I do not go into the details of our personal finances right now since he’s too young and I don’t want to burden him with things like that at his age. I keep things light. I show him bills but do not let him know how tight our checking account is. I also try to lead by example and try to be vocal when I am making decisions so he can hear my thought process.

He’s pretty content with having to save up for something he really wants to buy and he sometimes brings up points to ME when I’m thinking about buying something. So right now it appears that what I am doing is working well for his age.

(JD- Karawynn is my first choice of your potential staff writers- great voice, easy read, interesting topics)

As a soon-to-be-parent, I am so interested in this conversation. I grew up in a very similar family situation. My question is HOW do you create this culture with your kids?? How and when do you talk about these things? I want details.
Thanks!

I grew up in an educated family consisting of my three brothers, and my artist mom. Money? What money? My mother’s family was wealthy, but she was not. We cruised garage sales, thrift stores and recycled things. We ate healthy, weird food at home. You can be a foodie, and eat at home. You just have to learn how to cook.

In graduate school, I have to admit, we learned the skill of dumpster diving. Well, we didn’t really dive into them, but did keep an eye out for discarded, intact furniture (not couches…I draw the line at couches. Anything cushy…ew). Raising a family on a grad student stipend is a mother of invention.

The only new car I ever bought was totaled in an accident before we’d had it a year. The fates were sending a message.

An amazing example of how to live within your means is my brother, who has managed to save $60K, while making only 20K a year. How? A little at a time, by not spending what he didn’t have to spend. Of course, he chose that lifestyle.

My kids are learning the value of value, although it is a learning process. Money loss is often like a leaky faucet. iTunes is terrible that way, as are coffee drinks, and little impulse buys. It’s small, so it seems inconsequential, but adds up to quite a bit per month, then per year.

Oh, and the thing about kids, books are cheap, carboard and pens good art supplies, game boys are not a necessity. That is all. Grandparents are great for the snow boards, however. Do save for college…so they too may learn the art of dumpster diving.

Too many of us were not educated by our parents in regards to finances, and while not entirely the reason, this is surely a LARGE reason why we lacked the knowledge to avoid ending up in debt and making such silly decisions/ purchases.

I feel that hopefully our generation of GRS readers will be much more comfortable discussing these types of things with our loves ones, as well as re-discovering the lovely culture of thrift.

(… and Yay! Glad you used my father’s day cards..)

I agree homemade gifts and cards DO mean a lot more!

It’s not necessarily unfortunate. Those higher-paying jobs usually involve a lot of stress and responsibility. Why *shouldn’t* that be something to back away from? We don’t have to “prove” anything to anyone. I certainly don’t want a lot of stress or responsibility at work. I’ve had those jobs and absolutely hated them. I’ve discovered that I’m really quite content at a job if I can just work at it from 8 to 5 and then forget about it. That keeps me from making as much as I could, but so what? I don’t want to drive new cars or live in a McMansion anyway.

“Or, instead, you can tell your kids not to bother. That the second or third rung of the ladder is a perfectly decent goal, and you’ll be able to survive there. I doubt anyone actually plans on picking this choice, but it’s the one I think of when I read about teaching children “how to plan meals around grocery loss leader sales”. It’s not that that’s a bad thing to know how to do, but it *feels* defeatist to me. Teach your kids how to climb the ladder instead. Yeah, it’s harder than buying groceries on sale, but it’s also more rewarding.”

I completely disagree. I am 40 years old and have never, ever found trying to climb the ladder at work to be the least bit rewarding. In fact, it took away from the things in life that I *do* find rewarding. Granted, the things in life that I find rewarding aren’t things I could ever get paid to do. I have not particularly enjoyed the career fields I have been in. But that makes sense to me, because if work was supposed to be fulfilling, rewarding, or enjoyable, they wouldn’t have to pay us to do it. Those rewarding things? They’re called “hobbies.” There are about twelve people living on the planet who get paid to do their hobbies. For the rest of us, there are just jobs.

“young adults cannot expect to have the same standard of living as their parents.”

People often seem to think they are entitled to riches and a comfortable life without effort. We grew up getting whatever we wanted and we expect it to continue when we live on our own.

I think this is the cause of the generally abysmal levels of service and terrible attitudes of workers in so many companies now. Everyone thinks they are a rock star and don’t want to put in the hard of the lower people.

Hopefully, the recession and hard times will re-awaken a little bit of work ethic in everyone.

I never realised how much of a financial education I got listening to my father explaining “opportunity costs” and “false economies” and so forth to my mum over and over and over again. In a way I just thought this was normal.

When we got down the hole a bit, I finally woke up to it and kicked our lifestyle into gear. We’re doing much better now, with savings and little debt. (Sorry, student loans AREN’T avoidable for everyone.) Never really had a money talk, beyond a “don’t get into the mess we’re in” sort of thing with my parents. Plus awesome examples of really what not to do for in-laws… My husband points this out, not me, so…

Yesterday I asked her to cut my hair, I figured it would be a good way to save some money. She saw it as a small amount of money to be spending and we did not need to stoop to such levels.

The argument wasn’t really about a haircut it was more about our overall current financial limitations and it took a good 3 hour conversation to get things worked out.

Anyways, this article struck home with me. My wife really is a nice person too, we all have our moments.

I had a credit card, but I always paid the balance in full each month. My parents never taught me about money either, but luckily, my grandfather did. Before I graduated from high school he sat me down and showed me all about compound interest (with real life examples).

Thanks for this post, it’s great!

This is something we *don’t* tell our kids. In fact we tell them the opposite as they go off to college — we say “get an engineering degree, you can make $100,000/year!” and we repeat this so many times, as the justification for going to college at all, and our kids believe it. No wonder they’re shocked when they graduate and aren’t living at the same level as their parents.

What we should be telling our kids instead is that they start at the bottom. Everyone (barring royalty) starts at the bottom. You have to work your way up the ladder to the place where your parents currently are. They’ve been climbing that ladder for 50 years now, and it’ll probably take you nearly as long to get to where they are. All college does is get you through the first couple rungs of that ladder faster.

Or, instead, you can tell your kids not to bother. That the second or third rung of the ladder is a perfectly decent goal, and you’ll be able to survive there. I doubt anyone actually plans on picking this choice, but it’s the one I think of when I read about teaching children “how to plan meals around grocery loss leader sales”. It’s not that that’s a bad thing to know how to do, but it *feels* defeatist to me. Teach your kids how to climb the ladder instead. Yeah, it’s harder than buying groceries on sale, but it’s also more rewarding.

Unfortunately, I seem to find myself constantly backing away from situations in which I could be a stronger earner in favor of the lower wages I do now earn. And I have a masters degree so I could increase my ability and opportunities to earn more.

Thank you for helping us all examine our financial roots. Self-awareness is truly the starting point to financial literacy.

“As a fledgling adult, I had all kinds of unreasonable expectations, not the least of which was that I would coast along with the same high standard of living that my parents enjoyed during my teenage years. Even though I knew, if I had thought about it, that my parents had started out on a much lower rung — I can remember the Formica tables, vinyl chairs, and ancient matted carpets of my early childhood — no one had ever suggested that I would need to go through a similar sort of climb.”

As someone who is very active in the financial literacy movement, I’m absolutely AMAZED at the level of “expectation” that so many young Americans have. Thank you for sharing your story – anyone who reads it can’t help but come away with a desire to re-examine those “imperceptible deep-seated assumptions.” Go you!

1) What we learn from our parents. I’m (lucky?) in that my mom was a single parent, and she was very open about money. From the time I was 9, I used to balance her checkbook for “fun” – I was a numbers geek even then. I used to joke that I learned about negative numbers long before I took pre-algebra.

We had family meetings about how to spend our vacation fund (for two years, we skipped them, and had a pool built instead, with us doing a lot of the yard demo to save money). I used to add the grocery cart contents in my head, so she wouldn’t be embarrassed at the checkout stand with more food than she could afford. We had “school clothes” and “play clothes.” In short, she did a great job of training my sister and I on trade-offs.

My younger brother seemed to avoid a lot of that training. While he has a job in the financial field, he absolutely is the one of the three that tries hardest to “keep up with the Joneses.”

Second: expecting your parents’ lifestyle. This is absolutely the biggest trap my brother has fallen into. He and his wife bought a nice but small house when they had their first kid, in a VERY expensive area. After the second kid, both my brother and SIL decided to move up. What they failed to take seriously was the idea of moving up in size, but accepting less than they wanted in terms of house style. They couldn’t stand the thought of a cheap, ugly ranch house. So they spent more than twice as much on their second house as they had their first (four years later!) because it was the style the preferred, and in a primo neighborhood.

When he got transferred within the year, across the country, they became poster children for the mortgage meltdown. They were underwater, they couldn’t sell it for what they owed, and it stagnated on the market before they sold it 19 months later.

If they’d been willing to move up to a “starter family house” that wasn’t a showpiece, they wouldn’t have ended up in that situation. But their determination to have the house that their parents had (at 38 and 37) really trapped them.

So thanks for your article; food for thought, for sure.

There’s a cultural imperative to *not* talk about money that I think can be damaging. I love the pf blog movement for helping to change that.

My parents, too, gave me “zip” in the way of financial education. My mom taught me how to use the register, but even when I started bouncing checks they just got mad at me; it didn’t seem to occur to them that I needed further guidance. First credit card at 19, had to be bailed out a year later–again, they were angry, but didn’t talk to me about the real dangers of credit. I declared bankruptcy in my mid-20s. I think they were shocked, but again–we didn’t talk about it.

My financial education came in my early 30s, when I discovered PF writers and bloggers. I’m particularly thankful for it now as I go through a divorce. Though my income has been slashed considerably, I think I’m in a better place to handle it than my soon-to-be-ex, who was more of a spender.