Teaching children: budgeting

[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]

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.

[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.

[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

[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.

[deeaimond]

This thread is so apt because... later after work i am going to the bank and .... paying off my interest-charging student loan in full!

I'm so excited. In the last one year I saved up a substantial amt from my salary and I was wondering what i should do with it and it didnt occur to me that i should clear my debt. so silly. After I pay this i'll have not much money left and i'll have to start saving really hard again but at least i know i'm not losing paying money to the bank for nothing.

I have another loan but it's interest free so i will spread that out over the maximum number of years. It's only $200 a month so thats ok.

I don't own a house, or a car. Just 2 bicycles and a Chanel bag. I shop, and use expensive cosmetics and such. I still live with my parents I don't pay rent (but granted its like a... $350 a month mortgage)

I do save alot compared to my peers though. Almost 35% of my take home pay. I could do more though. So that will be my next target.

[TxDoc]

I've always been horrible with money.

That makes two of us Tulip - I can say I'm quite horrible with finances as well.
Regardless of whether I have way more than I can reasonably spend, or just enough - I'm never able to save a cent.
Growing up I was surrounded by more money that we could find a way to spend, invest, or give away (those times are gone unfortunately), while now I just have to work for a living, so to speak - but never in my life I have been able to save or build anything.

Ironically enough, my mother was very good with finances - and still, at some point all of our assets just crumbled. Gone, just like that.
I guess that's why I really don't care anymore. I spent 30 years with my family building more and more wealth - to just watch it all disappear in like a minute with a turn of the winds. The way I see it, it's just not worth the headaches.
Or, I guess that's just my excuse for not even making an effort to save...

On the other hand, the debt burden growing on the younger generations is of concern. When I think of my students, and all the student loans that many of them have to take up in order to graduate... Sometimes I feel as if some of it is our responsibility - as if we did not build enough wealth to secure the future for them, to allow them to begin their adult lives and careers without debt. In a way, when I observe our generation compared to the one before us - sometimes I wonder if some of us have failed to meet a standard as productive citizens.
Our parents provided for the community and also provided for us, and among other things they allowed us to study and graduate and train completely debt free. Conversely, us - or at least some of us - we are failing to provide the same 'protected environment' for the younger generations. In a way it makes me feel like if I fell short on the world's expectations - or maybe just on my own...
I guess I'm not as perfect as I would like to be

[Crankin]

I can relate, TxDoc. I think when you see the younger generation (Gen Y) saddled with all of that debt, it is very dependent on what circles you travel in professionally and where you live.
When I lived in AZ nobody, well hardly anybody, thought of going to a private college out of state. There were no private colleges around. Most people I knew lived at home, worked, went to a cc and then transferred to ASU or U of A. Most took more than 4 years to graduate. Here, you are considered somewhat sub-human if you go to a state school. It's all supply and demand. The private universities here have done a great job of brainwashing everyone, from upper middle class to those with little money for school that you have to go to a private college to be anything. Hence, a lot of kids are saddled with unbelievable debt from this. They think they are going to be "rulers of the world" because they went to such and such university.
When I didn't have a lot of money, I never thought of saving. I wasn't in horrible debt, but I just lived paycheck to paycheck. I think an awful lot of people are like that. On a certain level, I agree with you, because my family had tons of money, too, that was gone in an instant, because of changes in one particular industry and my dad's lack of a college degree. Sometimes we have no control. My dad grew up with servants and is now 86 and is living on Social Security. So, this is why DH and I have been aggressive in investing and saving in the past few years. Despite our late start, we are well on our way to being able to enjoy life when DH stops working. But, I do admit, I was not willing to give up certain luxuries when my kids were young. It all worked out, though.

[TxDoc]

I can relate, TxDoc. I think when you see the younger generation (Gen Y) saddled with all of that debt, it is very dependent on what circles you travel in professionally and where you live.

Yes, this is very true. My experience is limited to observing my students and residents - so what I see is the enormous debt of the student loans for medical school. We have grad students and nursing, OT, PT, RC also on our campus - but I only teach in medical school so I have really no idea what their situation is. The burden of debt on medical students is scary though.

[shootingstar]

True, cost of education is high.

"as if we did not build enough wealth to secure the future for them, to allow them to begin their adult lives and careers without debt. In a way, when I observe our generation compared to the one before us - sometimes I wonder if some of us have failed to meet a standard as productive citizens.
Our parents provided for the community and also provided for us, and among other things they allowed us to study and graduate and train completely debt free. Conversely, us - or at least some of us - we are failing to provide the same 'protected environment' for the younger generations."

My parents made enormous self-sacrifices which I'm not sure alot of parents would make these days. For instance: my parents only went on day vacation trips with family...less than 2-3 times annually. My mother spent very little money on premade clothing for herself. She must sewn 90% of her own wardrobe.

And so on.

Neither hardly ever used a credit card. So hardly any debt from there.

There are some children who are expecting big inheritances from their parent(s) and some are just cruising along. It is of course a big huge mistake to think one's parents will give you the windfall. I think the reason why myself and all siblings have saved money without going to huge debt is because we already know there's gonna to be very little money left for us after nursing home /hospice care bills are paid..when my parents will need that type of care down the road.