Parents with 2 toxic habits raise children who are bad with money: CEO

Mellody Hobson, 54, grew up in a single -party low -income home. His mother Money habits He put it financially anxious at an early age.

“There was simply shortage at all times. We evicted, our phone would disconnect … Once we lived in an abandoned building,” Hobson said about An episode of “The Oprah Podcast” which was issued in January. “My mother would buy Easter dresses instead of paying the electricity bill.”

The misconduct of his family’s money, and not properly demonstrating the value of money for his children, there are two toxic habits, says Hobson, who is now the co-cement of the Ariel Investments asset management firm and published the children’s book most selling “invaluated acts on money” in 2024. These habits can make their children stress chronically by their finances in adulthood

Children can grow to repeat their parents’ bad choices, he added. “If you pay the minimum payment, your child is going to do that,” said Hobson. “If you spend too much, your child will spend too much.”

In the case of Hobson, his mother’s excessive expense was confusing and inductor of stress, and made her feel desperate, she said: “() frankly created a lot of trauma for me. When you are a child, you have no control.

Hobson’s education motivated her to follow a race in finance, he said.

Good habits to teach their children from the beginning include discussing The value of cash And the importance of saving, and putting your money where your mouth is, said Hobson.

Once he gave his children $ 3 in cash and took them shopping at a dollar store, where they had to decide between buying sweets, a consumable good, and an article with repeated value, like a toy. The departure gave their children a shocking perspective when they visited the Lego store later and saw a game for sale for $ 189, he said.

This type of approach is practical and easy to understand for children, Alexa von Tobel, an investor trained by Harvard University and manager of Venture Fund Inspired Capital, He told CNBC to do it In 2024.

It is important to use a “matter of fact” tone by having money discussions, since that helps their children to understand that the cash is “a tool to help you live the life you want,” he added, instead of something that It is worshiped or ignored. .

The use of physical cash in front of their children can also help you, Hobson said, since children can have difficulty understanding the value of a dollar when only a number appears on a screen.

“For the children, it is on a credit card, a phone or squad of a machine, so trying to explain that it works for him (s) super hard,” said Hobson, adding: “Use cash so they can see that It’s finite … and you don’t have an endless amount. “

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