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How your DNA can impact your financial decisions

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Was money a topic of open conversation in your home growing up? You'd be fortunate if it was.

Quite often, the subject of money is not discussed at all in households – or worse, it's a taboo topic that can never be mentioned.

Just as you've inherited biological DNA from your parents, such as the way you look, you have also inherited their financial DNA – the way you think and act around money. It is also shaped by environments you've lived in.

Let's discuss how people and experiences affect your financial decisions.

Biology

Education illustration with mathematical symbols and the human brain in blue

Your genetic code programs how your body functions. That code may make you more susceptible to certain influences and behaviours.

The brain has the highest proportion of genes expressed in any part of the body. Given the brain controls the body, your genes directly affect the way you move, think, feel and behave.

This means your DNA also affects your financial behaviour. In fact, an article published in the Archives of General Psychiatry reported a link has been established between genetics and gambling addiction.

Your brain chemistry affects the degree to which you are obsessive, impulsive and compulsive, which in turn affects your ability to be persuaded by marketing, make and stick to a plan and control spending.

This can result in difficulty in managing your money, keeping track of your finances, paying bills and saving for the future.

Behaviour

Mother and daughter arguing outdoors

An article published in the American Psychological Association linked genetics to behaviour, so aside from the DNA you've directly inherited from your parents, you will have been indirectly "programmed" by their behaviour and the way they talked about and interacted with money.

It's instinctive to model your parents' behaviour, so your experiences growing up will have influenced your reference point for what constitutes "normal" thoughts, feelings and actions around money.

Can you pinpoint any financial thoughts and behaviour that are directly attributed to your parents?

Perhaps your parents bought lotto tickets or scratchies or played poker machines. Perhaps they budgeted, saved and invested their money.

Or perhaps they fought about money, linked money to faith or said disparaging things about wealthy people. To what extent are you following in your parents' footsteps based on learned behaviours?

The clash of what's considered normal can also be the cause of friction and fights in marriages.

Your expectations and assumptions of what's expected may be very different from your partner's. If you haven't talked about it beforehand, there can be a substantial unspoken expectation gap.

Small amounts of tension over time can become marriage breakers. One of the quickest ways to repel wealth is to end a marriage – somehow dividing by 2 leaves each partner with less than half.

Look back to look forward

  • One of the most telling ways to determine your likely fiscal future is to look at how your parents fared financially throughout their lives.
  • If you do what they did then you'll likely end up where they are.

Environment

Your monetary attitudes and actions are also shaped by your environment outside the home, particularly once you've become an adult and left home. This could be the impact of a spouse or significant other, a mentor, a book or a course that you've studied.

What you learn may cause you to question and redefine normal, and sow new seeds, new ideas and new possibilities that expand the boundaries of what you thought was once possible given the financial DNA you inherited.

In my experience, the best way to elevate your potential is to have someone else break your glass ceiling – an intervention or interaction that causes a course correction where that person becomes a catalyst for change to unlock new opportunities and outcomes not previously known or available.

That is, if you can't break through on your own from the inside, seek the help of someone else to break in from the outside.

A family topic

Side view of smiling son writing while studying by father over table at home

Expect your children to follow in your footsteps. They are watching and absorbing the way you're living now, with how you manage your money becoming their baseline for normal. This is your generational legacy and it is critical you set a good example.

If you want your kids to be ignorant about money, then keep them in the dark but don't be surprised if they struggle financially as adults. If you want them to be empowered, then make money something that is openly talked about and include them in conversations at a level appropriate to their age and ability.

If you can help your kids make good decisions, then that skill will be carried through life. How much more mature would your money habits be today if your parents had made the time and gone to the effort to include you in their everyday and important financial discussions? Who will educate your kids if you don't or won't?

Although the way you think and act around money is "set" based on what you inherited from your parents, any shortfall can be more than made up if you commit to learning new habits.

These can help you become more financially attractive and you make a wholehearted effort to pass on those skills to your children so they too can learn habits for a successful financial future.

Steve McKnight is an accomplished investor and one of Australia's most successful business authors and acclaimed public speakers.


Edited extract from Steve McKnight's Money Magnet: How to Attract and Keep a Fortune that Counts (Wiley $32.95), available 1 November at all leading retailers.

Price, M. (2008). "Genes matter in addiction". American Psychological Association, 39(6), 14.

Mandal, A. (2010). Cited in Wendy, S., Gu, Z., Meier, M. & Martin, N. Gambling addiction can be inherited equally by sons and daughters: Study. Archives of General Psychiatry. www.news-medical.net/news/20100610/Gambling-addiction-can-beinherited-equally-by-sons-and-daughters-Study.aspx

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