Teaching My Child about Money in a Way I Was Not Taught

When I was in high school and working 15 to 20 hours a week, my mom gave me free rein to use the money I earned as I would like.  Actually, she said nothing to me about saving for college or putting some money into savings.

When I had friends who complained that they had to put away some of their earnings, I commiserated with them.  How unfair of their parents to make them save some of their money!  They worked hard for their money, often at crappy part-time jobs.  They deserved to spend the money any way they saw fit.

The way I saw it, why save for college?  According to financial aid rules, if the student has any savings, she would have to use the majority of it to pay for college.  How unfair.  To add insult to injury, if prospective college students have some savings, they would qualify for less financial aid, which often meant fewer student loans.

The injustice. 

Yes, it was better to spend my hard earned money than save it and be penalized.

No one told me differently.  In fact, many people in my family agreed with me and encouraged me to buy a used car to get to and from my job.   Of course, I paid the loan payments for the car, the gas I used and my insurance out of money from my job.  That was a responsible use of money, but I also went out to eat with friends, a lot.  At 16, I was going out to eat with my friends twice a week at least.

However, my plan worked perfectly.  When I went to college, I didn’t have to use any of my hard earned cash.  No, not me, because I hadn’t saved anything.  Instead, I left college with nearly $20,000 in student loan debt.  I took two years off and paid down as much student loan debt as I could, getting it down to about $8,000, but then I went to graduate school and took on more student loan debt.  I graduated with nearly $25,000 in debt total.  I am still paying on it today, 13 years later.

Now that I am the parent, I am one of those “awful” parents who makes her kids save.  My son knows when he gets his allowance, some goes to save, some goes to donate, and some goes to spend.  True, it makes me cringe when he uses his spend money on little trinkets like temporary tattoos, stickers, and gum, but I keep silent.  He did the work to earn the money, and he can spend it as he likes.  However, I am inflexible with saving; that money must be set aside.  When he goes to college, I expect that he will have to use the majority of that money.  Rather than seeing it as a waste, I see it as an important component of his financial education.  Spending his money to pay a portion of his college education will hopefully make him take college more seriously.

Meanwhile, I have already begun having chats with him about money, spending, and budgeting.  He watches his dad and I work hard to pay down our debt with gazelle intensity.  He sees me use a calculator at the grocery store to see how much our groceries will be.

Ultimately, he will make his own financial decisions as he grows up, but I plan to teach him throughout these important years so that even if he turns into a spendthrift, he will have a firm financial understanding to revert to as he ages.  While my mom taught me how to stretch money further, she never taught me how to save; I hope saving is a lesson my son takes with him throughout his adulthood.

How do you teach your kids about money management?

Melissa writes at Fiscal Phoenix where she encourages people to rise from the ashes of their financial mistakes as she and her husband are doing.

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    1. The forced savings is something that I really didnt like when in high school and was working, and didnt like it in college either when I got the money (It went to tuition – and I didnt “see” it doing anything for me).
      If you’re having trouble getting your kids to agree, tell them it will be like this all their lives, and you’re just taking the part of the IRS in this case!

    2. Your son will thank you later and you will be telling him “Yup, I told you so.” If I get children I will definitely teach them about money from early and encourage them to save. And seeing that you’re setting a good example, I think your son is in safe hands.

    3. I like this tactic; your son will learn some great principles now and hopefully graduate college with little debt. I wish I had taken the principles my mom taught me about saving and used them in college, but once there I was on my own — and I spent on worthless stuff!

    4. Great story Melissa!

      I’m a little different in that we’ve been saving college before both of our kids were born.

      But I do have an advanced strategy too for them, but that’s another story…

      It’s funny I was reading this article thinking it was Jason, until you used the phrase “gazelle intensity” (which was great by the way). An eyebrow arched and I though “Jason?, naw”…

      Gave me a good chuckle when I realized it was you instead of him…

    5. I required my children to save half their allowance. When they started to work in high school, I motivated them to save by matching their money for a car. My children are now adults and are great savers.

    6. Its very important to start teaching kids about money early. Its those lessons you learn from your parents that stick with you. But parents have to show by example.

    7. My husband and I just had this talk. We tell our daughter who is 14 if she saves right and invests that she could be set by the age of 40. We are determined not to let her grow up with no lessons on money like we did. I am with you about the calulator at the store also. I use the store to teach the kids how to save, how to spend wisely and the difference between a want and a need (something else that I was not taught). Thanks for the great article.

    8. It is peculiar that if we save and work during HS, we are denied the same amount of financial aid.

      The penalty of being responsible amazes me.

    9. Saving my money was instrumental in my upbringing, and what I bought with it was that much more special. I’d like to think my kids will have the same experience, but worry a bit that too many things are far too easily obtainable in today’s world, and the value of the dollar doesn’t mean as much just based on the lack of excitement from today’s tangible things.


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