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February was National Parent Leadership Month, which highlighted the role parents play in shaping the lives of their children. As a sort of tie-in, the most recent poll in the Get Rich Slowly sidebar asked: “Did your parents prepare you well for financial independence?”
Over 1000 GRS readers responded; the results surprised me:
- 17% of you said, “Yes, they did a great job in preparing me.”
- 17% said, “They did well — I learned the basics.”
- 18% said, “It was okay, but they missed some key areas.”
- 48% said, “What preparation for Financial Independence?”
I, too, fall in that last group, but I guess I didn’t expect it to be so large. It’s great that a third of you folks felt well-prepared to tackle your finances, but it’s incredible that half of us feel like we had little or no preparation at all.
What did your parents teach you about money?
I wanted to know a little more detail, so last week I polled my Twitter followers (both at the site’s @grsblog and my personal @jdroth account). I asked: “What did your parents teach you about money? Anything? Did it work?”
A lot of folks responded to say that their parents were poor examples:
- @MoneyMateKate wrote: My parents didn’t teach me — I taught them! I was paying my own dental bills (no insurance) from age 12 onwards with babysitting dollars.
- @RevancheGS wrote: My parents just taught me that you have to work hard to earn money, and how to write checks. I was on my own for the rest of it.
- @liberryteacher wrote: My parents never had any money, and life was hard. So they taught me by example that that was not a good way to live.
- @mike_strock wrote: My parents gave me money whenever I asked. Needless to say, that wasn’t helpful later in life. I’m learning!
- tcita wrote: My parents taught me absolutely nothing: no chores, allowance, budgeting, spending money, savings — nothing. Though I guess that taught me value of work.
- Via Facebook, Tamara wrote: What did I learn about money from my parents? “Don’t do any of things we did.”
But not all parents fail at training their children about money. Plenty of folks picked up good habits (like searching for a high interest savings account) from the Bank of Mom and Dad. Here are some of my favorite anecdotes and tips:
- Pam from The Turtle Path (a running blog) told me: In junior high, my parents gave me $400 at the beginning of the year (instead of a weekly allowance). They told me I could do whatever I wanted with it, but they weren’t giving me any more money the rest of the year, so don’t ask.
- @betsyatoreilly (who is on the PR team for my book!) wrote: My sister and I got $50/month to buy clothes, etc. I had a lockbox for cash and receipts, and a book to enter items. It worked great. I’m a great saver.
- @Elle_CM wrote: My mom (and grandma) emphasized always saving a chunk of any income you receive. We used to make Saturday deposits at the bank.
- Via Facebook, Cynthia wrote: As kids, if we were at the store and saw something we wanted, my dad would say, “Did you bring your money?” I think this is awesome! (And, in fact, I heard my friend Steve ask one of his kids this very thing last night.)
- On a related note, Courtney told me that she and her husband have an interesting approach when their kids beg for things at the store. They simply say, “It’s not in the budget.”
- @mattwakefield wrote: My dad taught me about the stock market by using a 1/100 scale model of the market (MSFT would be $.28 right now). Got hooked early!
- @OregonCPAs_PR wrote: My Dad has always been adamant about avoiding monthly payments. They seem small, but add up quickly.
- @EverydayFinance wrote: My father insisted on no credit-card debt and said, “Everything in moderation.” It worked like a charm.
- @kingkool68 wrote: My parents printed family checks for my allowance. I could write checks to my parents in first grade! They also gave me monthly statements. I love this idea!
- @studentfinances wrote: My parents taught me that hard work is required to be successful. Laziness is not an option. Time will tell if it worked…
That last comment is perceptive: “Time will tell if it worked.” Even if your parents did try to teach you about money, how can they be sure the lessons were right for you, or that they’ll stick?
Training for tomorrow
I’m curious: How did your parents prepare you for financial independence? What specific things did they do that helped you develop money skills you could use as an adult? Do you plan to do these same things with your own children?
And for those of you whose parents didn’t give you enough training: What do you wish they’d done differently? (For my own part, I wish my mother and father had included me in the household finances once I was old enough to understand. I know they struggled to make ends meet, but they never showed me exactly what the challenges were. They never showed me their income compared to their expenses. Also, I wish they’d given me a consistent allowance and required me to budget my fun with that.)
What was your story growing up? How did it affect how you handle money today?
This article is about Ask the Readers, Kids, Relationships Monday, 8th March 2010 (by J.D. Roth)
Like so many others who’ve become problem debtors at some point in their lives, I grew up in a household where money was ridiculously tight and it seemed like every request for money was an unreasonable imposition as my parents struggled to make ends meet.
There were five kids in my family and my parents flitted between low paid semi-professional jobs when we were growing up. This, coupled with the fact that we all had partial (almost full) scholarships to a private secondary school where peers where significantly richer led to myself and other siblings falling into the debt trap when we hit adulthood in an attempt to buy the happiness we felt we were missing.
I’ve only just cleared debts I started accruing when I was 18 or 19 (I’m 27 now) and I feel like my parents taught me nothing about financial freedom.
They never taught me about credit, APRs, budgeting, saving or other rudimentary areas of personal finance because much of this was irrelevant to them as they were perpetually skint.
I’ve come to realise that while it certainly wasn’t their fault that I became a debtor, they most definitely didn’t provide me with the lifeskills to get myself out of debt. That has been a uniquely personal and painful voyage of self discovery
My parents taught me about a frugal lifestyle. They gave me skills to live like we do today. They really didn’t teach me about money straightforward, but I picked up on their spending habits and I’m glad that I did!
My parents taught me about a frugal lifestyle as well. While at this point in my life I feel like they went a little too far, it was still a good example to set. They also taught me that savings was good and debt, especially credit card debt, was bad. I didn’t get a credit card until I was 21, specifically because I was taught that I never needed one (they didn’t teach me about establishing credit, and why that was important). There were a lot of other things they didn’t teach me (budgeting, etc) but I picked it up on my own pretty quickly. I think most importantly, they taught me to really appreciate what I already have.
When I was in first or second grade, my mom had a board game called “Stocks and Bonds” that we played to teach me and my siblings about investing.
Once I owned a few stocks of my own (circa 3rd or 4th grade), I remember her reading the shareholder statements and putting them in language I could understand so that I could vote my shares.
Only child of blue-collar parents in the 50s and 60s here. Mom was a bookkeeper, dad a carpenter. I got taught basically nothing about money at all. I had a small allowance but that dried up somewhere in my teen years, I don’t remember why or when. However, I never had to hold a job until after I graduated, either. I think my parents’ thinking was that I’d get married and THAT unlucky sod would take care of the finances. I’m lucky I haven’t had a worse time financially - at least I did grow up with an unholy terror of running up a credit card. I’ll be 60 this year and I finally feel like I have my finances under control - though I know nothing about investing (and have no interest in it). I owe no one, and my house will be paid off this December. An okay place to be! :^)
My mom was always the one who took care of the finances in the family– She taught me everything very well, from how to balance a check book to how to pick mutual funds to invest in. She has never carried any credit card debt in her life (she’s now in her mid 60s), and neither have I. She set an excellent example in frugality when money was tight, but knows how to loosen up a little when money is more abundant. I feel very lucky compared to most of my peers, who mostly seem to be totally clueless. Because of her example and the Dave Ramsey books she gave me when I got married, I am in a much better financial position than I would be otherwise.
I think your numbers may be skewed somewhat due to the fact that so many of your readers are more financially savvy than the average person. They probably remember more of what their parents did teach them and they implemented it. Also, your readers are obviously a bit more tech savvy and able to find information via the Internet. That accounts for a lot.
Frankly, I think the last number is probably a LOT larger in reality.
I was taught zero, handed a checkbook when I went to college and given a student loan application. Mom and Dad financed most of the first year’s living expenses but come my sophomore year, I was completely on my own … and I screwed it up badly.
@Ron
I’m not entirely sure that I agree that the relative savviness of GRS readers means that they’re utilising lessons passed on by their parents.
My ‘take’ on things is that a lot of us are savvy because we’ve made mistakes in the past and have learned from them (J.D. was a bit of a debt fiend in the olden days, too!)
Ps. I can relate to your experiences of student finance - it’s so easy to make all the wrong choices when we’re handed the (financial) world on a plate as new students. I for one didn’t think for a moment that I wouldn’t graduate and land straight in an amazing job and untold wealth
My parents never sat me down to teach me financial skills, but I picked up a few things along the way, and some of those things were contradictory:
- Always pay with cash.
- Always buy the best you can afford
- When applicable, ask for a discount, especially if paying cash
- Live frugally day-to-day in order to be able to purchase big-ticket items
- Waste absolutely nothing
- Cook from home
- Grow your own food
- Give generously. This is where the contradiction comes in. My parents gave generously to their children as well. If we wanted anything - anything at all - they would buy it for us. You’d think that would make us spoiled; in fact, it made me really debate purchases. I saw how hard my dad worked, (so hard his knuckles would bleed), so I had serious internal debates about whether I really wanted something.
- Work hard. I learned a lot from my father (a labourer since the age of six) about working hard. But I’ve also learned that it’s necessary to indulge a little bit once in a while or you won’t gain any satisfaction in life.
- Another contradiction. I know that if I didn’t work hard, or if I got myself in a jam, my parents would bail me out. There were no financial consequences to my decision making because I grew up with their safety net. But to me, their approval meant more; money is money, if I ran out, we could find more, but if I lost their approval….. I wasn’t sure how I could ever get it back.
- Most importantly, they taught me that anything is possible. By combining all of the above daily life habits, they’ve taught me that nothing is beyond reach. If I want something, I have to work hard for it to mentally earn that item, and to physically be able to afford it.
Anyone else experience this? I grew up in an immigrant family, and while not looking to stereotype, I wonder if there’s some consistencies with other families.
My parents were good role models in living within a budget, saving for things or events that were important, avoiding debt, etc. But they never really gave me concrete lessons, my Mom tried to talk to me about budgeting right before I left for college which, I think, was too late.
I like the piggy banks that are divided into saving, spending, charity, etc. that are available for parents to use to help their kids understand the various roles and reasons for money.
My parents did a good job. They were very cautious about spending money on frivolous items (my father used to negotiate the price we would pay for a week at the beach until he got it down to $100!). But they were super-generous in spending for things (like education) that were likely to provide a long-term payoff.
Their lessons didn’t take with me. I wasted lots of money until I lost a job at age 35 and learned the hard way. But once the general idea started to click me, I realized that my parents had been doing it right all along.
Rob
My parents taught me basic rules which I try and pass along whenever I can. Living by these rules has allowed me to feel safe and secure about my finances while still having fun:
1. If you cannot buy it in cash (with the exception of a home), you cannot afford it
2. If you cannot put atleast 20% down payment on a house, you cannot afford it
3. Only buy used cars
4. Put away money each week so you can take vacations and see the world
I don’t remember how my parents did it, but it worked, I was always very responsible and started at 12 babysitting and really making a lot of money and paying for my clothes, etc. I play quality financial consumer podcasts now when my sons are around and I know they are picking up information. I heard from an adult friend who has a lot of issues with money that her Mom told her growing up to throw your bills in the air and whichever you catch is what you pay! Wow, sure made me appreciate the parents I have! My inlaws hoarded money and now as one lies dying, the other still does not want to spend anything. I wonder what people are “saving” for at this point. Think you still get lessons even as an adult from parents.
I don’t remember any specific lessons from my parents, but we did have savings accounts that we kept track of ourselves.
I was in college before they felt comfortable talking about their income with me (and even then, I had to guess). They didn’t want my sister and I to think that they were made of money… as we had nothing to compare their income too.
We’ve been attempting to teach some financial responsibility to our 5-year old. She has a magnetic responsibility chart, she gets 5 cents for each magnet she gets - up to 7 a day. If she gets all 7 magnets (they’re for things like clearing the table and picking up toys - to be being respectful), then she doubles her money for the day. But the catch is, we don’t remind her to check in with us to receive her magnets at the end of the each day. It’s got to be her idea. She’s reminded on occasion when we’re at a store and she wants something - but doesn’t have the money for it - then she asks us if she can start her magnets again.
In fact, she just asked us this morning… she must have a goal in mind.
Here’s hoping it works - we haven’t been the best financial role models yet, but we’re working on it.
Thanks for the great content!
Meredith @ Building Character
I think it’s not all what our parents taught us. Plenty of parents teach their children to do what’s right, and plenty of children still get in trouble anyway.
My parents taught me to avoid debt (other than house, and maybe car–but buy used!), save money, and do it yourself if you can. What they didn’t teach us was budgeting money. We were taught to save, but we weren’t taught how to spend. While this caused my older brother–as far as I can tell–to live a frugal life and save, my younger brother–as far as I can tell–would rather spend the money now that no one is watching over him. I fall somewhere between (I spend more than I should, but I also save some).
Several good lessons:
1. Didn’t get an allowance just cause, only if we did chores. Different chores earned different amounts. You never get something for free.
2. Opened a savings passbook account very early on and all gifts and allowance, later babysitting money and part time job earnings went into this account. Seeing the deposits and debits in the book helped me understand the basics of account balancing.
3. Saw my parents take on 2nd jobs when trying to save for extras like family vacations or Christmas gifts. The value of hard work and dedication in action.
4. Never pay for somebody to do something for you that you can do for yourself if you just put in a little effort. My father cringed at the idea of hiring people to help with house or landscaping projects unless it was really something that he couldn’t do on his own. This meant that I became very comfortable with tools at a pretty early age.
Things I wish they’d done:
1. I heard them fight about money a lot, but they never included us in the conversation to explain what the problems were. I grew up thinking that talking about money difficulties was something to be ashamed of and ignored a lot of my own problems longer than I should have.
2. I wish they’d explained the idea of compound interest so that I could understand accruing debt versus investing. And the long term implications of both.
The Good, the Bad, and the Ugly:
The Good- My parents were always very open about talking about money, so it was never a big mystery to me. Although they were reasonably well-off (and my uncle very much so), both brother and sister worked really hard to instill in their kids a sense of working HARD for it. They also took me and my sister down to the bank to start our Junior Savers accounts when we were in Grade 2 (so age 7). They would also never countenance the idea of “Buy Now Pay Later”.
The Bad- Despite this, there was never any actual money to work with. My mum set up an extremely strict “allowance” program with an “allowance chart” where each infraction costs you 25 cents. It wasn’t terribly well tied to our ages, so by the end of the week, most of the time we only got a quarter or sometimes owed her money! [which we could never pay off] This might have worked had there been opportunities built in to earn extra money, but instead us kids just checked out of the process, and wound up asking my mum for money anyways.
The Ugly- My parents had an incredibly nasty divorce when I was still in elementary school, and entered into a long, drawn-out custody and child-support battle that still continues 20 years later. This frequently played out at home in a cobattle for money. If we needed money for a band trip, for example, we’d ask Mum, who would say “Ask your dad, he should pay for SOMETHING!” and if we asked Dad, he’d get mad and go on about how she should be paying more since we lived with her. It was always a mess.
Interestingly, my sister and I each took very different lessons out of the Ugly. In my case, it pushed me to be fiercely financially independent, because I NEVER wanted to have to ask ANYBODY for money ever again. In my sister’s case, it made her… shall we say a tad manipulative? SHe’s taken on the attitude of “Why should I pay for anything if I can get someone else to buy it for me?”
So I would say that financial education in our house was a completely mixed bag.
My parents tried to teach me good money habits by having me write my allowance deposits and debits in a checkbook. But I resisted - I wanted the cash now! To this day I don’t use a checkbook (but I check my online banking almost daily). Overall, they taught me to be responsible and honest, and I have applied those principles to my finances.
I did try to learn from their mistakes. They were (and still are) high earners who spent a lot and had credit card debt. Growing up I realized that I’d rather be frugal than be tied to a stressful job that pays for expensive things. Because of this I have no debt and save for future purchases and retirement.
One item I would like to say in defense of the parents who didn’t prepare us:
There was little that parents could do to prepare their kids for the predatory credit card free-for-all that many of us experienced in college, because that was a completely new gimmick. In our parents time, even up through the 80s, it was hard to get a credit card, you had to have a good job and a bank account and be established, basically you had to earn the credit. There was no predatory credit card lending before the 1990s, so how could they have prepared us for it?
Hi JD, my story is similar to yours. When I was a kid the topic of money was pretty much verboten so I never asked my parents about money. I didn’t receive an allowance but always had everything I needed so it just didn’t seem important enough to talk about at the time.
They did teach me the value of hard work and even at a young age I always had ways to make money for the little extra things I wanted. I’d shovel snow, mow lawns, detail car, put up hay, etc. This is something I DON’T see kids doing today, at least not in the areas where I’ve lived.
I went to college to study math and science and always thought business and finance classes were a waste of time for “serious” students. It wasn’t until I was in my late 20’s that I realized there was a huge gap in my education and went back to school part-time to study business.
I’m doing things differently with my kids. My son’s a freshman in college taking engineering classes but he knows way more about money than I did at his age. My younger kids still don’t get an allowance but we work things out on the barter system - if they want “X” they’re expected to do “Y”. So far this seems to be working, and eventually I’ll give my oldest daughter who is 11 a cash allowance and a ledger for tracking expenses.
My sister and I got the same financial advice/models etc and we are in vastly different financial circumstances. So I think our temperments had more to do with our current situations than what our parents taught us. A lot of it is internal vs external locus of control.
Based on what I see so far, I anticipate the same thing with my own kids. I’ll give them the financial tools they need to succeed, but it’s up to them to use them.
My parents , I’ve learned as an adult, are fantastic with their finances, living incredibly frugal lives for most of my life to send myself and my sibling to college. Unfortunately they never care(d) to share much of this wisdom with me, other than to make sure I didn’t get a job until I graduated high school - telling me that my job was to study and get good grades, they would give me the money I needed. I thus got to college without a good sense of what things cost, and hated how others had to point out how sheltered my upbringing was. So far the internet is making up for what my parents haven’t shared with me, and luckily I haven’t make too many expensive mistakes yet.
My parents taught me very well…it just didn’t always sink in!
I think part of it was my personality (tended toward instant gratification, I suppose, since I was a child). I remember my parents telling me repeatedly to never have a car payment, for example, but I just dismissed the idea, because it seemed impossible to ever save up enough money to buy a car outright when I was earning minimum wage at my after-school job.
My mom also tried to teach me to budget, and to pay off credit cards in full each month. I’m not sure why those lessons didn’t all get through to me at the time. Fortunately, I’ve finally come around to their wisdom!
I don’t recall my parents ever sitting me down and teaching me how to become financially independent. In fact, I can honestly say that my dad was a terrible role model in terms of his actions with and attitude towards money.
I’m lucky in that I was born frugal — I’ve always been a saver, I’ve tried to live as cheaply as I can and take care of my possessions, etc. I’m also lucky in that I’ve married a man who has spent years educating himself about money — although I’ve haven’t ever really been able to invest, he has gone to a lot of trouble to build up a great stock portfolio, retirement account, etc.
My husband and I will be having our first child in May. We’ve already been discussing how we want to teach her about money and living frugally. Here are some of our ideas:
1.) We’ll be giving Alex stock as a birthday present. As she gets older, we’re going to teach her how to research companies so she can select the stock she wants for her birthday.
2.) We’ll be putting a limit on the number of Christmas gifts she receives — my nephew got (I’m not making this up) around 100 presents this past Christmas. No kid needs that much stuff.
3.) We’ve already started a college savings account for our daughter, which we’ll probably move over to a 529 once she gets here.
4.) We’re getting rid of cable — it’s a waste of time.
I don’t really wish my parents had done anything differently as far as my financial education goes — seeing (and sometimes experiencing) the consequences of their bad financial decisions actually probably helped me more than it hurt.
I don’t think my parents ever explicitly “taught” me about day to day money management. They did once give me a somewhat abortive lecture on investing and the benefits of index funds when I turned 18 and was entitled to a small amount of money from a grandparent.
However, in thinking about it, the way my parents lived has had a pretty deep impression on me. My parents were always close-mouthed about their income, I know it had to have been upper middle class level, but still don’t know what it was. However, they way they lived was that the only acceptable debt was a mortgage. They used credit cards, but they were to be paid off every month. Every car we owned was (1) used, (2) paid in full on purchase and (3) used until it became uneconomic to keep running. (One such car was a volvo purchased when my mother was pregnant with me, which they let me use starting with my 16th birthday, and I drove until my Senior Year of College)
I’ve never thought much about their influence, but it’s pretty obvious in retrospect. I’m still young, in my late 20’s, I don’t have an enormous amount of savings just yet, but I own my older (used) truck outright, and my only debt is student loan debt from law school and a mortgage.
My parents didn’t teach me anything about financial responsibility. They never talked once about money to me, nor gave me money for allowance or anything. I did intensive work around the house throughout all my life (cutting the grass at 5, re-shingling the shed roof at 10, laying a brick foundation for the house addition at 12, etc.) I was told that my work earned my shelter, food, and clothes.
I never asked for money and was rarely allowed out to movies or stores, so I guess if there is anything my parents did teach me, it was how not to spend money. They are really bad with money, and once becoming an adult, I saw myself following the same path. I decided that an aggressive action was necessary and I would do whatever it takes to make sure my future children have a better life than I did.
My father once told me that true success is measured when you make more each year in investments than you do in salary. He has not read YMOYL, but he basically imparted the cornerstone of financial independence with that. Reading The Millionaire Next Door I was instantly reminded of my father– an immigrant with a business who is generous but very frugal (whose children were encouraged to get high earning professional degrees).
He started me tracking Exxon stock weekly at age 9, and I learned about stock splits etc. Because he was depression baby, we grew up never ever wasting food (things that rarely went bad were composted) and I know a ton of cheap recipes (and understand the mark-up on sodas at restaurants) and how to cook. He taught to look at the price per unit at the grocery store, and to buy quality where it matters. I also had an allowance– I mostly spent it on candy, but sometimes saved up for larger purchases like a sticker set.
We never had the newest stuff because our college accounts were fully funded (my American mom’s concession to ultra-frugality). Being able to go to any college I wanted without debt when so many of my friends didn’t get to go to their dream school even when they got in, really did make it seem all worthwhile. Especially since so many of my friends had been denied nothing growing up and were completely shocked that they’d have to go to whatever state school had offered them the most money. I had four wonderful years at the happiest college on earth and total freedom to do what I wanted on graduation, even if I didn’t have a shiny new SUV and hadn’t had a ton of Disney World vacations growing up.
My sister is also doing great– 4 years for an engineering degree at a top private school, no debt, high paying job that she loves. She’s living an amazing life but also has fully funded retirement accounts and then some, and just bought a house (20% down, home buyers credit, reasonable price, amazing interest rate, exactly the neighborhood she wants to live in, she’s keeping her housemate and renting the other room to visiting nurses). She’s frugal but she travels and goes out and enjoys experiences. She can do what she wants because our parents made good choices and she continues to make good choices.
In contrast, my husband says he only learned not to spend more than you have, which is a good lesson a lot of people didn’t get, but he didn’t know about saving or comparison shopping. He’d spend all his money– if he had anything leftover before his next paycheck he’d buy random junk. His parents also made him work a minimum wage fast food job in high school so that he would be sure to go to college and take it seriously. I suspect he would have done so anyway.
I wonder how these numbers compare with a similarly sensitive area of life for which parents should prepare their children: sex. It is kind of curious that sex and money are two topics that we treat with such caution when both are a very important and integral part of life in our society.
I wish my parents had been more open about how they spent money. As a teenager my parents would hand my sister and I their credit card to fill the car up with gas. I had a job in high school. I don’t remember what I spent that money on but I know it wasn’t on gas for the car. I remember my parents complaining that we drove too much and gas costs money and blah, blah, blah… When I went off to college they gave me a credit card to spend ONLY on school supplies. I also had a cash allowance for groceries and when I ran out of money I was out until the end of the month. Because I had no sense of how to grocery shop sensibly I would go through my allowance living large the first 3 weeks of the month and live on ramen noodles for the last week. (I still can’t eat another bowl of ramen to this day.) When I felt starved for food I would go to the art supply store and buy art supplies. This somehow fed my hunger. Now I realize I was acting out because I felt deprived. It’s embarrassing to admit. I knew at the time I was lucky to have the opportunities I had but I still couldn’t help but feel like something was missing so I bought stuff and my parents footed the bill. I finally got it when my Mom sat me down and explained how my over spending on this credit card was becoming a hardship for them. We both learned a lesson from this. My parents learned to not give me a credit card that they were paying for and I learned to stay away from credit cards.
Ironically, my parents have been following me on this new path of how I am spending money. I’m learning in the past I was not open with them how I spend money as an adult. It’s bringing more depth into my relationship with them.
I wish my parents had made our household financial situation more transparent because they would often claim, “We can’t afford that.” As a kid, I didn’t understand why that statement seemed so resolute, as if we couldn’t just ‘afford’ it at that time, but we’d NEVER be able to afford it. That attitude imparted a very limited financial view to us kids with the result that all of us have struggled with debt and money mismanagement. We had this “We can’t afford it” mentality ingrained into us and so we squandered our incomes to subconsciously achieve that exact end.
My parents were very poor with zero savings and no emergency fund - they were always scrambling to pay for one emergency (car repairs in particular) or another, or just to pay the bills. Our pantry was often empty towards the end of the week. My paternal grandparents were always bailing my father out with new cars right up until the time I left home and beyond because we would drive ours (which were on their last leg to begin with) into the ground.
When I left home, I was absolutely helpless in all areas of household management. I had no idea how to write a check, how to manage a budget, how to save, how to grocery shop, how to cook, or how to delay gratification until I actually had the cash to pay for something. As a result, I went into heavy debt for years because I just couldn’t equate having money with having security. We all seemed to have so little security as kids and I guess buying ’stuff’ filled up the void.
I discuss personal finance with my kids daily. This may be overkill but I just don’t want them to leave the house being unable to cook for themselves, or not knowing how to grocery shop or not having at least a working knowledge of the basics in managing their money.
Honestly, I wasn’t entirely prepared by my parents. The most I recall was learning to roll pennies up for the bank! As for real sit-down learning sessions - not really. Out of college I came armed with the ability to figure out 15% tip for the waiter. Pretty much. Now, its a different story all together though.
~ James
My parents taught me alot about money, mainly becuase I was willing to absorb whatever they wanted to teach me. My younger sister is a different story.
I have had a bank account since I was a child. Dad taught me about compound interest (both good and bad), debt, saving for a rainy day, and later in my childhood he taught me about the stock market.
My Dad’s main goal was to pay off his house by 50, and he frequently told me how close he was getting in his late 40s. He has since been re-married, and has a homeloan, but that will be gone in a few years. I have learned much more since those days, but I have to thank my Dad for forming the foundation.
My mom always says, “We were poor but you never knew it!” I think what she meant was that she and my dad sacrificed so that my brother and I could have what we needed/wanted. They gave us allowance for doing chores, but I don’t remember much beyond that. When I got older, I lived beyond my means, but kept my credit card debt around $1,000. Nothing too crazy. I ended up having to teach myself about saving when the bad economy really started affecting my husband and I. I scoured the internet and got us completely out of non-mortgage debt (about $7K) and started a savings account with what I had learned. That’s how I found “Get Rich Slowly!”
I learned almost nothing about financial independence from my parents.
My parents were very private w/their lives, so much so that it sometimes felt that I was not worthy of the truth. I had no idea what amount of money my parents made and if I asked I was, of course, dismissed immediately. Political parties were taboo as well. It was only when I was much older (think Gore/Bush 2000) that I found out their respective party affiliations (to my dismay, opposite of mine).
They separated when I was about 11 y.o. and lived this way for at least a year before they explained to me that they were having marital problems!
So, my mom was a spender (mainly on herself, fur coats, new clothes, jewelry) and when I was a kid she would always say, “Gee, I really wish I could afford to buy you all of the things you want.” Trouble was that I really didn’t want anything. I just wanted love and attention (which was hard to get from a mother who worked night shifts).
My father was (is) a saver. But when it was time for college, he decided to tell me upon graduation that I had to pay back all of the student loans! Now he has made sure to let sis and me know to not expect an inheritance; he is remarried and travels.
My parents lived their own lives…and I am living mine with plenty of past financial (and other) regrets. It would have been nice to have even just a handful of guidance along the way, but my husband, kids, and I are working toward a close-knit, supportive family bond.
My parents never had much money but they were very careful about spending. Their honeymoon was their last vacation. They saved everything for my education. If i got “lazy” at paying bills they would bail me out. Because I lived at home until my low thirties, I had a good job and finally, with some money, would be a very extravagant consumer. Running up credit followed by paying it off and then repeat again. All in all I’m still learning the personal finance ropes but I never had a clue about money until my uncle educated me about investing. I spent like crazy over the yeas but thankfully at least I dedicated 20% of my salary to my 401K which built up a nice sum.
My parents’ idea of teaching me about money was to give me spending money in high school and a credit card when I started college.
I don’t fault them for not caring. They just didn’t know any better.
The best lesson was a savings intervention. My dad sat me and my brother down (when we were about 16-17) with our latest bank account statements. We both had jobs since we were ~14, and he made us divide the amount in our accounts by 36 (or however many months we should have been saving) to find our monthly saving average. Mine was about $0.05, and my brother’s was -$2.5. Pretty good wake up call, I think!
This was followed by some examples of how much money we would have if we had saved a little each month, which was especially salivating because we both had large purchases in our minds. My dad probably thought this lesson was lost, because we didn’t change immediately. Eventually though, we found the way.
The lessons I learned from my parents can be summed up with “don’t do that.” For instance, when I went to buy a new car, I asked my mom how much I should put as a down payment. Her answer? “Oh, we used the z-plan as our down payment.” Z-plan is the employee family discount for buying a Ford. They essentially bought it at full price!
Though I will say they instilled in me a good work ethic.
I pretty much learned almost nothing about finances from my parents. My dad thought it was best to “shield” us from what was going on behind the curtain.
I did learn a little about some frugal choices of living. He almost always tried to fix the cars by himself or with one of my uncles for support. He also was the one who cooked for everyone in the family.
I think if I would of had a little more education in finances from my parents I would be in a lot better position now, but “C’est la vie”.
I AM lucky to find a wife who can show some sense into me about finances (in addition to me reading blogs like this of course) on top of what I learned in the past 20 years so things are much better.
My parents did not teach us well about money at all. I have no memory of their budget and my father was very secretive about how much he made. We certainly learned the value of working hard though, and did pay for our own car and repairs and clothing from about junior high on.
They told us they’d pay for undergraduate and then if we wanted to go to graduate school we were on our own. But when it was actually time to go to college, only my oldest sister got her 4 years at a private university fully financed.
I was less decisive about my path (though I did well in school), and by the time I was positive about the degree I wanted I had dealt with enough stress around my father paying the bill on time and fighting about courses that I did it myself. He’d also paid up till then by selling company stock and the company stocked crashed, and then he took early retirement. No way was I doing student loans with him.
When my parents divorced they had tons of debt that my mother tried earnestly to pay off with the sale of their house. My father seems to have basically wasted all his retirement money and lives on social security. My mother works hard and is hoping she can still retire soon (she turns 65 this month) but has very little social security because she worked part-time in lower paying jobs to care for her children.
My husband and I have spent the last year trying to make sure we don’t follow the paths of either of our parents. We have a serious payoff plan and I’m confident we’ll succeed.
Our children are just 6 and 4, and they each get allowance. They get 25 cents a week for every year old they are, and my oldest certainly understands how to save. I love this plan, as when we’re shopping I both tell them that things aren’t in the budget (true) and ask if they brought their money. This stops a LOT of arguments and cuts out on unplanned spending.
I can see using the $400/year when they’re older, or giving them a lockbox and $50 a month and a ledger, both of those seem helpful to me. As they grow older I hope we work out more ways to include them in our finances. And I sincerely hope that we can raise them to handle money far better than their parents or grandparents.
My parents taught me a TON to help me value savings and a frugal lifestyle. They grew up in WWII Germany, so they understood the importance of not being wasteful and getting the most out what you had. My dad taught me all of the key tenets of personal finance - compound interest, true assets (things that gain value), delayed gratification, pay yourself first, etc; I funded my first IRA with money from my first job at 16 and never looked back.
One other key lesson was to buy value - I can still remember shopping for a basketball hoop with my dad; when he realized the fiberglass one, which was almost twice as much as the wooden one, would last much longer, he didn’t hesitate to buy it.
They gave us an allowance and left buying decisions (and their consequences) up to us, which resulted in some valuable lessons. They also gave us access to tons of great books like Millionaire Next Door and my dad’s financial newsletters.
Great lessons, and I’m extremely thankful to them for it. I’m now passing the same values on to my kids.
Honestly, these numbers don’t surprise me in the least. You have to think about the audience that you’re polling - they’re your readers, which means that they have an interest in personal finance, but it’s also a strong possibility (given the subject matter and nature of your posts) that they are interested in personal finance because they have struggled along the way. People who have struggled are more likely to have gotten incomplete, inaccurate or absolutely no advice from their parents on managing their finances - it’s what may have led to their struggles to begin with.
On the other hand, people who have not struggled with their finances - whether because of their personal nature or because of a good education on personal finance - are less likely to seek out a website that will teach them the basics.
So the numbers reflect your audience only, not the broader community, and therefore don’t surprise me at all.
For what it’s worth (since I rarely come to your website, I read the daily email feeds), my parents taught me the basics of finance, and while I haven’t always been perfect (and still am not), I’ve never had any major problems with debt or saving.
You can always learn things from your parents. If they are good with their finances, they can prepare you for the future. If they are horrible with their finances, you can learn from them by avoiding their mistakes.
I was lucky in that I had parents that were relatively smart with their finances. I am now in a position to give my parents some financial help myself.
With my help they are now earning more with a cash back rewards card, 2% high yield savings account, using e-file to pay taxes, and using bill pay for paying bills.
I learned a lot in a variety of ways.
Whenever I went shopping with my mum, she would explain to me how and why she was comparing the unit prices of items, always looking at the “reduced for quick sale” items etc, including what the pros and cons might be (e.g. don’t buy something just because it’s reduced, but do consider changing your meal plan to include a reduced item).
My parents did try to give me a weekly allowance in return for doing work around the house, but as I had nothing to spend it on (living >3miles from the nearest shop of any kind) I had no real incentive. I think I had already become a lifelong saver!
As a teenager, I was given 50GBP a month for clothes. It was made quite clear that this covered all clothes except mandatory school uniform, and that if I ran out of socks and money halfway through the month, tough. I usually managed to save some of that too, and certainly never ran short. What was very instructive was seeing how friends who theoretically were given the same allowance coped. Many of them would blow the whole month’s allowance (or more) on a single item in the first week, and then borrow from their parents against the next month’s. Except that then they would “need” that money, so it would be borrowed from the following month, and so on. I wonder what they would say they “learned” from their parents now?
It was a mixed bag. Growing up we received our allowance as entries in a checkbook that we had to maintain (though cash from babysitting would stay as cash). When we bought something, my parents would pay for it at the store but before we got to take the item we’d have to deduct the amount from our allowance checkbook.
On the other hand, I took dance lessons for many years and towards the end I heard my parents argue about how to pay for them however they did not ask me directly about it. I decided to take action and quit so they could save money.
Despite the lack of discussion, I just naturally tended to be a saver. When I was young I confused my parents because I would ask to get smaller bills from my babysitting cash so that I could divide it into peanut butter jars. These jars were my funds to save up for different purchases. I now know this is the “envelope system” but it just seemed to make sense at the time.
My parents really didn’t teach me a lot. And a lot of what I know I learned from not doing what they do (They always bought new cars and I didn’t understand that). But when I got my first part-time job at 16 my Mom told me I should put half of each paycheck in savings. I just went along figuring that was the norm and as a result I good chunk of money saved up when I went to college (also saved a lot by going to a junior college for two years) and I never had to take out any student loans. I found out years later that most of my friends didn’t do a whole lot of saving and had to take on a lot of debt.
I’m not a perfect example of being smart with money but I’d like to think I’m decent and that one tip from my mom helped a ton. It’s not like she even drove home the point - I think she just mentioned it once in conversation and for whatever reason it stuck.
My family was always just above the poverty line. While I can’t remember a time I didn’t know how to balance a checkbook (my mother has a slight case of numerical dislexia and needed help with the reconciliation), the only other money tips I learned where how to recognize which bills can be paid late and how to borrow money.
My mother was always very good and responsible with money. The problem was, she never taught me anything about it. Nothing about saving, paying bills, maintaining good credit, etc. I had to learn the hard way as a young adult. I remember asking her one time how much a particular bill was, and the answer was “none of your business”. So that was the very last time I asked her about money.
I never received allowance because she as not “paying me to do what I was supposed to do anyway”. Getting my first job at the age of 14 was the best thing for me at the time, but I never learned to manage my money, even back then.
I was lucky, I didn’t learn anything about money from my parents, but my grandparents from my mom’s side of the family had a few businesses.
I got to see them working on their taxes and sometimes working on their books for their business.
While I didn’t learn anything about stocks or bonds, it was fascinating watching work on building their business.
So, yeah, I mostly taught myself, but I learned that finance isn’t a dark magic of any sort…
The biggest message I got from my parents growing up was that “Lifes a bitch and Mr. Murphy is her boyfriend”. My folks didnt tell me much about money other than to work hard and dont spend any that you dont have to. #9 dotty above sounds very familier to my upbringing. I was thankfully instilled with a work ethic at a early age and growing up I didnt want to be some spoiled brat that was given everything by thier parrents. Dad helped me buy my first car and I apreciated it. Parrents divorced in 84 and I saw how it affected them both financaly. Learned most of what I know by observation and listening to the wisdom of elders growing up. Grandparents/Greatest Generation were a HUGE influence on me. My philosophy on money was molded by those that saw the 1920’s to the present day. My money philosophy is basicly this. 1. Work hard 2. Save something every paycheck. Dont care if its .10 cents or ten grand put SOMETHING in savings account every payday. 3. Goes with #2. Have “F#@% YOU!” money put aside for whatever comes along. 4. Take advantage of IRA,401k etc. Compounding of interest and investing for retirement. I probably wont be living on a beach in the Carribian when I retire but I want my bases covered so I dont have to work 50 hrs. a week when Im 70. 5. Have money available so if a good buy comes along you can take advantage of it. This is one that I use a lot. Worked for a man that bought lots of cars,trucks,equipment in the 80’s when the farm crises was at its worst. Bought stuff dirt cheap beacause he was at the right place at the right time with CASH in his pocket. Have done this myself with cars, motorcycles, tools etc. Best thing is that not only have I gotten use out of them, but if i need to be liquid on them I can sell them and get my money or make money on them 6. live frugaly. Dont fall into lifestyle inflation and spending money foolishly. We all know what Im talking about. 7. ENJOY LIFE! Keep yourself healthy and cherrish your family and friends! This is probably the greatest thing I have been taught. Your health and happyness is the most important thing. This is the reason to live frugaly/monitarily smart. If you dont have the ability to enjoy the blessing of life on earth than all the labors we do are in vain.
“When you die, you can’t take it with you!” Was my Mother’s motto. My Dad made over 200k a year since he was 32… but all my family ever did was spend. Of course as a child, I didn’t really know any differently… but now that my parents have not planned for a future and ended their relationship in divorce last year things are MUCH different!
Their lack of saving and planning for the future brought an abrupt end to my lifelong views of money. Now I’ve got my own family and I’m trying to learn all of these responsibilities I should have learned twenty years ago.
I think they had the best of intentions- trying to instantly gratify our wishes as children, but I definitely learn the most by seeing what they do and doing the OPPOSITE!
I was raised by my grandma who always had these amazing little quips and nuggets of wisdom about money.
“Always put some mad money in the bank, because then when you’re mad, you’ve got money.”
“You only need one credit card and one credit card is all you need.”
“First you pay your mortgage, then you pay the electricity. Everything after that is just gravy.” Her advice for when money is tight.
“Suck it up, do your job, then take the money and rub it where it hurts.”
“No teenager needs $50 a week.” Her words to me as she took my first paychecks and deposited half the amount in a savings account.
“Thank god for IRAs. A woman needs one, start yours early.”
My grandma was a bus driver with three kids, then a grandchild to raise. She was frugal, saved wisely, retired early and never stopped talking. I was lucky, I learned a lot from her. Still do.
My parents are incredible savers. They have always stressed saving for the things you wanted and paying cash for them. In my life, they have always purchased new vehicles, and they have always paid cash for them. They were able to do this on my dad’s small teacher salary and my mom was a stay at home mom until I got into high school.
They encouraged me to save the money I earned (through a paper route) to pay for a car and college. My parents did not get me a car, I bought it myself, paid the insurance and paid for the gas. Because I saved the way I did, they helped me pay for college. I learned a great deal from them and am in a decent situation today because of it.
My parents were very good role models when I was growing up. Though I never lacked and my parents mostly gave me everything I wanted (within reason), I was expected to get good grades in exchange. My mom, who worked in a bank, always encouraged me to save and taught me how to write checks and balance a checkbook. Whenever I would order books from Scholastic in elementary school, her checks were always accurate down to the penny–the people taking the orders were impressed. When I was old enough to get a credit card, she co-signed for my first one with the expectation that I would pay off the card in full every month. They would buy new cars but pay them off within a year and they drive their cars into the ground before buying new ones. Unfortunately, their current financial situation is not so good due to some bad investments in the real estate market a few years ago, but I am thankful for their setting a good example while I was growing up. I do like to spend, but I make sure I always save something too. As for my younger brother, he just landed his first full-time paying job and he is turning out to be quite the spender. My mom has asked me to lecture him, but I always retort with “But I’m not his mom, you are!”
1. Pay for cars with cash (had car loan for 2 yrs though).
2. Use credit cards carefully; pay them off every month.
My husband and I married young (at 21) and realized (fortunately) very early on that neither sets of parents offered a financial model that we wanted to follow–my inlaws never really made much money, so were trapped in their jobs by their pensions, and my parents were entrepreneurs who made a good living but spent every dime of it. They both definitely showed us what NOT to do.
We read everything we could get our hands on re: money (started with ‘the Wealthy Barber’) and decided we needed to find our own way. We became entrepreneurs who save a large percentage of our income…has worked well for us.
I think the biggest thing my parent’s taught me was to marry someone who has the same ideas about money that I do. So me and my spouse make 6 figures now (we’re 22 and just one year out of college - I’m in graduate school with a stipend). We are paying off all our student loans within 1 year and we never fight about money (unlike my parents.)
The other thing my mother taught me was that a women should NEVER stay home from the workforce to raise children for any extended period of time. She spent 10 years working part-time from home and she never, ever regained her pre-SAHM salary or position when she re-entered the workforce. Now that her and my dad are divorced (after 25 years of marriage), she has an incredibly hard time supporting herself. I would never, ever make the same choice she did, as my biggest financial asset is the ability I have to support myself (which I would lose if I left the workplace). I know that this opinion is not shared by your average SAHM reader, but this is the lesson my mom taught me.
My dad taught me about delayed gratification through cookies when I was maybe 6 or 7. He explained that people who couldn’t delay gratification would rather have one cookie right now instead of 2 cookies tomorrow. I obviously wanted the 2 cookies. I think it was a great learning mechanism.
When I was growing up, my parents always said…
-never spend more than you make
-you should never borrow money or use a credit card to pay for anything. if you can’t pay for it now, that means you can’t afford it (exception of a mortgage for buying a house). And if you do use a credit card to leverage it for the points etc, make sure that you already have the funds to pay it off in full that same day.
-never ever let the credit card companies make any money off of you (ie. always pay any CC balances in full)
-make sure you save some money away for a rainy day (you’ll never know when you an emergency comes up)
-when you’re buying a house, never trust the banks to come up with a figure that you can borrow - those figures will just send you to the poor house (ie. if they say you can borrow max 450k, do not borrow the max amount because it will only cause you to live from paycheque to paycheque - since you will be extended financially to the max)
-save up as much as you can for retirement, and start when you’re young (ie. first job out of university).
-if anyone ever asks you to co-sign a loan, always always decline! this means that even the bank is not sure if the person asking for the loan has the means to repay it. if they default, you are on the hook for the entire repayment.
-don’t gamble - if you do make sure that you have a set amount that you’re willing to accept to lose. once you’ve lost that amount, it’s time to quit and walk away - don’t try making it back by taking out more money.
I am glad that my parents taught me these important rules/lessons growing up. I continue to live by these rules today and I would definitely teach my future kids the same types of rules. Living by these rules has allowed me to enjoy life without a debt hanging over my head (except for the mortgage). My husband and I saved to pay for our wedding in full, and also paid for our new car in cash. We are in our 30’s, have a healthy amount of retirement savings (6 figures), no debt (except the mortgage), and 20k set aside for a rainy day.
I really appreciate my parents for instilling such great financial values in me to get us to where we are today.
My dad has always taught me to save money. He is a great saver. He still continues to teach me to pay for things with cash. It makes a lot of sense considering the majority of people pay interest. I’d have to fall in the category that I was taught well.
@9 Dotty. When I read your post, it was unbelievably dead on to my life..and yes, I come from a Polish Immigrant family.
I often wonder what my life would be like if my parents had more to give. Now that I have kids and our income far exceeds what my mom made, I wonder if my kids will be able to learn the value of money like I did growing up.
Also, I have immigrant relatives that were better off so they could give more generously and it had the opposite effect. Their son used his parents as an ATM til the day they died. Not sure how and why some people get the sense of entitlement to take freely while others see the hard work that went into earning the cash and say no.
#57- I had a very similar experience, my parents divorced and after not working for 25 years my mother was forced into an entry-level job at age 53. BUT- aren’t you grateful for the sacrifices your mother made to stay home? I think it is far easier to hire the babysitter and head into work than to make the financial sacrifices to stay home. I am eternally grateful that she stayed home with all three of us kids. I think the key is to continue your education, increase your job skills, etc. I would rather end up in the exact same position as her and know that my child was cared for by his loving mother instead of dropped off at daycare for 40 hours a week. Have you considered just staying home until your future child reaches school age?
My mom was frugal and taught by example how Not to spend money. However, there was no talk of budgeting or planning; the general idea was just to spend as little as possible.
There also was no talk about giving, financially or otherwise. To this day, I have a difficult time giving first. I think that is one of the biggest shortcomings from what I wasn’t taught.
#57 Sarah– That’s a really good point. My mom taught me the same lesson but in the opposite way–through example she showed that a mother can be both an excellent mother and have a meaningful career (that brings in money).
#60 Sandy– Totally check out The Millionaire Next Door. It’s got a chapter or two in there that I thought were the best in the book about children of millionaires. (And many millionaires are frugal immigrants.) I wonder too about how my children will relate to money given the lack of scarcity– I think we have to be more mindful about teaching money.
My dad was very controlling, so, while he wasn’t terrible with money (not ideal, but better than many), I didn’t come out of childhood with many useful money lessons. There were unwritten rules about money, and when we broke a rule, we learned what it was. We’d go out to eat, and I’d pick out something I wanted, and Dad would get mad because it was too expensive. This became the “$10 rule” — if an entree is over $10, don’t order it, because Dad will get mad. I also incurred his wrath when I saved up money I had worked for and bought a new stereo system. He made a decent salary, but he would tell us we couldn’t afford things our peers had, and the only explanation he would give when I questioned this was “WE don’t use credit cards like other people do.” He may have been right about our ability to afford certain things, but not even my mother could say where the money went. He wasn’t saving for retirement (he had pensions coming to him) or for our college educations (as I found out when I said something about my college fund and he said, “What college fund?”). It would have been nice if he had told us where the money was going, so we could have understood. Naturally, I thought things were going to be different when I went out on my own. Thankfully, I was too poor when I graduated from school to get myself into too much trouble financially. I think things would have been worse for me if I had actually made enough to feel like I could live the lifestyle I’d always wanted.
Actually, what I find interesting is that my maternal grandpa died a millionaire, but apparently he didn’t teach his children or grandchildren about money. My husband told me that my grandpa was conversing with him and said, “Interest is something you earn, not something you pay.” I love that nugget of wisdom, but he never told ME that, nor did my mother, so I guess he never told her either. I have repeated it to my daughter often.
My parents made me wealthy.
They taught me how painful lack can be for a family. I am sure that they got rid of any extra money and accrued monstrous debt in order to teach my sister and I valuable life lessons about money.
Here are some kernels of their parental wisdom:
1. When financing things always try to find the highest interest rate available. Department Store credit cards are great.
2. Pay the minimum monthly payment.
3. Buy new cars and since your credit is poor, pay a high interest rate.
4. When a financial boon falls our way, get rid of it as if it were on fire.
5. Save nothing, plan nothing.
I took this advice for the first few years of my adult life and it magically worked for me just like it did for them. Always nice to see a system go as planned.
Sarcasm aside I had heard somewhere that “rarely does the grail of wealth get passed down” and that “your life is either an example or a warning.” In their case it was a warning.
It took me a few years to unwind from the terrible habits I had and a short few more to adopt new, better habits.
That, I believe, really is the key. Adopting new, powerful financial independence rituals can be done regardless of your ‘parenting’. It is the simple habits we strengthen every day that makes the most difference in our financial life.
I don’t think parents can ‘teach’ kids about money without living their message. Kids are smart and will pick up any contradiction.
I bring my kids to the banks (The bank to deposit their earnings and our local food bank to give 10% to charity). They also contribute habitually into their 529 plan. My wife and I are vocal about our frugality and let them make choices with their ’spending’ portion of their money. Our mantra “Buy pre-owned and invest the difference” gets bandied around a bit as well. They understand ‘opportunity cost’, not in the Econ 101 sense but in real life. It is too early to tell how much impact this will have on them but we are optimistic.
One recurring problem I am finding with people who got even a good financial education from their parents is that things have changed a bit. There are some financial platitudes that while true in 1980, no longer apply to 2010 America. Beliefs about Real Estate values, contingency funds and long term investing from earlier times just don’t make as much sense now.
The “Buy the biggest home you can afford” advice was a disaster for many who perhaps should have stayed beneath their means.
Overall, I think kids will ‘catch’ more money habits than they will ‘be taught’. You just need to be a good model for the behaviour you want them to adopt.
My parents tried to shelter us from their financial stuff, but my dad’s employment was so precarious for parts of my childhood, I learned early on that savings = security and that your fixed expenses should be minimal so you can contract spending suddenly in an emergency.
They did a little bit of formal teaching - we helped do the taxes starting when we were 12 (my mom does her taxes, including when they were each running a business, with a pencil, paper, and calculator.) She bought stock in our names and we tracked it in the paper, paid capital gains tax when it sold, and got the annual reports to look at. I was my friends’ go-to person for questions like “what’s a CD at the bank?” and “what’s common stock?” because she taught us all that stuff.
But mostly, watching them trying to balance two mortgages when my dad got transferred in a bad housing market, or watching her wring money out of the budget for school clothes by turning the heat down another 3 or 4 degrees, seeing how saving when things were good helped us out when things were bad, was really formative for me.
My parents tried, but I don’t feel like they did particularly well themselves, so they didn’t have the greatest advice to offer. Also, they didn’t have a lot of guidance for how they should raise their kids (my parents’ families lived in New Jersey and Michigan, and I was raised in California), so I’m not sure they really knew when or what to tell me about certain topics.
My parents have done alright for themselves, but they’ve had plenty of their own financial troubles, too. Now as they near retirement age, they have little debt (aside from still having a mortgage), but little savings as well.
Here are some of the things they tried with me, and how well I think they worked:
They made me open a savings account and forced me to contribute money to it. I was not allowed to withdraw money from it for any reason. This was horrible. It made me feel like IWas throwing money down a black hole. I’d be better off buying candy and toys with it than throwing it into a bank account I could never again access. They said something like “you can use it for whatever you want when you’re 18, it’ll be a lot of money then.” This is a stupid thing to tell a 12-year-old. Telling a 12-year-old “you can use this when you’re 18″ is like telling a 30-year-old, “start saving now and you can buy a house when you’re 50″. Screw it, I’ll just rent.
They gave me an allowance, but only if I completed my weekly chores. This went well. It associated money with work, and let me have a bit of independence, I could buy whatever I wanted and didn’t have to ask my parents for it. It was only about $10/week, but that was enough for me.
“You can have a Nintendo if you buy it with your own money.” My dad told me this, and it could have worked wonderfully. I wanted that nintendo. I saved my allowance and my birthday money towards it. I found another kid at school who would sell his to me for $100, which was a *lot* of money for a 9-year-old. I managed to save my money and was ready to buy it. I told my dad. He said “you can’t have a nintendo, video games are a waste of time.” I was *so* mad that he let me go through all that effort and sacrifice for nothing.
“If you want a car, get a job and pay for it yourself.” This was when I was older. I was 16. It worked out great for me, but I think my dad lost a lot of leverage that day. My dad has always liked to use the “you have to listen to me because I pay for your ‘X’!” line, whether that’s clothes or food or cars or rent or whatever. But when it was clear to me that I wasn’t getting a car unless I paid for it myself, I got a job, and a car (admittedly, my dad helped me buy an old car from a neighbor and fix it up). Once I had a car and a job, I could buy anything I wanted, I could drive myself to the store for it and everything. I wanted a new computer, it didn’t matter what my dad thought, I saved my money and bought one. I wanted a new surfboard, same thing. I stopped asking my parents for money to buy clothes, and just bought them myself.
But as far as bigger things went, buying houses or saving for retirement, my parents basically never even mentioned it, but I don’t know if it really mattered. If anything, buying houses is too easy for many people, not too hard, and saving for retirement is absolutely abstract to a kid who’s parents are still working and who’s grandparents live on the other side of the country where he never sees them. I had no concept of retirement, so why would I save for it, or even think about it?
I think, when my parents were struggling, they wanted to project calm confidence, so they wouldn’t talk about how they were struggling (they didn’t really succeed in their efforts, either, my brother and I knew they were fighting, we just didn’t know why). And when they were doing better, they seemed to spend freely on things that looked pretty unnecessary to us (my dad spent thousands on solar panels and batteries setting up an emergency electrical system that powers some lights and a ham radio for 20 minutes once or twice a year when the power goes out). How much money my parents had, or where and how it was allocated weren’t really discussed.
Ah, I think I lost my previous post when I edited it with more info…
Anyway, things my parents taught me while I was growing up:
-live frugally but make sure you also enjoy life
-never spend more money than you make
-never borrow money or use a credit card to pay for things because if you need to borrow, it means that you can’t afford it (exception of a mortgage). And if you do use a credit card to leverage it for points etc, make sure you already have the funds available to pay off your purchase in full that same day
-never let the credit card companies make money off of you (ie. always pay any balances in full)
-when you buy a house, don’t let the banks decide how much money you can borrow – because that will only land you in the poor house (ie. if the bank is willing to lend you 450k max, do not borrow all of it because it will only make you live paycheque to paycheque since you’ve extended yourself to the max already)
-always set some money aside for a rainy day (ie. emergency fund – you never know when something will pop up)
-save for retirement and start when you’re young (ie. start contributing as soon as you get your first job out of university)
-if someone ever asks you to co-sign a loan, always, always decline!! This means that the bank is already thinking that the person who is looking to borrow is a huge risk. If that person defaults – you will be left on the hook to pay it all off.
I am glad that my parents taught me these rules/lessons when growing up. I would definitely pass these rules/lessons on to my future kids. Living by these rules has really allowed us to get to where we are today. My husband and I saved up to pay for our wedding in full, and paid for our brand new car in cash. We are in our 30’s, have no debts (exception is the mortgage), have a healthy amount saved in retirement funds (over 6 figures), and have 20k set aside for emergency/rainy day.
I really appreciate the values that my parents instilled in me. We probably wouldn’t be where we are today if it weren’t for their teachings.
My folks have taught me a lot about personal finance, through conversation and through observation. I earned an allowance for chores that I completed, which taught me about the concept of “work = money”. They also made me save up for stuff I wanted to buy, which taught me patience, the ability to save and focus on goals, and prioritization of my wants. My folks also opened a bank account for me early, to show me the value of earning interest (albeit very small amounts of interest). My folks forced me to get a job at my 16th birthday, so I could pay for my own car, maintenance, insurance, etc. My folks taught me how to write checks and apply for a credit card about the time I left for college - insisting that I purchase something inexpensive monthly on the card and pay it off immediately, just to establish a credit history, but never to abuse the card or get near the limit.
On the flip side, I learned by watching that my parents continue to carry month-over-month balances on their credit cards; something that I avoid. They use their cards as an emergency fund; though I keep my emergency fund in cash. My folks did not save up for college for my sister or me, but instead pulled from their home equity for our college tuition (for which I am very greatful) - I’ve learned the value of 529 plans and hope to “pay tuition forward” for my kids before they hit college age. My dad is self-employeed and never set aside money for retirement, constantly putting it back into the business - which over the last few years has been struggling. My mom’s company pension is their only retirement savings vehicle and it isn’t going to support them more than a few years. I’ve learned to sock away at least 10% of my paycheck for retirement and live otherwise within my means.
On my own, I’ve learned about how to invest, save, and spend intelligently in a manner consistent with my personal values. I also recently purchased a home with a fairly large yard, under the assumption that if my folks ever need help, I can build a granny flat and let them live with us as long as needed. Because the best lesson my folks ever taught me was to take care of family first.
To some extent I think the technical aspects that our parents did or did not teach us about money is irrelevant. Your father could have a PhD. in economics and could also be flat broke.
Managing your money is more about behaviors than knowledge. A parent that modeled the right behaviors regarding money and discussed why they made the choices they did will give their children all the knowledge they need.
Negatives: Parents unwilling to talk about finances even when we are adults. Father making huge decisions about family finances without involving mom or kids.
Some offspring given allowances and money for chores, while others (the girls) expected to do chores for free and when asked for allowance, told “why do you need an allowance, if you want money, ask for it”. Same thing when adults, one child in particular given alot of financial assistance while others none at all.
Parents not separating personal money from business money. Not putting any money aside for retirement. No life insurance, disability insurance, or will.
Positives: I still remember my Dad telling me that all men are “jerks” and that I should never depend on a man for money and to always have a job to support myself. The experience of having a family job in junior and high school, and the practice where any money from job I put into savings would be matched by Dad. Both my mom and grandmother being serious savers, not buying anything that was expensive, status or unnecessary.
One of the things my parents did to teach me about money early in life was a 100% match on any money saved (whether allowance, earned on chores, or elsewhere). However, any money put into the savings acct was subject to a 1 year hold (a long time when you’re 8). This went away when we started getting “real” jobs; in fact, my parents did a much poorer job of teaching me about the things a young adult needs to know about money (how credit cards work, etc.) than they did when I was younger.
“How did your parents prepare you for financial independence?”
I am willing to wager that most readers have a different idea of what financial independence means. In my opinion it is not having to work for others, or where your money does the working for you. I’m guessing the majority of readers will never truly experience financial independence.
Regarding parents teaching me - I learned by watching them fail on a massive scale, so it was a constant education of what _not_ to do. Starting from buying a house for 50k then racking up more debt, I watched 100k of equity evaporate in a span of 8-10 years (that’s what happens when you spend more than you earn). Ending up with bankruptcy. Needless to say, that is a pretty sobering experience, and I hope they learned - because I sure did by watching them.
My mom was a pretty good saver…dad…no.
My mother took me to get a Texas ID when I was 6 years old so I could open my first savings account at their credit union. She explained in simple terms how savings worked and retiterated it when I received money as gifts.
Sometime between then and age 11, she explained interest and showed me how to use and balance a checkbook. When I started middle school at 11, I had a solid understanding and bought my own tenor sax for the school band.
She explained credit cards and the fact you never want to owe interest by the time I was 16. My step-dad and my mom explained how stocks worked in case I was interested. I chose to invest in bank CD’s instead.
In short, I received a pretty full financial education but I was not included in the family planning meetings…I still don’t know just how well-off my parents actually are…
The only thing my parents and I disagree on are Roth IRA’s. They don’t think that my taxes will be higher in retirement, so they think we should invest even more into individual stocks instead. I’m in my mid-20’s and think that my taxes will be much higher in retirement and love my Roth IRA. I think it offsets my 401k nicely.
My husband invests our Scottrade money in dividend-yielding stocks and will also be investing our second Roth IRA into those too…I think we are well balanced.
Oh, and my parents also reminded me to never cosign a loan with anyone other than your spouse and to never let anyone else drive my car…that kept me from having the same problems as my friends in college.
I would like to think that I got my frugality from my parents as well (and my need to find a good deal), but my mom says I’ve been a money-hoarder since the first time I received a quarter from my grandparents for some little chore I did when I was 3…so my parents are somewhat frugal and I seem to have been born that way.
My parents tried to teach me financial responsibility, but both my sister and I have had issues with our finances. Usually it was ‘pay your bills on-time’ but there was never anything about what consequences we would experience if we did make late payments or used the credit card and let our balances raise too high. I really feel that there should be a segment in high school cirriculum or a mandatory college class that teaches personal finance. Especially with he looming debts people face today.
When I was a small child, my Mom used to pay the family bills and balance our chequebook sitting on the floor next to us while we played. This piqued our natural curiosity, and questions were always answered, however often they were asked. When we were a little older and shopping for clothes (or toys, or anything else) we were allowed to pick anything we wanted, and then someone would explain (if the item was expensive) that getting this item would mean giving up something else (such as one expensive toy now, but no new toy at Christmas, or a less expensive toy now, and one really cool new toy at Christmas). Once we hit our teens, when shopping for clothes, my parents would set a budget of what they were willing to pay - if we could stay within the budget, we got clothes that were entirely paid for. Anything above the limit, you had to find a way to fund yourself (and no, we weren’t paid for chores or given an allowance).
Once I was old enough to drive, I got a credit card (wait, don’t judge me yet!) paid in full by my parents every month. The catch was that you had to sit down with both parents when the bill came in and justify each and every item on the bill. If they weren’t satisfied with your explanation, you had to pay for it yourself. That taught me to use my credit card exactly like my cash - because it wasn’t free money (just meet my Dad if you disagree with me!)
When I hit university, my parents were generous enough to front me the tuition money. If we made the dean’s list (top 15% of our class), we didn’t have to pay it back. Miss the dean’s list, and you had the equivalent sum added to your parental loan (which had to be paid back in monthly installments set by the parents, after graduation). Living expenses had to be covered from your own money (summer jobs, scholarships), except for the year I lived at home where instead of paying rent I contributed to the household - my parents drew up a list of tasks that they disliked doing (shopping for groceries, cleaning the bathroom, chauffering and enforcing curfew for my wayward younger sister) and I did them instead of rent.
It seems to have worked quite well for their older two daughters - between the two of us in our twenties, we have emergency funds, nest eggs, pensions, and no debt apart from one mortgage that is substantially smaller than the value of our house. It remains to be seen whether it worked on our (much) younger sister, but we hold out hope.
I had a little piggy book which allowed me to stick quarters in it. When it was filled ($5?) I was taken to the bank and I deposited it. I think my mom matched the money. I also had a small bank for other coins and was allowed to spend some of that. However, I can remember wanting to add to my savings account at the bank. My mom started me really early on this. She also took me grocery shopping and taught me how to chose items (including paying attention to cost per ounce and other details). I was set up with a checking account when I was 16. My first check was to pay cash for my used car (my choice). This was from my own savings plus some money from an inheritance I had received when I was 7 and my parents had put in a high interest account until I was old enough to handle it.
My parents taught me well. My mom is big against debt and big on savings and we still discuss these issues even though I’m in my 40s, married, and taking care of our household budget. Currently no debt, $7000 in emergency fund, but really, really low on retirement savings (I was in grad school for too many years and my husband’s job has been erratic–we’ll be working on retirement savings issues in the next few years).
When I started college, my parents cosigned the loan to buy a condo with me. But I was fully responsible for managing it, finding roommates to rent, etc… I learned the rental business very early on.
My mother also gave me $1500 to match my $1500 savings to open my first brokerage account to trade stocks after I took an investment class in college. I remember my first portfolio had AT&T, Cocacola, IBM, etc… That taught me how to invest.
Since then, I never stopped investing in both real estate and stock market. Rode the big up turn in late 90’s and survived the two big downturns… My networth is in millions now and I am only in my mid 30’s.
I think that most parents talk to kids about spending and saving, but they fall short where credit management is concerned. I just found out about a new website, Kwedit, that IMHO makes it too easy for kids to get into a habit of borrowing and not deferring what they can’t afford today. Check out http://bit.ly/cwesCL.
I my early teens (I am now 55), I asked my father how to manage money. His reply: Dont worry about it, your husband will do that for you. I am still single.
To all the people with parental match contributions and credit education - how was the end result? Do you see yourself in a better position today because of that experience?
@80 KittyBoarder
That’s a good example of what financial education gets you vs professional education. But I’m sure you learned more on your own (unless your parents coached you).
It seems your money is employed in paper and real estate, what do you yourself do for a living?
@82 Maharani
It’s amazing how far society has changed. How are your fiances now? Did you figure it out alright or struggle?
I learned about money from my parents’ mistakes. Namely do not buy a new house without selling your old house first. And if you don’t sell your old house before buying the new one, do not rent out said old house for a year before selling it. Especially not the year when your kid has to fill out the Fafsa for a very expensive private college. You learn about LKE’s real fast in that situation.
I agree with whoever above said that plenty of parents did teach their kids good things, but the kids get in trouble anyway. Here’s my long story that I emailed to JD, but he didn’t read it in time to include in this post.
My parents almost lost the farm in the 80s. The only reason they didn’t was because of a local banker. The banker told my parents to not worry about their debt and to take their money home and take care of their family. (I think they had just sold some livestock or grain or and the money wasn’t enough to pay their debt and have anything left over for living expenses.) My sister and I were crying that night, but our tears were the result of fear of being locked into the bank at closing time. If we only knew…
They were always frugal. We bought generic groceries. We bought second hand clothes. We lived in a house with no central air or heat (in central Iowa) until I was 7th grade (1991). Our only source of heat was a wood burning stove in the kitchen and a few space heaters. But I don’t remember ever truly lacking for anything. We went on vacations and did a lot of things to save money on them (including driving through the night once or twice.) We took time share places up on their offers for free weekends. My parents had nerves of steel and always took the free gifts, but never bought anything. The year we built the new house, my parents told us their might not be any vacations for awhile because of it. But we went on TWO vacations that year.
I was 25 before I realized that they could only afford the vacations as a result of the other choices. I always looked at it the other way. If we can afford vacation, surely we can afford name brand ketchup? WRONG! The truth was we could only afford vacation because we bought the store brand ketchup.
I got my first checking account at 14. My parents paid my sister and I each $100/mo and we had to buy our own clothes and our lunches at school. (They wrote these payments off as labor for the farm.) I think this was very smart of them. I still do. But it didn’t really work for me. My sister, however, seem to get it. She always had a ton of money. I always spent all of mine. Somehow, I didn’t get it or I didn’t inherit the right frugal gene. Or I have too much ‘book smarts’ and not enough common sense!
I got my first credit card in college because I thought I ‘needed’ it when I was preparing to spend my summer at a college undergraduate research program in Massachusetts. I was going to be very far from home. Their might be an emergency? RIGHT? I got the card through ACM since I was a student member. I really didn’t use it much that summer, but by the time I graduated from college two years later I had racked up some debt. I bought a computer on credit by responding to a direct offer that came in the mail. I charged up a hefty balance on my credit card buying things for my upcoming wedding that my parents refused to pay for. My parents had money. They paid for TWO weddings that year. My sister got married in April and I got married in July.
My husband and I each brought some debt to our marriage including loans from our parents for my car and my husband’s trumpet. (He teaches high school band.) My husband didn’t start teaching until 6 six months after we were married. That first 6 months we lived on my income and I paid the tuition for his student teaching semester. After that, I made a plan and we paid our parents what we owed them. We were poised for greatness.
But then we made a lot of average decisions. We didn’t attack of other debt (credit cards, vehicles, student loans). We bought whole life insurance. We bought a house. We put more stuff on credit. We bought new vehicles. We had a baby. We moved and bought another house, finally paying off our credit card debt with the proceeds from the sale. We bought a new truck. We had another baby. We were normal. We were average. We had the expected vehicle and student loan debt. I also had a nagging feeling that we should have been a lot more well-off considering our combined income of about $120k. And then through some friends on the boards at babycenter.com, we found Dave Ramsey.
We revamped our budget. We ditched the whole life insurance. We paid off my car. We paid off my student loan. We paid off the truck. We paid off my husband’s student loan. Now we are piling up money in the bank and planning a vacation for our 10 year anniversary that will be paid for with cash. We did everything my parents would have done. And I try not to think about where we’d be now if we had our act together 10 years ago.
I think my parents did a lot of things right, but their failing was in really explaining to me why they were doing what they were doing and the impact it had our lives. And ensuring that I really got it. When I got the checking account, they just let me have it, but didn’t try to teach money management beyond the ability to reconcile my balance with the statement. My dad growled when I bought the computer on credit, but they didn’t make me run the numbers on the interest I would pay. The basic math was not the problem. I’m a software engineer now. I would have understood compounding interest a decade ago. But I didn’t take “consumer math” type of classes in high school. I was busy doing calculus.
I don’t blame them. They did a lot of good things. They tried. And I recognize that I may not have listened even if they have listened even if they had been more explicit with explanations. My sister was the complaint one. I was the rebellious one!
The one specific money lesson I had from may parents was: Don’t spend money you don’t have. The idea of not paying off a credit balance in full was almost like theft, or at least a Very Bad thing to do. It kept me out of debt if nothing else.
Most of my economic nous, however, has come from reading “The Wealthy Barber”. I credit it with my starting an RRSP before 30, and being able to buy my own place — yay!
Let’s see:
Mom (and stepdad): Amazing highs and lows with money, from driving a Mercedes with two live in help in a 9 acre Westchester property next to Al Roker to living in a tiny house with a used Ford Tempo, all within 4 years.
This taught me to save because I didn’t want to live with those roller coasters. Also, work for someone else for a steady pay check to keep things sane, rather than working for yourself where you never know how a recession will affect your ability to feed your family.
Dad (and 4 wives): Even if you’re very rich, you can lose it all if you keep getting married and divorced over and over and over again. Also went through highs and lows, seems to be okay with his money but always getting pay checks from family and friends of family. Taught me to always work for unrelated parties and be wary of marriage (or at least, value a prenup).
My decision to become an Accountant was based on my parents (both sets) uncanny ability to both make tons of money and spend tons of money. I wanted control over my finances (and the finances at work too).
My mother taught me everything I know about finance, saving, and not getting into debt. As a divorced single mother (and an immigrant) she lived within a budget and worked very hard, eventually starting her own successful business. One of the best lessons she ever taught my sister and I was through the purchase of our first cars. My mom told us if we wanted cars at 16, we would need to buy them ourselves (we both had after school jobs), and we would only be allowed to buy used cars, as new cars were not necessary for a 16-year-old and the insurance was cheaper. The deal was she would front the money for the cars, but then set us up with private third party loans (two of her friends were the bank esentially), and we had to make monthly payments to those people. By having a third party be the “bank” really made my sister and I pay attention and not “default” on our loans or be late with payments. And by the time we graduated from high school our car loans were paid off. I always tell this story because I think the idea my mom came up with was so ingenious and educational. There are many many other examples of lessons my mom taught me, but the car loan story is my favorite!
My parents covered the basics, but one rule I’ll remember — Don’t lend/borrow money with family members.
I was a saver and my brother a spender, and we’d always have some deal worked out where I would loan all my money to him. They never let it happen and always stressed the rule. My brother and I are best friends.
Before we got married, my wife sold her sister her car on a payment plan to be repaid each month. It did not end well.
Our family will not be lending money to each other…I like Dave Ramsey’s rule…either give it to them or don’t do it.
My parents didn’t teach me much, and I wish they had. Religion, Politics, Sex, and Money - you know, all the important stuff - were not topics we discussed much in my home.
Somehow, I ended up being a pretty good saver, and I started saving for retirement at age 26. My dad claims he doesn’t even have retirement savings (he’s 60), and I can’t tell if he’s joking (dear God, I hope he is. But I’m starting to wonder). I do remember they hit a low point in the late 80s and had to sell some of our nicer things. I never knew exactly why they did this, but it made a big impression on me, and I never want to be in that position in my own life. I’ve still got a ways to go toward independence, but at least I’m working on it and trying to learn.
Now I just need to get my boyfriend to do the same. :\
My parents taught me some things well. My mom told me many many times to never keep a balance on a credit card … pay it off in full each month! And my dad made me open a Roth IRA when I got my first job at age 16. That was great and has really helped me over the years.
But I wished they’d TALKED about our family finances to me. They both seemed to feel that it is unseemly to talk about money and money problems (which we had our fair share of), even with other members of the family.
Who knows if I’ll end up feeling the same later on, but when I have kids, I’d like to be more transparent about the family income and budget. Kids can and should understand these things not just in the abstract, but also as they affect their own family directly.
Answer to @83
— You are right that I learned most lessons on my own mistakes although my mother gave me advice to solve each problem when I was absolutely frastrated.For example, I rent to a girl I didn’t know who just came to our college. She started doing drugs and never paid rent on time. My mom told me that I had to screen people unless I know them very well even if they are from the same college.
– Most of our money is in retirement funds/taxable stock/mutual funds/Cash savings account/equity in residential properties and one commerical building I own which I own 2 of the residentials free and clear.
– I am a system engineer during the day and have a side retail business my parents manage now in addition to the real estate business (rentals). My husband works in the financial world. So we are in 35% tax bracket and are the type of ppl Obama is targeting at… My dad taught me that in order to save more, you have to earn more. So I did just that to make sure I have high earning power by having a grad school degree from top private university and only accpeted job offers from the biggest firms. My parents were very rigid about what schools I applied or what jobs I took. And my dad made sure to teach me how important a person should be able to make money regardless if he/she has a job or not, which prompted me to start a side business when I was in my mid 20’s. And another thing. My husband and I spend only 40% of what earn. My realtor told me that we could go for a million dollar home. We opted to buy a $300K home and fixed it up ourselves. Our friends buy more expensive homes than us although they only make 30% of what we earn. That helps us to accumulate assets that generate income.
My mom is a financial rock star. Though I whined about it at the time, I’m so grateful for the knowledge she gave, and continues to give, my brother and I.
She started Roth IRAs for both of us when we turned 18 and funded them monthly for the first year, a habit I’m SO grateful to have started early. She also got our credit started early by opening credit cards in our names on her account when we were 16. We had to save every receipt in a little envelope system she rigged up, and there was hell to pay if something wasn’t accounted for. She also sat down with my brother and I on separate occasions before we left home and went through her monthly budget and how she schedules and pays bills. She also created a folder for both my brother and I with all of her life insurance details and legal documents and the appropriate contact information for when the time comes.
She tried to teach us about checking account basics–balancing checkbooks, etc–but I didn’t really “get” it until I started working at a bank at age 18 and learned allllll about the dangers of overdraft fees.
Not all of her wise lessons stuck: I did find myself with about 8k in credit card debt after I graduated from college, which I paid off in about 18 months with some help from her (rather than give gifts, she would write a check directly to the credit card company, reminding me how much freedom I would have once I didn’t have to pour every extra dollar into the bank’s pocket).
My parents were always (and still are) extremely frugal. They taught me credit cards are a tool, and should never be abused, and are to be paid in full each month. They taught me to live within my means. They themselves always live within their means, never run up debt, and always paid cash for vehicles. They are excellent examples of people with healthy financial lives, and yes, I believe I picked up their good habits.
My only problem is I don’t make enough income to even live on my own, but what I do make, I manage well, and I’m debt-free.
5 Things My Parents Taught Me About Money and Wealth
1. Money is the root of all evil.
2. It’s pious to be poor.
3. Rich people don’t go to heaven.
4. Money doesn’t grow on trees.
5. All debt is bad. Pay off your home and cars as soon as possible.
Lessons Learned
While my parents had very good intentions, I’ve learned that these outdated ideas actually repel financial abundance. For example, if I were to believe that money is the root of all evil…why would I want to be rich? I don’t want to be bad or be perceived as evil.
I’ve learned that our thoughts lead to belief systems that lead to actions that lead to results. If the root cause of our results consists of money being bad, we won’t notice the abundant opportunities that surround us to achieve financial freedom.
My parents were not well off when we were growing up(2 teachers, 5 kids, go figure) so I learned a LOT about frugality growing up. That sort of knowledge and the willingness to live with hand-me-downs, deal with left-overs, find free activities, etc. can be invaluable. Also we knew from a very young age to simply not ask for toys in the grocery store or whine about wanting this that or the other. It just wasn’t done in our family. Perhaps because such whining NEVER would have worked so… At the same time, they made a huge effort to see that the things that were really important were covered. My mom worked in the office at my gym to cover part of the cost of me being a competitive gymnast (6 days a week of lessons are not cheap!). At times, when family budget allowed, we had allowances and guidance on how to spend them - the save / spend / charity type stuff. Some years we were given a set amount of money and had to cover our school needs ourselves out of that (clothes, paper/pens/etc.). Other years we didn’t have as much personal control. So the money training wasn’t necessarily consistent in how it happened. But it was there.
I never thought our childhood was that restrictive. The stuff we couldn’t afford was simply not that important to me. The brother immediately after me, on the other hand, seems to feel like we had a horribly deprived childhood. I am not sure why. Same parents, same childhood rules and whatnot. Two totally different personalities. I went the “save every penny you can because tomorrow may bring something unexpected” route and he went the “*my* children will not have to suffer the same lack of material goods that I did” route.
What could my parents have done a better job of teaching us? How to deal with money when you actually have some. Investing for retirement or long term goals. Stuff like that I have had to teach myself. (No problem, they also gave me a love of reading and good math skills.) But if they did anything less than optimal, it was spending money almost as soon as it was earned (but not *before* it was earned). Probably because they always had a list of stuff that was being put off until they had the money. Car repairs, house repairs, stuff like that. Nothing frivolous. But it gave me the desire to always, always have a hefty emergency fund. (2 years living expenses isn’t excessive, is it?)
My parents taught me that money was dirtier than sex to talk about and we didn’t talk about sex so the message was to muddle our way through. Now my father is in his late eighties and has been stone cold broke and has nothing other than his social security. I talking with my siblings I have confirmed that it’s still not OK to discuss money and that I may be the only one with any retirement strategy in place. I don’t want to be where pops is today and am making plans to prevent it though I have a very late start.
My parents taught me a great deal about money—and although I still had quite a few bumps in the road, I owe most of my financial success to them
My parents have been divorced since I was 6. My dad earns quite a lot of money and his consumption is quite “normal”. He buys what he wants but doesn’t want more than he can afford.
Despite her dislike of money my mother has always been a bit of a cheapskate. She has a decent income with has been improving a lot during the last few years, but she spends as if she were on minimum welfare and I am sure that she has a fortune in the bank. Because of this she is able to pay her car in cash and spend a huge sum on things that she really, really wants but I wouldn’t want to live on such a minimum just to save the extra daily bucks.
The thing is that she never taught me about money. I Always thought that she was cheap which I think increased my urge for buying things, and I did buy a lot of stuff when I started earning my own money.
Interesting thing is that my sister is a lot like my mother but we grew up pretty much the same way, which is why I think my spending and saving habits are not as much the result of lessons from our parents as it is the result of my personality. And to be honest, I think I needed to feel the pain of debt to being able to enjoy the pleasure of being debt-free.
After all I’m happy to have learned the lesson while studying. Though it feels like a large sum compared to my present income it is not that bad compared to the starting wages after graduation. Being in debt probably were a more valuable lesson than anything I learned during 5 years at the university.
When I was 12, my father took me to the local credit union and helped me to open a checking account. I didn’t really NEED to write any checks! The very first check I wrote was for a Christmas present (for him) that I ordered from an ad in The New Yorker. It cost less than 10$. He co-signed for a credit card for me when I was 16 and always taught me never to carry a balance. There was some talk of family budgeting when I was young, but I was not allowed to ask how much money my father earned. That fell into the category of impolite questions, along with “How old are you?” (The answer: As old as the hills.)
I am the oldest child and I certainly had more financial training than my 2 younger sisters who, in their 40’s, are still partially supported by my parents. My father is incredibly generous with his (admittedly high) income. Along with being financially responsible, he taught me to be generous. He once pointed out to me, as we passed our local United Way donation thermometer, that he had personally contributed 1% of the total.