I have had to learn, the hard way, about money. I still don’t really understand it all that well. My parents gave me an allowance when I was a kid, but I don’t think I ever connected it all that much to things I wanted.
When I was a teenager, I had a modest income from a job, but I never worried about not having money to buy stuff that teenagers buy – records, movie tickets, fast food. When I went to college, my parents gave me an ATM card – they were pretty new then – and put money into my account whenever I needed it.
I came of age as the banking industry was deregulated, and the banks were allowed to go after less reliable consumers, who were in a sense more desirable, since they’d borrow heavily, not pay in full, and could be gouged at large interest rates. I fell for that trap, and I got calls from the bank because I didn’t pay the bills. One time I thought a friend of mine was calling me and I jokingly quoted some TV show to the effect that “you are to be ignored” in some robotic sci-fi voice, and then I realized it was the credit card company calling. I pretended I was not home and suggested the bank call back. When I graduated from college, I got money from family, and so did the banks.
I learned more from my wife than I ever did from my parents. I learned to pay the bills in full every month, to spend only what I was sure I could afford. For almost two years I saved up almost every check I ever got into our “wedding fund.” I look out for good opportunities on banks with the best interest rates. I got good advice from my father-in-law about a bank that would eventually go public, put our savings in the bank, got an IPO for a great price, sold the stock at about double, and used that money to pay off all my student loans in one lump sum after graduation instead of making monthly payments until I retired.
It’s still a struggle for me, to understand money, how it works. But I feel I have to learn, since I don’t want to pass that problem on to my girls. We’ve started with the older one, and she’s taken to selling stuff – she gets the idea that you provide a service and people pay for it, and that’s great. But there’s a lot more to teach, and a lot more to learn.
I started this year trying to keep track of my money, where it goes. But it’s almost three months into the year, and I still have not added it all up and tried to do something basic, like figure out how much money we make and how much we spend. The truth is, it’s easier not to be responsible, not to care, not to worry about it. But I know from experience that this will lead to problems for my children as they get older.
We’ll be starting an allowance system for my oldest soon. We tried sort of basic “bribery” for good behavior, but neither my wife nor I like that kind of thing – they do it at school, and apparently it works! – so now we want it to be more directly related to doing her share of taking care of the house: help making her bed, putting away dishes, helping vacuum and dust, that sort of thing. I’ve created a ledger sheet on my computer, and at the end of the week – just like pay day! – she’ll get her money, and she can choose what to do with it. My wife set up a bank account for her, she agreed to invest the money rather than have it earn virtually no interest. We’ll talk with our daughter about how she can save her money, and what other stuff she can do with it. Let’s hope she develops a healthy relationship with money, rather than have no clue about it.