finances were considered a private matter, something we just didn’t talk about, even within the family.

Looking back, I understand that cultural norms or even a lack of financial education might have played a role in why those conversations didn’t happen. But I also see how that silence can do more harm than good in the long run. Without early exposure to money discussions, it’s easy to step into adulthood feeling unprepared. That lack of understanding can lead to poor financial decisions — ones that create stress, fear, and long-term struggles. I’ve felt some of that firsthand, and I’ve seen it in others, too.

That’s why I believe it’s so important to talk about money early and often. Being open about finances doesn’t just build knowledge it builds confidence and puts you in control of your future. We all deserve that kind of freedom.

As a mother, I’ve seen firsthand how powerful communication and even silence around money can be. The way we talk about money (or don’t), the emotions we attach to it, and the language we use can leave a lasting impression that shapes how our children approach their own financial lives. Our attitude toward money becomes part of what we pass down, whether we intend to or not.

By shifting the way we talk about money within our families, we have the chance to support our children’s independence, as well as set a healthier, more empowered tone for future generations.

Changes with new generations

One survey found that 52% of Americans never talked about finances growing up, and 25% were taught that it isn’t polite to discuss money.¹ Yet, 83% of Americans believe it was their parents’ responsibility to teach them about money; and at the same time, 31% of parents never talk to their children about money, likely because their own parents didn’t discuss financial matters with them.²

However, this cycle of silence may be changing. About 28% of millennials (born 1981 to 1996) and Generation Z members (born 1997 to 2012) consider themselves an “open book” regarding money, compared to only 13% of older generations.¹ Younger generations generally believe that financial transparency can help improve their chances for succeeding in areas such as building wealth, negotiating salaries, and investing for financial independence.

Having even a basic understanding of financial concepts like saving, budgeting, and investing, can better prepare us for making informed decisions. It sets us up to recognize the value of more complex strategies such as compound growth with investing and maximizing deductions on taxes.

Benefits of discussing money 

Learning about money has numerous benefits that can positively impact your life and your children’s lives — both now and in the future. It equips us with essential life skills that contribute to our overall well-being and success.

• Independence: Financial knowledge can empower us to be independent and prepare us for managing our own finances in adulthood. This is especially important for girls and women, who can often face unique financial challenges throughout life. Discovering the complexities of finances can spark interest in entrepreneurship, encouraging creative thinking about how to earn and manage money.
• Goal setting: We learn the importance of setting financial goals and working towards them, gaining a sense of planning and achievement rather than the thrill of spontaneous decisions that might set us back financially. Learning about money can help with understanding the differences between good debt and bad debt as well as the importance of living within means. For instance, saving, budgeting, and distinguishing wants versus needs could become second nature when taught young.
• Financial confidence: Young people who learn and talk about money early on may be more comfortable managing it later in life. It helps remove fear or mystery around finances. Financial education can boost confidence, a feeling of being more capable of handling money-related matters and making smart choices such as investing wisely. We can also gain a sense of responsibility and accountability, which encourages thinking carefully about spending and saving.

Lessons to learn

Growing up in a household that didn’t discuss finances means potentially not learning how to manage cash flow, invest in the stock market, save enough for emergencies, plan for taxes, create an estate plan, or buy the appropriate insurance. All of these skills help with building a comprehensive financial plan that can provide a roadmap for how to achieve life goals.

Here are six simple steps to follow for creating a financial foundation:

1. Savings for emergencies: Life is unpredictable. Whether it’s a medical bill, car repair, job loss or last-minute travel plans, emergencies happen. Many people don’t realize the importance of having 3-6 months’ worth of expenses saved for unexpected situations. Having your own emergency fund means you don’t have to rely on your parents, partners, or friends if something goes wrong.
2. Eliminating debt: This is important for younger people because the financial decisions made early in life can set the tone for decades to come. Focus on paying off smaller debt first and understanding the difference between accumulating good debt and bad debt.
3. Managing credit score and debt: Understanding how credit works, how to build a strong credit score, and how to manage debt responsibly isn’t always discussed but is crucial for financial health.
4. Funding a retirement plan: Time is one of the greatest advantages a young person has when it comes to building wealth. The earlier you begin saving, the more opportunity your money has to grow through the power of compound interest. Even modest contributions in your 20s can grow into a substantial retirement nest egg over time. Aim to maximize your contributions and take full advantage of any employer match, as it can significantly increase your savings. You can choose between pre-tax retirement accounts (like a traditional 401(k) or IRA) and after-tax options (like a Roth 401(k) or Roth IRA). Roth contributions are made with after-tax dollars, but all the growth, income, and gains can be withdrawn tax-free in retirement. By starting early, you give your investments more time to grow, which may potentially enhance your financial security over time.
5. Negotiating salary and raises: A lot of people never learn how to negotiate their salary, missing out on significant earnings over a lifetime. While it may feel intimidating at first, developing this skill early on can have a lasting impact on your financial situation.
6. Minimizing taxes: Learning about tax brackets, deductions, and strategies to minimize taxes legally is often overlooked but can save thousands of dollars over time. In addition to understanding how taxes work, it’s equally as important to find ways to reduce tax impact. For example, contribute to tax advantaged accounts and maximize your contributions to 401(k) accounts, IRAs or Roth IRAs. Consider the tax treatment of your investment income. Qualified dividends and long term capital gains are taxed at a lower rate than regular income. Consider investing in stocks or other assets that generate these types of returns rather than those that produce income, which is taxed at ordinary income rates.

If you’re not comfortable having direct conversations about these important financial steps with family members, you can be creative in how you approach them. For instance, commenting on a TV commercial for credit cards and how they can be detrimental when not used properly or pointing out how grandparents are able to travel often in retirement because they saved enough money while working.

Strategies for building wealth

Once a financial foundation is in place, it can be built upon with more complex strategies. Let’s look at investment management and tax planning as examples.

Typically, investing inherently comes with risks. A well-crafted financial plan can help you understand and navigate your risk tolerance with confidence. Your ability to take risks may depend on your cash flow needs and overall balance sheet. By keeping your funds invested long-term, your odds can be higher for experiencing potential positive returns. The extended time can help you capitalize on compound interest. Additionally, understanding the value of a diversified portfolio is crucial for managing volatility and avoiding the pitfalls of trying to “time the market” to increase returns.

Tax planning is a crucial component of a financial plan. There are many strategies that could help reduce taxable income in your working years, including donating to your favorite charity, selling stocks that have decreased in value, or maximizing retirement plan contributions. When it comes time to take required minimum distributions (RMDS) from your retirement savings account, excluding Roth IRAs as of 2024, you have tax-saving options such as making qualified charitable distributions.

Moving forward

It’s never too late to learn — or teach — money lessons! Seeking professional, experienced advice could potentially aid in your journey towards gaining knowledge and working towards financial independence. When surveyed, 75% Americans who work with an advisor said they believe that they will be financially prepared to retire, but only 45% without an advisor felt the same.³

From Baby Boomers to millennials, individuals and families are seeking knowledge and guidance from financial advisors. Millennials are just doing it sooner. While the average millennial said they hired an advisor for financial guidance at age 29, Gen X members did it at age 38, and Boomers did it at age 49.³

Mercer Advisors can provide comprehensive wealth management solutions to your entire family for multiple generations. If you haven’t introduced your family members to your wealth advisor yet, feel free to reach out to set up a meeting now.

Not a Mercer Advisors client? We would be happy to help you and your family connect the dots of your financial life, with integrated financial planning, investment management, tax planning, insurance solutions, and estate planning. Let’s talk.

¹ “62% of Americans don’t talk about money according to new Empower research, and their silence may come at a cost.” Empower, April 19, 2023.
² “Americans think parents should teach kids about money yet many don’t.” CNBC, April 6, 2022.
³ “2024 Planning & Progress Study.” Northwestern Mutual, April 2, 2024.

Mercer Advisors Inc. is a parent company of Mercer Global Advisors Inc. and is not involved with investment services. Mercer Global Advisors Inc. (“Mercer Advisors”) is registered as an investment advisor with the SEC. The firm only transacts business in states where it is properly registered or is excluded or exempted from registration requirements.

All expressions of opinion reflect the judgment of the author as of the date of publication and are subject to change. Some of the research and ratings shown in this presentation come from third parties that are not affiliated with Mercer Advisors. The information is believed to be accurate but is not guaranteed or warranted by Mercer Advisors. Content, research, tools and stock or option symbols are for educational and illustrative purposes only and do not imply a recommendation or solicitation to buy or sell a particular security or to engage in any particular investment strategy. For financial planning advice specific to your circumstances, talk to a qualified professional at Mercer Advisors.

All investment strategies have the potential for profit or loss. Changes in investment strategies, contributions or withdrawals may materially alter the performance and results of your portfolio. Different types of investments involve varying degrees of risk, and there can be no assurance that any specific investment will either be suitable or profitable for a client’s investment portfolio. Diversification does not ensure a profit or guarantee against a loss.

Mercer Advisors is not a law firm and does not provide legal advice to clients. All estate planning document preparation and other legal advice is provided through select third parties unaffiliated to Mercer Advisors. Tax preparation and tax filing are a separate fee from our investment management and planning services. Mercer Global Advisors has a related insurance agency. Mercer Advisors Insurance Services, LLC (MAIS) is a wholly owned subsidiary of Mercer Advisors Inc. MAIS provides individual life, disability, long term care coverage, and property and casualty coverage through various insurance companies. For Mercer Global Advisors clients who wish to purchase insurance products, MAIS has entered into a non-exclusive referral agreement with Strategic Partner(s), where the Strategic Partner will provide necessary services relative to the marketing, placement, and servicing of the insurance products, including without limitation preparing and presenting illustrations, supporting the underwriting process, assisting with the completion and execution of applications, delivering policies, and servicing in-force business. MAIS and the Strategic Partner will be listed as either “agents” or “co-agents” on the policies. While Mercer Global Advisors does not receive a referral fee, Strategic Partner receives a percentage of the commission revenue. MAIS and Strategic Partner do have a revenue sharing agreement.

Certified Financial Planner Board of Standards, Inc. (CFP Board) owns the CFP® certification mark, the CERTIFIED FINANCIAL PLANNER™ certification mark, and the CFP® certification mark (with plaque design) logo in the United States, which it authorizes use of by individuals who successfully complete CFP Board’s initial and ongoing certification requirements.