How Parents’ Financial Habits Shape Kids’ Money Mindset – Lessons from Mellody Hobson

Financial habits often take root in childhood, deeply influenced by parental behavior. Investment expert and Ariel Investments Co-CEO Mellody Hobson recently shared how growing up in a financially unstable household shaped her money mindset. Speaking on The Oprah Podcast, she described how both positive and negative financial decisions made by parents can leave a lasting impact on children, ultimately shaping their relationship with money.

Hobson’s upbringing was marked by financial hardship. Raised in a single-parent, low-income household, she experienced extreme struggles, including eviction and periods without basic utilities. In one instance, she recounted staying in an abandoned building due to financial difficulties. Despite these hardships, her mother sometimes made questionable financial choices, spending money on non-essential items—like Easter dresses—rather than prioritizing bills. These experiences instilled financial anxiety in Hobson but also sparked her lifelong passion for financial literacy and investing.

The financial lessons Hobson learned as a child underline the powerful influence parents have over their children’s money habits. She identified two of the most harmful financial behaviors parents can pass on: poor money management and failing to teach financial literacy.

When parents struggle with budgeting, their children may inherit financial insecurity that persists into adulthood. A lack of structure in managing money can create ongoing stress and an unstable financial future. Another harmful habit is neglecting to teach kids the value of money. Without basic knowledge of budgeting, saving, and spending, children may struggle with financial responsibility later in life. Investment expert Alexa von Tobel also emphasizes the importance of teaching money skills early, as children tend to model their parents’ financial behaviors, whether good or bad.

Hobson believes financial education should begin early and be grounded in real-life experiences. One effective strategy she practices with her children involves giving them a few dollars and taking them to a dollar store. By making choices about what to buy, children quickly realize that money is limited and must be used wisely.

Another eye-opening moment occurred when her children, after shopping at the dollar store, saw a Lego set priced at $189. This real-world lesson illustrated the concept of value and decision-making, reinforcing the importance of patience and thoughtful spending.

Hobson also stresses the importance of using physical cash rather than digital transactions when teaching money lessons. Handling actual bills makes financial concepts more tangible for children, helping them better understand the implications of their financial decisions. Many children struggle to grasp the value of digital money, as transactions made through credit cards or apps can feel abstract.

Open and realistic discussions about money are another essential practice Hobson encourages. She believes money shouldn’t be seen as something to worship, nor should it be ignored. Instead, it should be treated as a tool to achieve life goals. When parents encourage transparent, non-emotional conversations about finances, they help children develop a balanced and practical relationship with money.

Hobson’s personal journey highlights why early financial education matters. Children absorb their parents’ financial habits—both good and bad—and these lessons can shape their financial well-being for life. By fostering healthy financial habits through small, intentional lessons, parents can help their children avoid financial anxiety and gain confidence in handling money wisely.

With financial stress affecting so many adults today, instilling strong money management skills from an early age can be a game-changer. Hobson’s story demonstrates that overcoming financial struggles starts with education and simple yet meaningful lessons—even at the dollar store.