I have a secret. A financial secret.
I’ve never been a saver. Ever.
I think I learned that behavior from my parents. They didn’t save either. It’s not that they were financially irresponsible. They didn’t save because they were using every penny they had to keep our household going. They wasn’t any money to save. And when we did get a touch of money, a small inheritance, it all went toward taking the family on my parents’ dream vacation of a trip to Disney World.
To be fair, that was one of the best family memories I had growing up. It was August and the weather was sweltering. My little brother whined and complained. And I think my sister and my dad might have even gotten sick. But in retrospect, I had a blast. And it was the first time I ever saw a glimpse of the type of life I wanted to have.
Things didn’t go as planned and in college, I applied for a credit card like most other kids did. It was my very own credit card! And I used it like a credit card. I bought things I couldn’t afford and didn’t need and thought that it would be easy to pay off once I graduated college and had a full time salary.
Well, thank you, Discover Card for extending me credit when I didn’t have the vaguest idea how interest worked.
It took almost 10 years before I finally paid off my debt. And it wasn’t through budgeting. It was because I had a bit of a windfall during the dot com boom. Instead of buying a new car, I wrote a very large check to my credit card company and never looked back. I’ve never had credit card debt since.
I’ll certainly buy things on credit, but I’m always looking for the 12 months-same-as-cash deal and I’m a lot more savvy about the fine print and the terms and conditions.
So how do I keep my son from falling into the same trap? We’re fortunate enough to not have to live paycheck to paycheck. We save for retirement. And we have also been to Disney World a few times. What message is my son getting?
He’s only 5 years old so the message he’s getting is probably “Hey, Disney World is fun. Can we go again?”
But even when we took our first trip with him 2 years ago, we started budgeting money for him. His grandmother had sent him $50 for his birthday to use as souvenir money at Disney. That’s a lot of money for an (at the time) 3 year old. He had no idea how much money $50 was but we made sure that every time he wanted something, we pulled out his money, talked to him about how much he had and how much the item would cost. And when we were done, we were done.
He doesn’t earn an allowance yet but he still gets money from time to time from his grandparents or for special projects around the house. Usually, he chooses to save half of the money and spend half of the money. Sometimes he saves it all and sometimes he spends it all.
In his own words…
When we go to the store to spend his money, I tell him how much he has and as he picks out items, I talk about how much something costs versus how much money he has. We talk about value (one $10 item versus 10 $1 items). And once he’s made his selection, I make him conduct the entire transaction by himself. He hands the money over. He waits for the change. He takes the bag and he ALWAYS says thank you.
While he may not quite get that a dime is more than a nickel even though it’s smaller, we work not only on the concepts of money but also on how money is factored into day to day living.
He’ll often ask me, “Mommy, will we ever be poor?”
I answer, “I hope not. We try to make smart decisions about our money and save so that if something does happen, we’ll still have enough to live.”
That usually appeases him but he’s been asking that question since he was 3. I remember wheeling him through Walmart the first time he asked it. When I explained what it meant to be poor, he said, in the most innocent way possible, “Why don’t we just give them some of our money?”
I love that his heart and mind understands money in the way I want him to right now and I hope he always keeps those questions in his heart. And maybe even finds some new answers.
Today is Teach Children to Save Day, part of the national Teach Children to Save campaign which promotes the idea of building the next generation of savers. For the past 16 years, the program has partnered banks with students for lessons on the importance of saving. So far, the program has reached more than 5 million students. You can get more background on the campaign here.
I was especially inspired by this piece with 5 quick tips for teaching your kids about saving money. I’d say I’m doing at least 3 out of 5!