Understand the genetic inheritance you received and you will understand how to budget

Try genetic fingerprinting to see if budgeting is even possible for you

Would it make you feel better to know that you are genetically predisposed to spend money? Imagine if you could tell your spouse, “Don’t blame me for our family’s budget deficit. My genetic makeup forced me to buy the new TV, SUV, and Club Med vacation.”

Experts say you might naturally be a big spender.

I recently interviewed genetic expert Stephan Siegel on my radio show, Goldstein on Gelt. (He’s a fascinating speaker, and you can view the interview at our YouTube channel here: http://www.youtube.com/user/BuildingWealthVideos ). The professor explained how, if we were very good at genetic fingerprinting, we could know whether a person would be likely to be a saver or spender. His research included studying twins who were separated at birth and grew up in different families. It turned out that regardless of their respective household’s budgeting habits, the twins closely resembled each other’s spending habits.

Though the academic studies of Professor Siegel are fascinating, I couldn’t have witnessed this phenomenon more clearly than in a meeting I had recently. One of my financial planning clients asked me to sit with her mother to review her situation. Before I explain the mom’s situation, let me explain the daughter’s plight. After analyzing the daughter’s income, investments, and spending, we determined that she was spending almost double what she could afford. In fact, in a tear-filled meeting, I explained to her that if she didn’t implement drastic budget cuts, she would wipe herself out in less than ten years. The daughter is having a very hard time accepting this diagnosis, though every month she is getting closer and closer to financial doom.

Whether Mom taught her daughter bad money hygiene or whether the daughter just received a financially challenged genetic inheritance, I’m not sure. But when I looked at the mother’s situation, it was even worse than the daughter’s. In fact, it looked as if Mom was going to be depending on charity in under five years if she couldn’t control her spending. However, she closed herself down when presented with the idea of making a new budget. “I need new shoes, some blouses, and a new coat,” she said. “Everyone’s entitled to that, aren’t they, Mr. Goldstein?” What could I say?

Financial planners not only manage money; they try to coach clients to make wise decisions.

As a financial planner, it’s not my job just to crunch numbers. I need to gently teach clients how to manage their whole financial life. Unfortunately, it seems that some folks refuse to learn the lesson. Since I’m no expert in genes, I don’t really care if bad financial discipline is due to nature (genes) or nurture (what your parents taught you). Seeing the exact same spendaholic symptoms travel from one generation to the next, though, certainly has caught my attention.