Teaching children: budgeting

[tulip]

I've always been horrible with money. It stems from my family never having any, growing up on food stamps until I was 12, and general anxiety about it. My mother never has never been in debt, but she's never had any money, either. My father has been in debt, but he always manages to lurch out of it, and then into it again. So I swing from being being in debt to just being broke. Fun!

Mind you, I have two houses, a relatively new car, three nice bikes, and a fabulous kitchen...so things could be worse. Now I just have to pay for those things.

Since January, however, I've come leaps and bounds with some education, a new philosophy, and some very useful software. For the first time, I have money in the bank and I'm not spending it. I have a plan to pay off my debt, and I'm working the plan. I have a budget and it's incredibly powerful, but I'm not "starving" so I know I won't "binge."

Of course I wish I had done things differently in the past, but all we can do is start where we are.

[limewave]

I do remember getting an allowance at a young age. I also remember, around 8-10 years old, my parents taking me to the bank to open my first savings account. We did Christmas Club through the bank: every month we added a little bit of money so that at Christmas time we had money for gifts. I still have the same Chirstmas account.

I feel like my parents did a good job of teaching us about money. They did help us out, but everything they did was working towards financial independence for us. For example, when I was 16 my brother and I shared a car that my parents bought and paid for the insurance--but we had to pay for gas and repairs. Then when I was 19 years old, I bought my own car and my parents paid the insurance, but only for the first 12 months. That was also when I got my first job and first apartment!

Only once, as an adult, I had to ask my parents to borrow money. It was to buy a computer to start my own freelance design business. It was an interest-free loan. I had a small monthly payment I had to make and then he also got a percentage of the profits from my free-lance jobs until he was paid in full. Hopefully I never need to borrow money from them again!

[redrhodie]

I got my first job at 12, working in a church rectory. My mom was the church secretary, so I'd come after school and work, and we'd drive home together. I didn't get an allowance once I had a job. I didn't work steadily, but had summer jobs and babysat regularly through high school.

After high school, I took a year off, and got a full time job. I lived at home, and my mother charged me rent. Her philosophy was that if I worked, I contributed. At the time, I couldn't believe I suddenly had to pay for what had always been free, but in hindsight, it was really smart and kind on her part.

There were times we really struggled, briefly on welfare, when my mom couldn't find work. We got government assistance for heat. I don't remember ever being on food stamps, but I do remember standing in line to get free cheese. We often didn't have a car, and when we did, it was never a reliable one. Going to the grocery store was a nightmare. My mother would rarely ask anyone for help, even for just a ride to the store. I think she was embarrassed, and too proud.

When I went to college, I lived at home to save money, and I didn't have to pay rent since I was in school. My dad chipped in more at this point, but I still maxed out my student loans. My mom and brother helped me pay them off after I graduated, which I'm still amazed about, and grateful for. As soon as I could afford to pay the balances myself, I took over their share. I ended up paying them off years early. I was lucky and had a good job. I helped her financially when she needed it, but it always made her feel bad to accept money from me. She never did have a good relationship with money on her own, but somehow, she taught me well.

[Crankin]

ShootingStar, I think the main thing with the thought that "poor kids" are deprived is that they are educationally deprived, or not encouraged to do well in school, for a variety of reasons. That certainly wasn't the case for you, as it was a core value in your family. And, I guess it could be debated that lack of exposure to art, music, travel makes you deprived. I had exposure to art as a kid, but music? Forget it. My dad played a lot of jazz at home, but that was it. No one played an instrument and no one traveled. My family even made fun of those who traveled . It took me a long time to get over that one. My family had the $ to do all of these things, but it just wasn't imporant to them. I didn't feel deprived, though, even though everyone else took music lessons and traveled. When one of my kids signed up for music lessons at school, I was amazed he had talent. It definitely comes from DH's side. Then, when DS #2 stated he didn't want lessons (by this time we had mooved to a community where everyone is required to take lessons in elementary school) in middle school, my friends really tried to tell me I was depriving him and I should make him. I assured him I had lived without having music lessons. And the music teacher in his elective class really did not believe him, when my son told him that he couldn't read music or play an instrument, especially since his brother was so talented. It was such a core value in the community, this was seen as odd.

[Melalvai]

I'm mostly glad that we are (still) struggling to make ends meet. I'm worried that we won't be able to buy a house and save for retirement, but we're proud of being debt free (except for student loans) and I feel really good each month about saying "I can by this and this, but that will have to wait until next month". It's the second half of that sentence that makes me feel good.

My daughter gets a small allowance, which mostly she saves. We buy everything she needs and I make sure she has spending money (either from her allowance or I'll just supply it)--but despite that she herself has ample money she is SO worried about money all the time, and she hates parting with it! I love her dearly but I don't know how she came to be such a tight a$$! She's been that way since she was quite little. We aren't like that, neither are we the opposite, I'd say we used to spend a little more than we ought and now we are a lot better at saving--but still not unwilling to part with money like she is.

[sfa]

I think my parents did a great job teaching us about finances and budgeting. I was one of six kids and Dad was a teacher, so there was never much money around (like Tri Girl--I lived in hand-me-downs, even wearing my brother's old clothes). We got allowances starting at age six--50 cents base pay, then every year on our birthday we'd get a five cents a week raise. So at my peak (around age 11) I was bringing in roughly $1.00 a week. They did this entirely to teach us about budgeting--Dad ran a "store" at home, where he'd keep the extra school supplies and we could buy them out of our allowance (and he'd sell them one crayon at a time!). I was always the saver in the family--I remember going on one family vacation and I was the richest kid in the family, with $21 saved up.

Once we hit middle school, we were expected to earn our own money--allowances stopped at age 12, so I babysat and delivered newspapers for a while back when kids used to be able to do those things. As soon as I was 16 I got a job at a garden center. We got checking accounts along with these jobs, and Dad taught us how to balance the checkbook (odd now that I think about it--Mom always was the one who paid bills at home, but Dad was the financial teacher). Throughout high school I was expected to pay for everything myself except school books and supplies and any activity done with the family. But clothes, entertainment, any activity I did with my friends, gifts for others, etc.--I paid for all of that. We each had to pay a portion of our college costs too (whatever the Financial Aid people said was our contribution, my parents asked for at the start of each year to pay the bill, so I'd earn money all summer and hand it over in August, and we all took out the maximum allowed amount in student loans), and all of everything in college (same as high school, only now paying for books, supplies, and all of our "household" stuff like toiletries and laundry supplies.). And absolutely no cars--they were clear on that from when we were little. We could use the family car when it was free once we could drive, but we had to pay for gas and insurance ourselves.

Dad did some formal education with us about investments and how interest rates and mortgages worked, but it was always a one-time thing so I remember that he talked about it, but when the time came for me to deal with these things I couldn't remember most of what he said. I got into a bit of trouble with credit card debt--that was one thing not on his radar when we were young because people pretty much didn't have credit cards, and if they did, it meant they were financially pretty secure. When I was in college the cc companies started with the easy credit stuff, but it still wasn't out of control until much later. My cc debt problems happened after having a second child and not enough money to pay for child care, so we were using credit cards for daily expenses.

More than anything, my parents taught by example--they lived extraordinarily frugally and taught us to do the same. I have to admit that as stressful as it is to have DH unemployed for nearly two years now, I'm very proud that we've been able to cut expenses enough that we aren't behind on any of our bills and haven't taken on any more debt.

[shootingstar]

More than anything, my parents taught by example--they lived extraordinarily frugally and taught us to do the same. I have to admit that as stressful as it is to have DH unemployed for nearly two years now, I'm very proud that we've been able to cut expenses enough that we aren't behind on any of our bills and haven't taken on any more debt.

That's excellent sfa. Hopefully a job will materialize after the big job chase. Look where it got me: in a different city (that's colder ) but I can't complain about a job that gives me great benefits and personal time.

Melavi: better that your daughter tends to save rather than the contrary. My manager, who is a single mother vents abit that her live-at-home daughter in her final year of university and who makes good money working part-time, doesn't save hardly any of her money. Now that, would be abit worrisome, as a parent.

So for me to have 4 bikes, given my family background, sounds excessive. But not really, it can't beat the cost of a car and operating it.

But all of this probably explains why I can live somewhere where 80% of my possessions are still in a different province, elsewhere at this time. I live VERY simply right now.
In fact, when I move to my new place, I still won't have a couch. I ended up buying a new computer first when I moved out here. My next load of stuff: is more clothing, some of my artwork to adorn place... There will not be a TV for awhile, if any.

So use your imagination...

[jelee1311]

Growing up we had money but my mom grew up very poor and made sure we understood the value of it. When I was 9 I got horsebackriding lessons that I eventually paid for myself by cleaning out stalls. When I got my first horse I had quite a nice stall cleaning business and paid for my saddles and more lessons. Ilearned about hard work and I learned how to save money. Unfortunatly somewhere after I became an adult I also became compulsive about shopping. I do better now but saving still eludes me,much to my husbands chagrin. We are trying to teach our 9 year old about money and its not easy. Kids these days are so entilted and as a parent its sometimes hard not to fall into that trap.I make my daughter save half her allowance for a future car. She knows how to save but she also wants the instant gratification of shopping. I usually make her wait at least a week if she wants to purchase something for $10. Then we discuss why she should get whatever it is. I also have her get rid of toys,clothes,stuff before Christmas,and her birthday and she helps decide what family we adopt every year for Christmas. I think the best thiing we did together about spending money recently was go to a local shopping district and we each could only spend a 10 dollar bill. We had fun looking and making decisions on how to spend money and she came home with $6

[shootingstar]

ShootingStar, I think the main thing with the thought that "poor kids" are deprived is that they are educationally deprived, or not encouraged to do well in school, for a variety of reasons. That certainly wasn't the case for you, as it was a core value in your family. And, I guess it could be debated that lack of exposure to art, music, travel makes you deprived. I had exposure to art as a kid, but music? Forget it. My dad played a lot of jazz at home, but that was it. No one played an instrument and no one traveled. My family even made fun of those who traveled . It took me a long time to get over that one. My family had the $ to do all of these things, but it just wasn't imporant to them. I didn't feel deprived, though, even though everyone else took music lessons and traveled.

I appreciate your perspective as an experienced teacher for several decades.
It's just irritating that there is still the tendency to equate money (lots of it/enough of it) with becoming a "better" person. Tell that to a priest who has taken a vow of poverty.

Yes, not only parents valued education as a mechanism, providing tools, to help oneself and to also help others better..but it does run through our entire extended family, cousins, children of cousins, etc. I know my sisters are working patiently with their spouses to pass on this value together to their children also.

[Irulan]

For those of you that wish you had better budgeting skills, Dave Ramsey's Financial Peace is a really terrific program/class/book resource. The fact that he's a compassionate Christian may turn some of you off, but his teaching on finances ( how to budget, get and stay out of debt, what/how to save for) is priceless. Highly recommended. His radio show is very good too.

[tulip]

For those of you that wish you had better budgeting skills, Dave Ramsey's Financial Peace is a really terrific program/class/book resource. The fact that he's a compassionate Christian may turn some of you off, but his teaching on finances ( how to budget, get and stay out of debt, what/how to save for) is priceless. Highly recommended. His radio show is very good too.

DR + YNAB = awesome!

[shootingstar]

That's great jesteele with that $10.00 max. spending shopping spree and time with daughter. she'll probably remember that.

[Melalvai]

For those of you that wish you had better budgeting skills, Dave Ramsey's Financial Peace is a really terrific program/class/book resource. The fact that he's a compassionate Christian may turn some of you off, but his teaching on finances ( how to budget, get and stay out of debt, what/how to save for) is priceless. Highly recommended. His radio show is very good too.

+1 to that. I am someone who DOES get turned off when things turn out to be a soapbox for religion, but I find his book & radio show are fine. He doesn't shove his religion in your face. He shoves his financial lifestyle in your face. That's what I want.

[Crankin]

I guess it's good that a lot of you like a particular plan, but I don't think I could follow someone else's directives, knowing myself...
Frankly, the key for me was 1) having a spouse who has the same thinking about money/saving/etc. because so many people are with a partner who has totally different ideas on this topic and that is a real problem; 2) frankly what helped us the most was knowing that DS#1 was going to be going to college in X # of years. That gave us a date to be debt free by. A couple of stock option sales (not huge amounts, but enough) and DH getting a job with bonuses and other savings options for him, based on his level in the company at around the same time was what pushed us to use the added income wisely. We were living on his income without using any of mine for a few years before I quit work to go back to school. Even though we knew we could, it was scary to give up the safety net of my teaching income, which was quite good at that point. During those years, I used my income to pay for DS's college, buy him a car, and make other major purchases for our home, as well as invest. I felt really good that I could do this for my son and family. Our goal was to have him graduate without debt, and if he listened to our teachings, he would be set. Of course, going to a state school helped.
So many (all?) of my friends did not work when their kids were young. I had to. While, it's true that my personality would not have done so well being a stay at home mom, I think I might have liked to work part time. But, I made the choice because I was not willing to give up what I already had and it was important to me that my kids have the same things I had as a kid. Somehow, it all worked out, and now I can do what I want.

[Crankin]

Well, even though I know I had a "privileged" upbringing, two things have influenced my thinking about the subject of "deprived" kids. First, many cultures put a huge value on education and that seems to be irrespective of financial status. Those were the parents that would actually believe you when you told them that there was something that needed to be addressed. Secondly, passing these values down is hugely important and something one needs to work at. It doesn't just happen.
When my youngest son dropped out of college to join the Marines, it was probably the worst thing that could have happened to me; not because of the military, but rather for the fact he was leaving school. It was like a slap in my face to my values. Now, after 7 years, it seems possible that he actually realizes that he might need that degree.
My DH's family gave their kids absolutely no encouragement for education. In fact, they were all told they were "stupid." DH finished college after we were married, with one kid, a business, and a house we had just bought. If it hadn't been for me and the encouragement of my parents, it never would have happened.