Several weeks ago, my 4-year-old daughter, Sophie, was playing with a plastic gift card that had long been without a balance. She took the card to the stereo (of all places) and made a sliding motion, gently running the card through a slit in the machine. When I asked what she was doing, Sophie said, “I’m getting money from the machine.”
Clearly she pays attention when I go to the ATM to deposit money or get cash. I wasn’t expecting that she knew that the motion of sliding the card meant getting something. (I’m picturing Suze Orman cringing at this moment.) It was quite a reality-check for me that I should soon think of how to teach Sophie the value of money. Lessons like, plastic cards don’t necessarily equal money.
Watching Sophie slide the plastic card through the stereo got me thinking of my own childhood and how so much of my own financial actions were shaped by the parenting I received.
Let’s flash back to my younger days. I grew up with a father who worked and a stay-at-home-mom. My parents were quintessential Baby Boomers raised by Depression Era parents. They paid cash for all their purchases and always paid credit card balances in full at the end of the month. We didn’t take fancy vacations, or dine out frequently, nor did we buy new cars but once a decade. But we never suffered either. We lived comfortably, and my parents always made sure we had food, clothes, and … things.
When I was a kid, I pretty much got whatever I asked for (within reason). Books, clothes, the newest toys — it wasn’t a problem. If I wanted a new Barbie, my mom bought it for me. The My Little Ponies and Care Bears — we had them all. What I wanted, I got right away. The only time I recall using my money to purchase something was my first Cabbage Patch Kid. But I did not pay for the three dolls that followed.
Don’t get me wrong — this was a great way to grow up, never feeling deprived of anything. But looking back now, it was probably not the best way to teach children about money. I never learned budgeting and patience with respect to earning and paying for things.
The result was that for much of my adult life, if I wanted something, I’d buy it. Just like I’d seen my parents do when I was a kid. The problem was that I didn’t have the money in the bank to back up those purchases the way my mom and dad did. I never budgeted or saved money for the things I wanted. And as a result, I spent many years spending without thinking, resulting in what seemed like never-ending credit card debt.
It’s taken many, many years until I finally realized that, in the words of Mick Jagger, “you can’t always get what you want.” It was not until my early 30s and when I become a mother did I start to take financial responsibility for my life.
I remember the moment my financial reality hit me, clear as day. It was December 31, 2008. My husband and I were enjoying a movie, dinner out, and trip to the now defunct Borders Bookstore. I sat in Borders reading Suze Orman’s financial guide to 2009 in which she argued the economy was going to hit America hard in 2009. And if you don’t get your financial act together, you’d be sorry.
I immediately felt my heart pounding and feelings of anxiety and shortness of breath overtook my body. I was $26,000 in credit card debt (not to mention student loan debts and a mortgage) with barely any money in savings. We didn’t track our spending. If I ran low on money each month, I’d simply charge whatever remained of the expenses on a credit card.
My daughter was just over a year old. If I didn’t start looking seriously at our financial situation and getting our money in order, my daughter’s future (not to mention my own) would be seriously in jeopardy.
On New Years Day 2009, my husband and I sat down and began tallying our income and expenses. We made a budget and promised to stick to it. We dramatically cut back our spending, only allotting money on necessities, bills and paying down debt. While this may seem like a “no duh” strategy to some people, it was a completely foreign concept for me. I had never seen my parents struggle financially and they never had debt to speak of. I was ashamed at what we owed, but was looking forward to a new year of financial freedom.
It was a tough road. But the path helped tremendously when my husband and I both got hit with state-mandated furloughs in August of 2009 (which translated to a 10% monthly pay cut). We were able to adjust our finances without too much of an impact. And one year later, I was proud that we kept to our goal of not using credit cards and paid down our debt by about 75%.
It’s now been three and a half years since I took a long hard look at my financial future – and past – and decided to make a change. Now I only buy what I can afford, and budget for the things my family needs (and wants). I’ll be honest when I say I do miss the days when I would go to the store and buy new clothes, books, and DVDs without thinking. But now my heart and mind (and bank account) are much more at ease than ever before.
It’s funny how much our children can teach us about ourselves. In my case, my daughter taught me valuable lessons about money and my financial future. I am determined to teach her the value of a dollar and the importance of saving in a way I was not taught during my childhood.
I’m confident I can educate Sophie about these important lessons as she grows. Maybe the fact that there is not an infinite amount of money in the ATM would be a good start. Of course, if money actually does come out of that stereo with the plastic gift card, I’ll rethink my lessons (and ask for the gift card back).
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