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Rochester Local

Talking Dollars and Sense to My Son

child with money & piggy bankMost of my family members and people in our neighborhood lived with limited means. No one owned their own business or property. Very few people around me owned a vehicle.  My immediate family of four lived a pretty impoverished life, although it didn’t feel that way at the time. Through reflection I was able to process just how poor we really were and the lingering impact on my life.

My family members did not demonstrate any fiscal responsibility. They made expensive purchases on credit, maxed out credit cards, and were barely able to pay their bills. Purchasing in excess was a standard practice. Subsequently, the messages I received about money were to buy what you want whether you can afford it or not, and credit isn’t a real thing that has to be paid back.

Lessons about money were taught to me by my great-grandmother who ran an illegal gambling ring known as ‘Policy’ back in the mid-eighties. Yes, you read that correctly. She taught me the power of money (in the most non-traditional ways you can imagine) and how hard it is to come by. She was the first person to teach me how to earn money by paying me for odd jobs. She was also the person who taught me the game of poker as a tween. I can’t make this stuff up, people! When I started earning money, my whole perspective changed. Suddenly, I wasn’t so poor. I made enough money to buy many little things I wanted. Some of my wants weren’t as far out of my reach, as long as I was willing to earn the money.

When I became an adult, I’m ashamed to say that the example of poor spending habits outweighed the lessons of earning. I was in major debt by the age of 19 with credit cards and student loans. After all, it doesn’t really have to be paid back right?? I experienced two of my family members go through bankruptcy (one of them twice), so if push came to shove, I could just write it all off, right?? WRONG!! Making poor financial decisions can possibly have the longest and farthest-reaching impact on your life. Repairing the damage can be extremely difficult unless a big bag of money happens to fall from the sky.

The sum total of these experiences led me to my current career as a financial advisor. Even before that, teaching my son about money was placed pretty high on my Parenting List of Musts. How do you start instilling sound financial values into a child at an early age? How do you teach them about spending, when the use of physical money is rapidly decreasing? Generally, one of the main causes of overspending is that we don’t actually see it being spent anymore. We’re all swiping our sweet hearts out. Lastly, how do you teach good spending habits, while also wanting to give them everything you never had, and more?

I had enough working knowledge of financial management when I started teaching my son, so I didn’t do a lot of research. In preparing this article however,  I looked up a few resources on the subject offered by popular financial sites. I’ll share those links at the end.

In his early years, I gave him everything without much discernment. It’s crucial to me that his life be all that mine wasn’t. I eventually grew frustrated by the quick disinterest and waste that happened. The abundance also created an air of ingratitude that also had to change. Over the last two years, my purchasing habits for him shifted. I decided it was futile to waste money on things he barely plays with or uses. Pretty soon, home is filled with all this stuff that’s hard to get rid of, or has little resale value.

The main messages I give my son are simple:

1. Money is hard to come by.

2. It spends way faster than it’s earned.

3. It’s important to understand your needs versus your wants.

4. Everything costs something.

5. There is a tremendous amount of excess and waste in the world.

He has to earn almost every non-essential thing he wants through completing chores, extra education assignments, piano lessons….. you get the idea. Very few things worth having in life are free. I guess that would be another message, huh?

As far teaching him about spending in a swipe-n-go world, that was a different kind of challenge. Until he was old enough to grasp the concept of using a card instead of cash, I used the traditional method of giving him in-store shopping experiences using physical money.

Then I tried different phone apps where children can earn points and money for completing chores. Most of them are pretty awful and too time consuming. I was thrilled to discover that a company called Greenlight understood the importance of teaching children how to use and manage bank cards. The child gets to have their own debit card and parents fund the account as they see fit.

When he expresses interest in something, he cannot purchase it immediately. He has to wait a week or two and if he expresses interest again, then we have an in-depth discussion about it.  I ask questions about why he wants it.  How much does it cost (of course)? What does he want to do with it? What does he like about it? Does he already own something like it? Does he use or play with that similar thing he currently owns?

You’re probably thinking “What a buzz kill!” But believe me when I say that worrying about having enough money all the time is an even bigger buzz kill.

The result has been amazing so far! He’s very proud of his card. He watches his balance online. He purchased a wallet to hold his card. He understands that he won’t get to buy everything he wants. He comparison shops on Amazon when he wants something. He’s starting to really get the point of “How much is this worth to you?”

Want to know more? Here are a couple of sites that offer pretty good recommendations on educating children about money.

https://www.daveramsey.com/blog/how-to-teach-kids-about-money

https://www.nbcnews.com/better/lifestyle/how-teach-young-kids-about-money-so-it-sticks-them-ncna1023231

 

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