Not long ago, I tumbled across a very interesting read. Some American I have admired so much for his personal finance management advice, Trent, was telling a story of how he discovered the path to financial security. What I found very interesting was how he linked his parent’s financial management behaviour to his indebtedness in his own early career years.
Like many of us, this man was born into poverty. Both of his parents were used to the concept of living from payday to payday, never having enough saved for them to survive more than a week or two.
One important mistake that his parents would make is that whenever they got a lot of money at once like a bonus, they would celebrate by buying things that they didn’t need—like buying TV sets in each of the children’s rooms, top of the range bicycles, etc. As a child, Trent believed that this was a normal situation. He believed that when one had money, they were supposed to spend it on something that brought them happiness immediately. Money was the key to happiness, he thought, because one could get stuff they wanted. He didn’t understand that saving money might not buy you that immediate burst of joy, but it could provide a steady level of peace in the security that it could provide for you.
Another problem with the level of poverty in Trent’s family was that he never really had an opportunity to manage any money of his own until rather late in his teen years. He didn’t receive any sort of allowance. Any gift money he received was turned over to his parents who would then dispose of it as they wished.
On the rare occasion that Trent did have any money, it was usually slipped to him by his grandmother or a wealthy aunt that he had, who would whisper in his ear not to tell his mother and to spend it quickly on something. The intention was good: they wanted to bring joy to the life of an impoverished boy. The problem was that it didn’t teach him any sort of financial skill whatsoever. He would go to the store as soon as possible and buy a video game or something frivolous which brought immediate joy, but afterward he would go back to having no money.
I wish to pop this question at you: Do you ever give your children/wards money to manage on their own? If you do, take time to observe their spending quality—and check if they save any coin at all? Teach them good spending habits and saving culture while they are still young as the Biblical King Solomon would advise.
The short of it, the lessons Trent got from his parents did not teach him how to save or manage finances by himself. When he graduated from College and started a job, he was getting so excited with his salary going on a spending spree from one month to the next accumulating more debts in the process. Reversing these mistakes cost him many years of frugality and saving. If his parents had taught him these tricks early enough, he probably could have been more careful in spending and managing his finances.
Do you know that children are so observant and learn a lot from you as parents because they consider you role models? Take time to teach your children benefits of saving and the significance of distinguishing between needs and wants—of course without denying them the fun that they deserve from time to time!
A blessed week-end to you and yours as you take a step to teach your children/wards how to manage finances—it’s a lesson they may never get in school and yet very important for their future.