Most people in the world live on less than $10 a day so I now feel blessed that we were so “rich”. Once you realize that what is the difference between one rich and more rich.

It can definitely be helpful, like you mentioned when paying off student debt. For me it is helpful because I have just moved and started graduate school again, and will be living on a smaller income than before. I think I’ll try to make small concessions along the way though.

- Mark

What you don’t hear about are poor people with terrible financial literacy (and believe me, there are probably just as many or more of those than the opposite), or more wealthy people with great financial literacy (there are plenty of those, too). Neither of those situations makes a good story.

Being homeless is something I’m terrified of, personally. I have several mental disorders too (including severe anxiety), and have been on a variety of medications to try treat them. Still working on finding the right mix. I’ve also been jobless for 7 years now after a failed graphic design career and am living with parents (although I have gone back to school at this point). I’m also middle-aged.

If my parents had shown tough love and “kicked my ass to the curb”, I can assure you, I’d be either homeless or dead by now. I just don’t have the capacity to function normally in society, and need a lot of help to do so. So don’t be so quick to think that your method would have been the correct one. It’s so hard to know exactly what to do with dependent family members who have mental illnesses. Science just hasn’t made very good advances yet in the area of highly-functioning mentally ill people. (or in the area for low-functioning ones either).

“How do I go about teaching my children the importance of finance, responsibility and self-sufficiency when I plan to give them a safety net?”

I believe that you can provide a safety net for your children without telling them – at least until they are young adults (and no longer a financial dependent of yours). Ideally by then (because it would be too late otherwise) you will have already taught them ‘stick-to-it-iveness’ and ‘perseverance’ and any other lesson you wanted them to learn.

For example, make your children ‘earn’ their spending money – whatever ‘earn’ means to you. I’ve seen ‘earn’ mean doing chores and helping around the house. I’ve also seen it mean getting good grades; and I’ve read about a dad who only paid their children to read books – period. After all, they were expected to get good grades and do their chores – rewarding them for what he expected them to already do seemed counter-intuitive. And the knowledge, language skills and worldliness they learned from reading books of all kinds is irreplaceable in life.

As they are growing up – teach them the pride of a job well done, and that the consequences of not doing so aren’t always just monetary (privileges taken away works very well when done right), seems wise to me. As they are growing up, teach them that if they want something (a new video game, stylish shoes, a popular jacket, etc) they need to spend their own money on it – money they ‘earned’ from you and money that they received from other family members as gifts throughout the year can really add up for a young’un. I have found that when I didn’t offer to buy my son what he wanted (video games are the worst), and instead told him that if he really wanted it then he could use his own money on it – a strange thing happened…more than half of the time he decided he didn’t want/need it that bad. That still cracks me up!

Most importantly, in preparation for the gift of your safety net, teach them that every time they get money, they should divide it four ways: invest some, save some, donate some, and put some in a ‘free to spend’ bucket. That’s what we do in this house. This way, they will understand the difference between those 4 choices and will learn that they are all equally important – when you get a windfall (an extra big birthday check from grandma for a milestone birthday, for example) you will have already taught them what to do with it, while they were still malleable in your home.

When the time is right, as they are exiting your house (moving into their own apartment or home, going out of state for college, getting married, going into the military), tell them that you have worked hard and saved and that you wanted to provide for them, but you didn’t want it to be a crutch that would keep them from learning how to handle money. You wanted to teach them the financial lessons of responsibility, long-term and short-term investing and charitable giving. And that the rest is what you get to spend. It will be second nature to them. They will take the safety net and divide it four ways and only be at risk for ‘blowing’ ¼ of it. And if they do blow it, that will be a valuable lesson for them, but one that won’t break the bank, so the speak.

Another example is the new Iphone. My phone is old and the screen is cracked so I went to get a new one. So, I asked them what do these new phones do and he told me they do all the same things that my phone does and nothing new. They’re just a little bit faster. Why would I throw my money away for nothing, when again they do the same thing.

Same thing with the new Iphone, I hear everybody saying they need to buy it but, again other than being a little longer and a little faster it does the acsact same thing as the old iphone. Sometimes I just want to say come on people.

Which means there is a high probability that he has some sort of disorder that no one bothered to check into, and just wrote the kid off as lazy. Of course, I’m assuming, just based on your short story, but I’d love to hear to more. So many people with learning/mental disorders get swept under the rug and written off without ever being diagnosed.

http://midlifefinance.com/2012/12/letter-to-our-children/

How you grew up — and how your parents responded to those times — affects you. You can’t help that. What you CAN do is realize why you’re feeling that way…and deal with it. You often can’t directly change a situation (or especially other people) — but you can change how you deal with it. And more often than not, your attitude can actually have the long-term effect you were wishing for, all along!
Sounds a little Miss Suzy Sunshine, but I’ve seen it happen, over and over.

I didn’t grow up in a family with a lot of money, and certainly learned to be financially responsible because of it. I have a doctorate, and my parents did not save any money for my education. There have been times when I wished that they would have set up a college fund for me. Yet, I don’t know that I would value my education as much as I do if my parents had paid for it. I do recall that in college, those of us who had to pay for college ourselves certainly put a lot more effort into our studies than many of the students whose parents were paying their way. Perhaps I’m a romanticizer as well?

You can grow up rich or poor or middle class and think that you are ENTITLED to whatever you want without working for it. It is all in how you are raised.

Did your parents teach you to work hard?
Did your parents teach you to take what you want even if you don’t deserve it and even if it hurts someone else?

Did your parents work hard or were they takers? Welfare cheats or work place bullies or slum landlords or thieves. Children learn by example. What did you learn from your parents?

Rich people can spend themselves into debt just as quickly as poor people – they just buy more expensive stuff.

“And now, one of us can afford plenty of large ice creams, but won’t even go to the ice cream shop for a small, one of us can afford plenty of small ice creams, and enjoys going to the ice cream shop for a small, and the last one of us can’t afford a small ice cream, but enjoys going to the ice cream shop for a large.”

What a great use of Kristin’s anecdote! Thank you for the laugh and the insights. May I ask, which one are you? The middle one?

I’m actually the first one. I have plenty of money to buy the large ice cream, but I have a very difficult time spending money on ice cream, in addition to almost anything else.

I struggle to spend a few dollars on items sometimes.

And how many people born into wealth (or even the middle class) have the “initiative” to climb higher or even just maintain their status completely on their own, rather than just relying upon established networks and familial safety nets?

Poverty affects your life in so many ways from the time you’re very young, and often produces lingering effects that can never be fully erased, no matter the interventions.