How Dad affects your debt, financial decisions

Research: Father's advice, or lack of it, influences kids' money behavior

If you feel like you control your debt, and not the other way around, consider picking up the phone and thanking your Dad for that sense of confidence.

Debt has a harder time knocking you down if your parents taught you that you control your own life, according to researchers at the University of Arizona, who tracked more than 2,000 college students and their finances for a year.

Parents who "promote the idea in their children that I can manage myself" raised college students who borrowed more responsibly, says Joyce Serido, a research scientist at the university. In fact, parents who believe that financial health is not a matter of fate have children with fewer debt problems, she says.

"It's not just about resources, but attitude," Serido found.

A healthy attitude may even translate into borrowing at better rates, and more favorable terms, as a desperate mindset can lead to desperado borrowing decisions.

Dad sets the course on debt
In many families, the primary breadwinner -- often Dad -- is the person who sets the tone for any family borrowing.

"Frequently, but not always, the parent who goes out into the world and earns the money has greater power in establishing the norms around borrowing money, " says Brian Farr, a financial therapist in Portland, Ore., who previously founded an investment management firm and was a member of the Chicago Board of Trade.

He notes that sons in particular look to fathers for cues. "Same-sex shadows do seem to have their own special strength, whether it is father-son or mother-daughter," he notes. That tends to be true "whether it is finances, work life, sexuality or anything else."

"Same-sex parent-child relationships have unique bonds," he says, cautioning that these bonds "can translate into large shadows if the child does not successfully individuate."

Ignoring bills costs next generation, too
Fortunately, good habits don't cost much, and they can pay off for generations.

Parents of any income level who talk about money and display good habits -- like budgeting and paying on time -- can improve their kids' financial future, Serido says.

On the flip side, parents who ignore financial reality can hurt their kids. So if Dad never opened his credit card statements, you could suffer in adulthood.

"An individual who grows up in a family that doesn't pay their bills or avoids bill paying is likely to grow up and be afraid to deal with their own finances," says Kristy Archuleta of Kansas State University.

Never discussing money can be another big mistake that can pave a road to debt.

"Not talking about money at all can do just as much harm in the long run as sharing too much information," Archuleta says, "because children are never allowed to learn what has worked and not worked in managing money and debt."

"When they become adults, they do not know what to do," Archuleta says.

Talking pays off
How you talk about money can mean the difference between financial calm and chaos, experts say.

"The first thing I would say is: Don't be secretive about money," says Farr, the financial therapist in Portland.

"Find ways to talk about money as an ordinary part of life in the house," he suggests. "Take the middle road. Kids pick up that Mom and Dad are really obsessed about money."

Consider tailoring your moves to your kids' ages. Craig Israelsen, a professor at Brigham Young University and a father of seven, says Monopoly can be an opportunity. "That's why we don't take a 35-minute shower," for example, packs more punch when a kid sees his Monopoly cash stash going for a huge water bill, Israelsen says.

And keep things positive. "What's modeled less often is saving," he says, leaving spending as the sole avenue.

Parents should talk openly about good decisions and bad decisions they have made about money and why

-- Kristy Archuleta    
Kansas State University    

With older kids, you might discuss good and bad debt, or how interest works. Kids learn from parents' mistakes, but they also pick up on smart moves, Archuleta says.

"Parents should talk openly about good decisions and bad decisions they have made about money and why," says Archuleta.

So if borrowing for grad school translated into a higher income for the next 20 years, explain that to your kids when they start thinking about higher education.

Dad's advice and your debt
Most people turn to parents or friends first for financial advice, like input on refinancing debt or paying off credit cards, says John Grable of Kansas State University.

"You would hope they would turn to professionals, but most people don't," Grable says.

Dads and Moms tend to rely on personal experience when giving financial advice, Grable says, with all the pitfalls that involves. And interestingly, the less financial knowledge college students have, the more whatever parents tell them -- true, false, wise or foolish -- has an effect, Grable and his colleagues found.

Accurate financial information can pay off more than personal anecdotes. "Students with basic financial knowledge, like what the terms APR and APY stand for," he says, got into less debt trouble.

"It all comes down to knowledge," Gable says. And that's something Dad can encourage, and even pay for.

"If I were a parent sending a kid off to college, I would strongly encourage them to take a financial planning course," says Grable. "It will have a good impact on behavior -- if the student goes to class."

Debt doesn't mean bad parenting
Heavily indebted parents don't necessarily fail on the parenting-skill test, as some might expect because of the stress that often comes with debt, reports Israelsen of Brigham Young. They don't spank more often or yell more, for example.

But Mom does determine how you use your plastic. "If Mom was an installment user -- meaning she didn't pay off the balance each month, but tended to pay the minimum -- then the child was likely to be an installment user," Israelsen found. "If the father was, it didn't show up," he says.

He thinks the Mom-Dad disparity is probably because of the amount of time mothers spend with kids. Mothers have more "shopping moments" with their children, Israelsen suggests, and kids can see their mom using credit.

Farr sees more of a Mom factor in spending than in debt. "Shopping became a social activity," he says, shared by girls and Moms, especially from the 1980s onward. But those mall-going Moms weren't thinking of it as debt.

Tips to break the chain
If you think you might be unconsciously reliving Dad's debt amnesia, or Mom's incessant shopping, try to make things concrete.

"Make your relationship with money very tangible for a while," suggests Farr. "Tracking every dollar you spend -- even for two or three weeks, it's an eye opener."

He says that once people do it for two months or so, they never go back to their old habits.

Visualizing can help, too. "You have to have the mental capacity to picture yourself in a new reality before you can actually move toward that," he says.

Whether your Mom lived in the mall or not, experts say you can separate your financial reality from your parents' financial reality.

"People kind of get stuck thinking they don't have the ability to break free of their parents' gravitational force. But over and over again, I've seen that it is possible to do that and still have a relationship with them."

That's as true for debt patterns as it is for anything else.

See related: Preparing kids for credit card management

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Updated: 11-23-2017