Parenting Children in an age of uncertainty: How do you teach children financial responsibility?

I came from a family that had no economic resources. When I was young and newly married we had income, but no assets. We spent what we earned and more. We bought into the economic message that we should accumulate many things, and that all of those things would make us happy. We obtained many credit cards and maxed each of them out. We made minimum payments on all of them and consequently, never seemed to get ahead. Eventually, we determined that we would have to pay off all the credit cards if we ever wanted to accumulate any assets. For a time, we would work hard in a disciplined fashion to limit our spending. We deprived ourselves of the things we were used to doing such as eating out and going to the movies. We stopped shopping as a form of entertainment or way to kill time.

When we were living in this disciplined way, we generally did not feel deprived or cheated out of much. We had a goal and we worked our plan. We would make progress and almost reach our goal. Then it would happen. We would get to the point that we were a month or two away from being caught up on all bills and it would be either time for the holidays or summer vacation. These became the times that we began to feel deprived. Our thinking was that we were good people and we worked hard. We did not have any despicably bad habits, we had virtue and life was supposed to be fair. Something was wrong with plan to stay current with our expenses. It meant that we not could have what we wanted! By golly, we deserved to have a vacation since we had worked so hard all year long. Our children deserved to have an incredible Christmas. After all, what is Christmas without lots of presents and the joy of the family sitting around the heavily laden table, wearing their new sweaters and ties? Soooooo, being the intellectual giants that we were in our younger years, we talked ourselves into splurging on a great vacation or a wonderful Christmas, and were immediately back in the well of credit card debt. We never learned to tell ourselves no. We were never willing to forgo a vacation or Christmas spending, for even one season. We never stopped and saved, and got ahead to the point of a cash based expenditure cycle. We always worked hard and thought we earned/deserved the things that we wanted. We always believed in fairness, so it was inevitable…….. We were doomed to repeat the cycle.

After my divorce, I realized that I needed to teach myself how to manage my money. I got rid of my credit cards and quit spending money I did not have. I did not have to keep anyone happy or impress anyone by gifts that I gave them. I was able to work and be disciplined and pay off my debts. I was able to save money and live on my cash income. It took quite awhile before I was able to save for a rainy day, but eventually I did. I learned to have a goal-based budget. I would save for a vacation before I went on the vacation and pay for it in cash. I would save for budgeted events and use the credit card for convenience, paying it off at the end of each month. I developed a healthy fear of interest charges on the credit card and have not had a need to pay them in years! Like the phoenix bird, I rose from the ashes of a divorce into a financial discipline and freedom that I had never experienced before.

As a result of these changes in my own life, from my family of origin through my first marriage, I became interested in the impact of a financial education. My family was economically challenged and unstable. As a young married adult (I married at 19), I never had any experience with something that would be called an asset. Through scholarships and working, I completed college, which allowed me to have good earning potential. I easily obtained credit, but was never taught how to use it wisely. I used it to consume and enjoy the things I thought I was entitled to, or just merely wanted to have. I knew that I was moving up the economic ladder since my earnings kept going up. What I did not know, and had to learn through reality-based losses, was that if I did not teach myself delayed gratification and did not learn about money management, I would be doomed to a life of economic limitations and poverty. In my first marriage, I did not have a partner who either understood or embraced the concepts of delayed gratification or money management. Her philosophy was we are good people and we deserve to have these things. We each worked hard, we deserve to enjoy the fruit of that work. It just wouldn’t be fair if we did not have the things that others in our social circle did not have. My first wife had tactical skills, but not strategic vision. While I was with her, I shared this lack of vision and it was very destructive. As it does in so many marriages, financial stress was one of the issues that drove an irreparable wedge in the marriage.

I am older now and have been married for over twenty -five years to a woman who does have incredible self-discipline. I am convinced that her name in ancient Greek means delayed gratification. I now have savings. We have an economic plan, no credit card debt and neither of us believes that life is fair, or that we are entitled to anything. We both believe in hard work, self-discipline, having a game plan that honestly reflects how we want to live and what our values are. Our values are more defined than mine ever were before I met her. I was a floater and lived in the moment. I worked hard and was a good person, but the circle of my life was small.

Having lived with her for a quarter of a century, my circle of life has expanded so much. We have learned that stuff does not make us happy. People and relationships matter more than money, but that money is necessary for safety and stability. We manage our money pretty well now. We had to work hard to learn the information and acquire the skills that enabled us to do that since neither of us grew up with an example to follow. We are certainly not at the top of the heap. Many of our friends do so much better than we financially, but we are happy and we have enough. The question for us now, is how to teach our teenager the values that we have learned to live by. What do we want him to know and believe about money? How do we guide him to find a path in life that makes him happy, allows him to serve and contribute and to reach his potential in a self-directed and self-fulfilling way?

We are convinced that one of the essential skills he needs to learn is the skill of money management. We spend time with him talking about credit, investments, savings and budgeting. But beyond that we talk a lot about self-discipline, planning ahead, saying no to yourself when you are being impulsive (at least most of the time.) We talk a lot about the importance of setting a goal and developing a plan to reach that goal. We talk about saving for a rainy day and having a Plan B. We believe in and demonstrate by our behavior that those who are blessed have a responsibility to give and to care for others.

We are aware that we have no control over how he lives his life and how he manages his money. We cannot guarantee that he will be happy and fulfilled in his chosen career. Our goal is to expose him to the lessons that we learned on our journey, so that hopefully, even though he has to climb his own mountains in life, he does not have to re-climb the mountains that we had to climb. We want him to begin his journey on a level higher than the one on which we started, just as our parents wanted us to begin higher on the ladder than they did. It is also a fact that none of us can individually control what happens in the larger economy. There are no guarantees and life is not fair. That is why it is so important to have survival skills, to be adaptable, to learn to land on your feet, look ahead, and pursue your own goals even in the midst of chaos and change.

As parents, what we believe in is the fundamentals. They are knowledge, effort, self-discipline, strong values and hard work. We believe that these things will ultimately pay off in one’s success.

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2 Responses to Parenting Children in an age of uncertainty: How do you teach children financial responsibility?

  1. co says:

    This is a great article. I have never had a permanent job and my life has been hand to mouth policy. I see my teenagers in college spending their allowance($20) without plan .
    This makes me angry when i have to top up on their fare before the week ends. How do i teach on leaving within their means?

    • Brett Newcomb says:

      I appreciate your concern and your affection for your adult children. You need to begin to think of them as adults and love them and allow them to make their own mistakes. I would encourage you to stop funding their life style (especially in college) with money that you need for your own life style. Let them get part time jobs for spending money. Let them blow it irresponsibly and do not replace the money they blow with your own hard earned cash. Only real life consequences will teach them the lessons you are speaking of. You cannot make it happen, but you can help prevent it from happening. Don’t lecture, don’t preach, don’t rescue. Tell them you have faith in them and love them but you are sure that they will figure out what they need to do. Good luck. Brett

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