Tuesday, December 2, 2008

Teach Your Children Well

Tip #35 - Teach Your Children Well. If you are like many Americans, you learned the three "Rs" in School - Reading, Writing, and 'Rithmetic. You probably also learned social studies and science. You may have even learned how to sew or cook or type. What you didn't learn about was managing money. Very few schools teach money management. And many parents don't know how to manage their money. And even of those who do, very few pass on that knowledge to their kids.

So many children graduate high school and spend their allowances or their money from part-time jobs and don't save anything. Then they go on to college and go crazy with their spending or worse yet, rack up some debt. Then they get their first job and spend what they earn without saving anything. Then they get get into a marriage with debt or and or no savings. And whose fault is it? The child's? The school's? The credit card company's? Or the parents'?

The burden of teaching your children about money falls with the parent. And if the parent doesn't know how to manage money, then s/he should enroll the child in a class about how to manage money. One does not expect a child to know how to read until he is taught. Nor is one expected to know how to write unless he is taught. And one doesn't expect a child to know how to add unless he is taught. Well, how can a child manage money if he isn't taught?

If you don't know the first thing about money, then take a class. Many community colleges offer basic finance classes. Or listen to some radio shows about how to save or invest money. There are magazines such as Money Magazine or Kiplinger's which revolve around money. There are t.v. channels dedicated to money. There are radio stations that are dedicated to teaching about money. I just stumbled upon a guy named Dave Ramsey who teaches people how to get out of debt and to save money. While the books have a somewhat Christian bent to them, they are full of information about how to manage your money.

After you are confident in your ability to handle your money - how to spend it wisely, stay out of debt, and save for retirement, then you can pass that knowledge on to your children. Start the cycle of good money management in your family.

In Real Life (IRL) - My dad taught me plenty about money. He was and is a wise steward of his money - a great provider and a better saver. He grew up pretty poor. His father passed away when he 10 and his mother worked in Woolworth's to earn money for the family. I can't imagine they were living the good life on a drugstore income. My dad graduated in a vocational technical school for high school. And he did not go on to college. Just looking at that information on paper, it appears that he would not be one to "make it" financially. But then one day he heard about a trade where he could make decent money. So he went to school to learn the trade - it was court reporting or court stenography. He was decent at it - not the top of the class but good enough to get a job.

My dad found a job in court reporting in New York City where he was living and did okay. Then when a colleague of his moved to Suburban Philadelphia for a court reporting job that paid decent wages for a lower cost of living, my dad followed quickly behind him, taking his family with him. While the money wasn't extraordinary, it was above average wages and enough to live a nice middle-class life. With this job came the opportunity to do extra work at night at depositions and other things. By doing this extra work, my dad managed to save a fair amount of money. All the while my mother was a stay-at-home mom.

Growing up, we lived in a nice 4-bedroom house in an upper-middle class neighborhood. We never kept up with the Joneses, but we did have a nice life - the shore every summer, a trip to California in the late 1970's, and summer camp every year. But we did not have designer jeans or the latest clothing fads. We did not eat out extravagantly or buy fancy jewelrey or cars. Instead, my dad put savings away from all of his night work. He gave each of us three children an allowance and taught by example how to be responsible with our money. When we graduated high school, we were all given a car (with a cost up to $10,000). And he paid cash for all three of his children's college educations. By society's standards, we were better off than most. By our neighborhood's standards, we were maybe average.

My parents are now in their low 70's. While I haven't had a look at their finances lately, I am guessing that today my parents are millionaires. They live in a nice house and have a condo in Florida. But, they don't dress extravagantly, nor do they eat in fancy restaurants. It's just not their thing. They live comfortably and share their money with their family.

My father taught me well. I have always looked up to him and how he made himself out of nothing. With no father to teach him, he learned how to provide for his family. No college degree needed, thank you very much. He spent wisely and more importantly lived on less than he earned. I have since taken his example and applied it to my life. While I did go to college (thanks mom and dad!), I started off in a fairly low-paying job. Yet I still lived on less than I earned and put the rest away. I had a nice savings account to show for it when I got married several years later.

Because of this savings, my husband and I were therefore able to buy a nice but modest house in a nice neighborhood. And having this savings has allowed me to stay home with my young children while my husband provided for us. We have already saved over $20,000 for our kids' college fund and over $200,000 for our retirement. We aren't on any kind of list of America's wealthiest families. But we live comfortably and don't have to worry about where we will find the money to pay for a broken water heater. Sure it helped that I got a good start in life - college was paid for as well as a car and generous gifts. But my dad has proven that you don't need a good start in life to succeed financially. Learn to live on less than you earn and teach your children that. And if you get a chance, read "The Millionaire Next Door," you may be surprised at which people you know are the ones who can manage their money. And then try to become one of them. Thanks, Dad!

No comments: