This is a guest post from Andrea, a 29 year-old Licensed Clinical Social Worker, full-time freelancer and single mom paying off over $60,000 in debt. Visit So Over Debt to follow her journey out of financial chaos.
Like any parent, I work hard every day to make sure my son is growing up with the tools he needs to become successful. I make sure his basic needs are met, along with some of his wants, and that he learns to treat others with kindness and respect. I help him with homework and try to make sure his diet is balanced (which is difficult, since he’s the pickiest eater on the planet). One of my constant worries, though, is that I will fail to prepare him to deal with money responsibly.
My concern for my son’s financial future has roots in my own childhood. I grew up lower middle class, with a father who worked a blue collar job (and always had at least one business on the side) and a mother who stayed at home with my sister and me. Looking back, I see all the ways that my parents’ financial choices affected how I would view money as an adult. Despite the fact that my mom and dad were excellent savers and frugal spenders, I ended up with an addiction to shopping and spending that will take many years to overcome.
Wait a minute, you may be thinking. If your parents did such great things with their money, how did you turn out to be so irresponsible? That’s a good question, and one I have spent a LOT of time pondering myself. While I don’t blame my parents for my choices, I do recognize the opportunities they missed to prepare me for survival in the world of first, last, and security.
Here are the top 3 ways my parents raised me to be a financial disaster:
1.They kept their income secret. I grew up clueless about how hard my parents worked to stretch their small income. To this day, I only have the vaguest idea of how much they make in a year. Obviously it’s not a good idea to share your pay stubs with your 6 year-old (unless you want the entire first grade to know your income), but it’s also a disservice to him or her to grow up with no clue how much things cost relative to the amount of money coming into the home.
If my parents had explained to me, even on a percentage basis, how much they made versus how much things cost, I would have learned a lot about the realities of living within my means. When a child lives in a home where discussing finances is taboo, s/he doesn’t gain an understanding of valuable concepts like setting aside money for bills and future expenses, budgeting enough money to make it through the entire pay period, and prioritizing needs over wants. Instead, that child may grow up thinking that money magically appears when you want to spend it, like I did. The result? A potential financial disaster.
2. They didn’t include me in the bill-paying process. Twice a month, my mom got out her checkbook, a calculator, and a stack of envelopes and spent hours at the kitchen table. I knew I wasn’t allowed to bother her during that time unless someone was hurt or the house was on fire, but I never understood what she was doing or why. When I became an adult, I had no idea what to do when bills were due between paydays, for example, or even how to write a check. I sure learned how to swipe a credit card, though!
Kids of any age should be involved when it comes to paying bills and completing other basic financial tasks. They need to see how you interact with tellers at the bank, how you organize your bills, and even how you deal with inaccuracies on your bank statements. I’m embarrassed to admit that I once paid a phone bill that was $200 more than usual because I didn’t realize I could call and find out why I was overcharged. Why did that happen? Because I was never exposed to situations like those until I encountered them on my own.
3. They did my saving and spending FOR me. When I got money for Christmas or birthdays as a kid, I knew it went straight to Mom and Dad. The problem was, I didn’t know what happened to it after that. (Turns out it went into a savings account, which paid for my first car in full when I was 16.) Same thing when I spent money – when we shopped for school clothes, for instance, I couldn’t tell you what we spent. I just picked out what I liked and my mom told me whether or not I could get it.
I know now that my parents had a budget category for everything, from our summer trips to the city pool to the cost of my hideous perms in the early 90s. However, they never gave me money of my own and allowed me to manage it. It would have been so easy to say, “This is your weekly allowance for the city pool. It has to cover admission and lunch, so you need to figure out how much you can spend each day.” Something that simple would have gone a long way in teaching me simple math, budgeting, and doing without when I spent beyond my means.
Don’t Raise Financial Disasters
My parents’ fear of allowing me to mess up as a child resulted in an adulthood where I seemed to make it my mission to mess up in every possible way. My mistakes have been a wonderful teaching tool as I raise my son – I know better than to protect him from anything to do with finances – but they have also impeded me from providing him with the lifestyle he deserves. I’d much rather let him make mistakes now, under my guidance, than send him into the world as clueless about money as I was.
What are you teaching your kids about money, either directly or indirectly? Will they grow up with a sense of what to do when it comes to financial matters?
Jana’s note: If you want to read my answer to Andrea’s question, make sure you read this.