Allowances. I cannot remember for the life of me if we got an allowance. Somehow what I remember most is that my dad sometimes paid us in candy bars. Not your normal candy bar, the kind you sell for school fundraisers. He would buy a case (or maybe we had some left over). I distinctly remember the ones that had caramel in the inside. If we ever did get paid (even with candy bars) it was for chores we did around the house. Did doing chores and my parents never following through with an allowance teach me good ideals about working, money management, or spending money? Not really.
I started working when I was nine years old. I babysat, cleaned a neighbor’s house, polished their silver, and had a paper route. Yes, crazy to think I did that at the age of nine. I guess I worked just as hard then as I do now. My parents would have me put my earnings in a savings account, so I guess you could assume that they taught me about saving. The problem? My dad usually “borrowed” from my savings account never paying me back. I did not have the best money role models. Kids should be taught about money early on, and not be graced with everything with no knowledge or conversation that money does not grow on trees. Which is why I especially love this article from Slate.com titled: “You’re Doing Allowance Wrong.”
“Spending is about modesty, thrift, and the prudence to shell out (and even splurge) for things that bring kids the most joy while avoiding mindless outlays for plastic junk they will quickly break or forget. Saving instills patience in a world that increasingly conspires against waiting, delivering television without commercials and movies without Blockbuster. And giving is about generosity as well as gratitude for how lucky you are to be able to help others.”
The article goes into depth about giving an allowance, a budget, and a list of things they want or need and let them make the decisions on what to purchase. It means letting them fail. As the article states: “Better now then at age 24…” It teaches critical thinking skills, how to rationalize why one purchase makes more sense than another one. Many adults today do not have these skills. What if we started early on learning these life skills? We have gone away from being a saving culture, instead we spend, and rarely give. If you have kids what are your thoughts on this article + topic?
I am a personal finance fanatic. I grew up poor, and while for the most part my basic needs were met, I look back and never want to live the way we did. Nor do I want my children to live that way. What has that done to me? I have become passionate about personal finance, and how to be careful over what I spend my money on, how I save, and how I think about my future.
Which is what leads me to my blog title. There are a few subjects I think are taboo in our society. We rarely talk about our sex lives, and we rarely talk about money. Yes, we talk in surface ways about money, but never about how much we make, how much we save, and how much we feel most comfortable about having in our savings account. Why is that? I often wonder why it is such a taboo subject. Is it because comparisons make us feel like we are lesser than, or better than others? Possibly. What is funny, is you could live next to a run down home, that gives the facade that someone does not have the finances to keep it up, and maybe they do. Maybe it is just a choice that they live that way.
So, about checking accounts. Do you and your spouse or significant other have joint or separate checking accounts? I know that I will probably piss someone off today, as I am from the joint checking account camp. When Chris and I got married we decided to pool our finances, or rather I should say to be politically correct, we decided to pool our debt. We did not have much cash when we got married, we just had debt. Credit cards, school loans, you know normal twenty-something-year-old debt. Not too crazy, but still money we owed. So maybe it was easier for us to pool our finances, and make financial choices together. Would we have thought differently if we had plenty of cash in the bank? I hope not. Why? It works for us. We talk about everything, we discuss our purchases, and it all makes sense to us.
Yet, I know that a lot of couples fight about money. They fight about debt. Having separate checking accounts work for them, and I want to know why.
As more and more people around me have babies it makes me think about kids more and more. There are so many things to think about: car seats, cribs, bassinets, strollers, names, kinds of diapers, bottles, the list goes on. As they get a bit older the list shifts a bit to other very important ideals that a couple should, for the most part, agree upon in how they want to raise their kids.
When I recently came across this article on how to teach your kids about money it made me think, wow everyone should be starting very early in how they want to approach money with their kids. I was talking to a colleague just the other day. Yes, I can tell you this now, and it is possible that I have no idea what I am talking about! We were discussing how expensive it is to raise a kid these days, let alone thinking about paying for them to go to college. I paid my own way through college. I was in a work/study program, and I worked outside of that too. My parents could not afford to pay for college for any of their three kids. While it would have definitely been nice to have it paid for, it taught me a lot about money, about growing up, and about taking responsibility for my decisions. I probably would not have worked as hard to learn if I was not paying for it.
Now that does not mean that I will not help my future kid(s) out with college, but I want to do it in a way that helps them grow, learn, and understand what their decisions mean financially. Too often, I think parents write a check and walk away, and that does not help their kids learn about life. The above article starts with ages 2-5 on how you can use play money and play “store” together. Oh how I remember the plastic cash register I had when I was little. I loved watching the coins come down the side like it used to at the grocery store. Toy cash registers today I believe have scanners and credit card swipers. Oh well. Parents could still teach the value of money, and include a bit about how someone has to pay for what is put on that credit card.
Start young. Whenever we begin having kids I know I will start young too. I think conversations about wants, needs, and money help kids know and appreciate all that they have in the world. It does not have to be in a way of shame, but from a place of abundance and gratitude.
Some of you that follow my blog know that I have a passion for money management. My passion evolved because I wanted to make sure that I truly understood what we were doing with our money, and that I trusted the information we were using to make our money decisions. I cannot do that in a vacuum. It means I have to read, learn, and ask the right questions. This recent Daily Worth had an idea that resonated with me:
“Money management is like cooking, or fixing a car or anything else you can learn,” says Myers. “But if you tell yourself you’re simply not good at it, you’re less likely to take steps to learn the basics you need to be financially healthy.”
I have to agree. While I am not a cook, I would feel comfortable calling myself a baker. I learned over time how to work with dough and understand why a recipe called for baking soda rather than baking powder. I am still learning new things about baking, and enjoy trying out new recipes. The same goes for money management. As the world changes and evolves fast, we have to shift and adjust with it, and be aware of whether the decisions we have made in the past continue to serve us, or if we need to adjust our financial allocations based on changes in the market, and our lifestyle.
Some individuals work with a financial planner that they trust, others rely on friends and family, and some look to books, the news, and the Internet to help inform them on what decisions they make regarding their money. Whatever step you take, I encourage you to continue to learn. Maybe you are young and a beginner, or you might have a family and are looking now at how to save for your children’s future, wherever you are in life, there is always something to learn that can benefit you today and in the future.
I recently read this discussion called: “Why Kids Should Chip in for College.” It is a discussion I support. I had to pay my way through college and while it was tough, it was good life experience for me. It starts the reality that life costs money in a big way. Maybe you do not have to have your child pay for school completely, but they should contribute. If not, what happens when they graduate? Will you continue to pay for their life? How have you helped them to prepare for the next stage of their life where they have to pay rent, utilities, food, car payments, insurance, etc.?
These days with the zillions of technical devices we have at our finger tips, the ease of access to credit cards, and dwindling checking accounts, those graduating from college will have a harder time balancing the cost of their wants with the bills they will now have to pay, with the amount in their paychecks. Do we need to shift the balance of what we are doing for kids today? Have we taught them the value of the cost of life itself?
I remember a class we had to take in high school. I cannot remember what it was called, but what I do recall is that we had a section on stocks. We were split up into teams and we had to decide what stocks we were going to buy together based on the research we did on the company, the rate of return, and many other factors. I cannot remember how well my team did, but it sparked a new thrill inside me of something I had never been exposed to – investing. What I find interesting about this class that we were required to take, was that we never learned about the basics of money: balancing a checkbook, living within your means, interest rates, deciding between how much you can make saving versus paying off debt, and saving for retirement. These aspects of personal finance would have benefitted us way before we were ever at a place to actually invest in stocks.
I wonder how many college graduates know those core personal finances ideas. Are most college graduates savvy with their social media profiles, and maybe how to create their next app, but not ready for the basics of paying their rent, and saving for their next plane ticket? Are we coddling kids today, rather than finding ways for them to be set up for success?
What do you think? Are we preparing today’s college graduates for their best financial future?