Developing generational wealth begins with a mindset.
Because the beliefs and behaviors you have about money have been passed down through generations, impacting your attitude towards saving, spending, and investing.
Understanding the generational money mindset of your family is crucial because it will influence your:
- financial habits
- decision-making
- ability to hit your financial goals
By becoming aware of and, if you need, reshaping your money mindset, you can develop a healthier relationship with money and work towards what you want financially.
What is a generational money mindset?
The way a family thinks, feels, and behaves about/around money is called their “generational money mindset.”
It includes both the conscious and unconscious ways the family thinks about and deals with money through generations.
Many things, like upbringing, cultural influences, personal situations, and societal norms can shape how a whole family treats money.
Types of money mindset
Here are a few common money mindsets that we can develop from our family history:
Scarcity mindset: A scarcity mindset holds that money and resources are hard to come by and limited. They may spend cautiously and avoid financial risks due to money worries.
Abundance mindset: People with an abundance mindset believe wealth and opportunity are infinite. They’re more financially optimistic and willing to take reasonable risks.
Safety and security mindset: Some put financial security first. This leads them to save, budget, and avoid debt to protect themselves and their family.
Growth mindset: Those with a growth mindset use money to improve themselves financially. More eager to invest, take chances, and seek wealth-building opportunities.
Fixed mindset: A fixed mindset commonly holds money beliefs like, “I’m not good with money” or “I’ll never be wealthy.” These limiting beliefs can stunt financial progress and decision-making.
Consumer mindset: People with a consumer mindset view money primarily as a means to acquire material possessions and experiences. This mindset may lead to impulsive spending and a focus on immediate gratification.
Wealth Mindset vs. Poverty Mindset & How Can You Develop a Wealth Mentality?→
Generational money mindset examples
Generational money mindsets do not occur in a vacuum.
Significantly different economic, societal, and cultural realities are influencing them. These behaviors trickle into relationships with other people and how we are socialized about money.
For example, if your parent is a Baby Boomer, their general idea of building wealth would likely be through securing a stable job and getting a home. This cautious approach to money may not be relevant in 2025, where jobs are unstable and homeownership is becoming more of a privilege than a necessity.
Here are examples of generational money mindsets:
Silent Generation (born 1928–1945)
- Mindset: Thrift and savings
- Example: Many members of the Silent Generation adopted frugal habits as a result of the Great Depression and post-war austerity. Saving money and avoiding debt were common practices.
Baby Boomers (born 1946–1964)
- Mindset: Job stability and homeownership
- Example: Baby Boomers often prioritize job security and homeownership. Many pursued long-term careers with a single company and aspired to own homes as a symbol of financial success.
Generation X (born 1965–1980)
- Mindset: Independence and entrepreneurship
- Example: Gen Xers, often referred to as the “Latchkey Generation,” value independence. Some embraced entrepreneurship, seeking financial security through diverse income streams.
Millennials (born 1981-1996)
- Mindset: Experience over ownership, debt-averse
- Example: Millennials are known for valuing experiences, such as travel, over material possessions. Many Millennials are cautious about debt, possibly as a result of the 2008 financial crisis during their formative years.
Generation Z (born 1997–2012)
- Mindset: Financially savvy and tech-driven
- Example: Gen Z, having grown up in a digital age, is often financially literate and tech-savvy. They may use technology for budgeting, investing, and pursuing financial education.
How does our upbringing affect how we treat money?
The way we were raised has a big impact on how we think about and handle money.
This is how it can influence our money mindset:
Family environment
For most people, their family is the first place they get a chance to observe and learn about money. When parents talk about money issues freely with their kids, for example, the kids are more likely to learn how to handle money better.
Role modeling
Kids often act like their parents or other adults who care for them the most. So it follows that kids are more likely to follow their parents’ planning and saving habits if they see their parents doing these things. (Or on the flip side, they won’t know planning and saving is important if their parents never share or attempt it.)
Spending attitudes
A child’s perception of money can depend on how their parents spend and save.
If parents are careful with their money or stress how important it is to save for the future, these lessons may affect how the child acts.
I’m a Gen X and I definitely remember statements from my parents along the lines of, “We can’t afford it,” or “If you really want it, you have to save your allowance.”
While both annoyed me to no end, I eventually caught on that money is not in endless supply and I would have to really think about where mine goes if I had to pay for it myself.
Financial education
How well kids are taught about money – or encouraged to talk and ask questions about it – when they’re young is pretty important.
Kids are more likely to learn about money if their parents talk to them about budgeting, saving, and how important credit is.
Cultural and socioeconomic factors
Cultural norms and a family’s level of wealth both have an impact on how they handle money.
Saving money may be important in some countries, while showing off your wealth may be important in others.
Exposure to economic realities
When kids see their families going through hard times or having good times financially, those events are likely to shape how they think and act.
When the economy is bad, people may become more cautious, but when the economy is good, people may become less strict about spending.
Values and beliefs
Families often teach ideals about money, like how important it is to work hard, be honest with money, or give to charity. These ideas become a big part of how someone thinks about money as they grow up.
Parental communication
Open communication about financial matters contributes to a healthier understanding of money.
If parents communicate openly about the family’s financial situation, children are better equipped to navigate their own finances.
Breaking free from a generational money mindset
Breaking the cycle of bad money habits that you learned from your family is the first thing you need to do.
But you can’t just snap your fingers – changing deeply rooted habits takes self-reflection, education, and deliberate effort. It’s a way to change how you feel about money and leave a better financial legacy for yourself and future families.
Here are some steps to break the cycle:
- Understand your money story: Think back on your upbringing and the family’s financial practices. Acknowledge any limiting beliefs about money you may have inherited.
- Financial literacy: Learn about investing, budgeting, personal finance, and other key financial topics. Speak with professionals or financial consultants to acquire advice on improved money management techniques.
- Define your financial goals: Clearly state your financial goals, both long- and short-term. This could involve paying off debt, saving for emergencies, buying a property, or retiring.
- Start investing: Explore investment options to grow your wealth over time. Understand the power of compounding.
- Open communication: Discuss finances openly with your partner or family. Ensure everyone is on the same page regarding financial goals and responsibilities.
- Challenge limiting beliefs: Identify and challenge any limiting beliefs about money that may be hindering your financial progress. Cultivate a growth mindset. Embrace the idea that you can learn and grow in your financial journey.
- Consistency: Building healthy financial habits takes time. Be patient and stay consistent with your efforts.
Final thoughts
Breaking free from generational money mindsets requires self-awareness and a willingness to challenge established beliefs.
By understanding how your family’s financial history shapes your perspectives, you gain the power to redefine your relationship with money.
Take intentional steps to create a positive financial legacy for the generations to come by adopting healthy money habits and fostering open communication about financial matters.
Keep in mind that the decisions you make today will determine your financial future, not the past.
Updated from Feb 1, 2024
