The economy isn’t great… who else has noticed this? Not that I want to be captain obvious or anything, but although as adults we’re quite aware of what’s going on, our kids are oblivious to the realities around them – lucky them!
As parents, we often feel the need to protect our children, shield them from the difficulties that we are going through because we think that they may not understand or that there’s no need for them to go through it. When it comes to our finances, especially when the economy isn’t great, we’re under the impression that there’s no need for our kids to know about it – after all they’re just kids, right? Wrong. Granted they don’t need to know everything, but it’s important that we communicate with them so that they can understand the concept of earning the things that they want. This goes back to the previous topic discussed on entitlement… instead of children feeling entitled and demanding things, they can be encouraged and work towards earning what it is that they want. This way they also don’t feel that they didn’t get something because they were bad, did something wrong, or because they didn’t deserve it, but rather they will learn to be patient and to work towards their goals and desires.
I’m no economics expert and I’ll admit that math is not my strong suit, but I’m glad to say I’ve always been very financially responsible perhaps because growing up my family was never financially well off. I’ve always noticed that my parents worked really hard and although we made ends meet, we were always in debt. It made no sense to me because my dad was so good in math and he always got on me for being awful in math. So I decided early on in life that I wasn’t going to take financial advice from my parents (sorry mom and dad). I did however learn my work ethics from them because that’s what kept them afloat, they were never too proud to let any job pass them by because they knew they had bills to pay and they never asked for any handouts.
When my mom was a librarian, she would get a lot of books on tapes and one night when she picked me up I found myself listening to Rich Dad, Poor Dad. I immediately realized that I had not received the wisdom from the “rich dad” and started the CD over from the beginning and realized that there were some valuable lessons to be learned. Granted there are many better books and resources out there, but I’m talking about over 10 years ago and I wasn’t necessarily purposely searching for any books or resources on the topic. All I had seen my parents do was pay bills, not save or invest their money because there was never any money left to be saved or invested. The concept of having money work for you rather than working for money or paying yourself first (setting it aside for savings) was so foreign to me.
I always considered myself a responsible teenager, good grades, involved in sports activities, and kept some solid jobs… but I finally started to do some serious saving. When I went to college I got my own college loan, my parents co-signed it… I knew they couldn’t afford to pay for me to go to college and although I had saved I didn’t have nearly enough to put a dent to what college would cost so I indebted myself and put myself through college. However, I kept a job throughout college and kept on saving, graduating with a hefty savings that would hold me over until I got a decent job. Ok so that’s my story, who cares?
Now I have kids and clearly my husband and I have started a college fund for each of them (wish my parents had thought of that), but we’re not telling them about it (might have to delete this entry by the time they’re old enough to start reading my blog). I expect them to work and save because there will be more of an incentive not to skip any classes when you know how much each class they skip is worth when it’s coming out of their own pocket (we’re still paying back our own college loans until this day). Perhaps by knowing that they’ll have to pay for college they’ll be encouraged to work hard enough to even get a scholarship or two… that’d be awesome! Also at the rate the economy is going college might end up costing so much that what we’ve saved up honestly may not put a dent into their education… perhaps it’ll help pay for their books?! We might end up having to co-sign for their college loans as well… we don’t know what the future holds.
However, we do know that our children will be educated about money and will learn about working and saving. Earning the things that they so desire. This may sound contradictory to what society is teaching our youth these days. Our government can’t control its own spending and its borrowing has gone out of control. What kind of example is that? Since when has it been okay to default on payments? Since when has it been okay to make purchases that you know you don’t have the funds to pay back? Perhaps I’m simply not smart enough to comprehend the theories that those great economists have about how we can spend ourselves out of debt. I’ve tried to wrap my mind around it and printing more money, inflation, all those things are simply way over my head. I’m a simple gal and as I see it, we should live within our means. Don’t get me wrong, I’ve got some big dreams and some big plans, but I’m also logical.
It is not my intention to turn this into a political post, but we are in some difficult times because ultimately we have handed over our hard-earned money to our elected officials in hopes that they would do what’s in our best interest. Unfortunately our elected officials often have lied and invested where they have found to be best because apparently they are more educated than us, but their investments have proven to be huge gambles and huge losses. I for one am not one to gamble. I like to know exactly where my money goes, because I know how hard it’s earned. My husband works in the military and it’s not your typical job that pays the bills. But that’s exactly it, money that isn’t earned isn’t valued so it’s a lot easier to be frivolous with it… it’s easier for the government to make careless decisions without doing much research or reading all dotted lines because it’s not their hard-earned money.
Then there’s the other side of the coin where the rich get richer and the poor get poorer and we feel like we’re getting robbed. Yes and no. Common sense tells us that there should be equal taxation across the board, but I don’t see the need for the rich to get taxed any more. Why? Because we get angry when we check the labels of our products and see “Made in China.” If we want our products to continue to be made here in the good ol’ US of A we need to give the rich incentives to keep their businesses here. Their not foolish, why would they keep their business where they get taxed more? I wouldn’t, would you? We want our products being made here, because we also want those jobs here! Maybe I’m super simplifying it all, but my humble self is way too simple to want to complicate things. Want to get the rich? Tax high ticket, luxury items! There you go… if you can afford Mercedes-Benz or Louis Vuitton, you can also afford its tax. Another thing, why in the world do we tax food? Especially the healthy, farm grown products? There should be no tax in any of that. Go ahead and tax all the junk, the sodas, the products filled with all the food coloring and preservatives, but let’s support our farmers and our country in becoming healthy. Sorry for side tracking but it’s really hard to contain myself.
Now back to our children and educating them on money. Although the government hasn’t been able to get their act together, they have however managed to put together, quite wonderfully may I add, a compilation of 20 Things Kids Need to Know To Know To Live Financially Smart Lives. The tips along with recommended activities were put together by experts from the President’s Advisory Council on Financial Capability. Below are a few of them, but for additional tips from 14-18+ year olds please visit their website.
For more on teaching your children on the concept of mathematics visit here.
Question of the day: How do you teach your children financial responsibility? How did YOU learn financial responsibility?