Are your kids learning about finances the hard way or the easy way?
I remember it well. The little green booklet that I’d carry into the local branch of the savings bank, with my grandparents’ Christmas money or some such, all ready to save up for some far flung future when I’d be able to buy Something Important.
The wee booklet was received by the teller like a benediction, and after passing it through a machine that typed on it (TYPED!) it was returned to me fresh, newly updated, bearing the magic words “with interest” and I could watch my wealth passively grow.
Of course, in all the time I was at school it grew by about a dollar but hey. I knew it was growing, albeit slowly, I knew what savings were (they were imaginary) and I knew about personal finance.
I was set for a life of financial management.
When I left home I went boarding and my income of $108 a week (this was quite some time ago) was broken up like this:
$100 – rent money.
$8 – everything else.
Oh you can imagine the fun we had in those days. Still, it was Hamilton after all.
And then I went flatting.
Suddenly I had to budget. I had a monthly bursary payment that only came in every quarter, I had rent to pay, power, phone. Occasionally someone in the flat would buy food. Oh and I had a car which consisted mainly of repairs stitched together with what meagre earnings I could afford and then some.
At one point I bought a fridge because the flat needed one and while we couldn’t afford to pay up front we could certainly buy one on tick. The never-never. Just a few pennies a week for ever more. Honestly, I must have paid for that fridge three or four times over and STILL they wanted more.
The problem was I really had no idea how to manage money. None whatsoever. I’d never had to. I’d never seen Mum and Dad do any more than write out cheques (ha) to buy groceries.
Not once had anyone sat me down and talked about overdrafts, about income, income tax, about credit cards and about budgeting. I knew I had to save special event money but who had that? My grandparents had inconveniently stopped sending me birthday money about the time that they died so my one usable piece of financial management (put the money in a savings book) was useless to me.
It took several years of being terribly poor, of hiding from the fridge police and some really awful jobs before I got on top of the whole thing and even now I look over my shoulder expecting the landlord to come banging on the door about my rent.
Kids today don’t have a clue either, and that’s on us. If you have kids it’s vitally important you teach them all the important stuff in life. How to make a decent cup of tea. How to bring you breakfast in bed. How to be polite to strangers. How to whistle, but above all else, how to manage their money.
Start by not hiding your own finances from them. Help them learn by showing them what you do. I get my kids to sit in when we do the accounts each month so they can see us managing our money sensibly or what passes for sensible in our household.
When we were saving for a holiday we go the kids involved so they could make the call – do we go out for pizza or put the money into the holiday – and they not only loved it, they learned from it.
If we don’t teach them I’m not sure how they’re going to learn and frankly I’d rather they didn’t learn the way I did. The hard way is no fun at all but if they don’t know to value the money they earn there really is no other way to do it.
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