Are You Teaching Your Kids to Follow Your Financial Habits?

My oldest is 10, and he does chores around the house to earn an allowance.  He works hard, and we’ve taught him to set aside a percentage for investing (10%), for saving (20%), and for giving (10%).  That leaves him to spend 60% of everything he earns.

And spend he does!

He finds it extremely difficult to let his spend money sit and grow so that he can buy something bigger.  Instead, as soon as the money hits his hands, he wants to spend it even if it’s a fairly insubstantial amount and can’t buy him much.

He just can’t seem to save up for the things he wants.

Instead, he’s enticed by advertisements.  He reads the newspaper and magazines to find free catalogs to send away for, and then he wants to spend his money on any little thing.

Teaching Financial HabitsIt’s driving me crazy.

His money, his life.  I should let him spend the money and be disappointed when he has no money to spend later.

Actually, that’s already happened.  When we first moved to Arizona, he saw a 2015 calendar at Costco for $15.  This calendar had scenic landscapes of Arizona and was quite pretty.  I told him to wait because as 2014 came to a close, he could get calendars cheaper.  But he couldn’t wait, and then in December and January, he was disgusted to find how cheap calendars got.

Still, his behavior hasn’t changed.

As a parent, I wonder how much I should interfere.

You see, when I was young, I was just like my son.  I spent every Saturday at the mall, my money burning a hole in my pocket.  I HAD to buy something, even if it was just a pair of socks I didn’t need.  Every week, I walked through the same stores, buying stuff I didn’t need, just like my son buys the stuff he doesn’t need now.

However, my mom never stepped in.  She gave me a wide amount of freedom.  Whatever money I earned was mine to spend how I liked.   She didn’t even ask that I set aside a portion of it for savings.

I was a responsible kid and bought my own car, paid my insurance, paid for gas, and also bought my own clothes.  I think she figured that I was handling my money well, so it was up to me to decide what to do with the rest.

When I was a teenager, my friend and I used our money from our job to go out to eat and see a movie every Friday.  Sometimes we’d go out to eat on the weekdays, too.

What a waste!

Imagine if I had instead invested just a small portion of that in a Roth IRA.  Or if I had saved it to pay for part of my college education.  Maybe I wouldn’t have graduated with $25,000 in student loan debt.

Even now, I have a hard time saving, though I am getting much better.  I’m finally able to stick to a budget and make saving a priority.  It’s taken me 40 years to break bad spending habits that I learned in childhood.  Let’s be honest, getting a hot deal isn’t really a deal if you don’t need the item and it robs you of the ability to save.

I want to teach my son this lesson now, so he can be more financially responsible than I was for many years.  But that lesson is oh so hard to teach.

How much do you guide and interfere in the way your child chooses to spend money?

 

What’s Your Financial Weakness?

We all have a financial weakness.  That one area where we struggle to do the right thing.  We might even struggle with deciding what the right thing is.  If we remain unaware of our financial weakness, it can wreak havoc throughout our financial life, as my weakness did mine.

However, knowing your financial weakness, your financial Achilles’ Heel, so to speak, can help you become a better manager of your finances.

My Financial Achilles’ Heel

Me?  I like to squirrel things away for the proverbial rainy day, but when the rainy day comes, I don’t like to dip into my stash.

My husband and I have an emergency fund.  True, it’s smaller than we’d like, but we do have one in place.  Considering 28% of Americans don’t have any emergency fund (CNN Money), we’re glad to have our small one.

Financial WeaknessThere are other ways I squirrel away things.  We buy produce in season at lower cost by doing creative things like renting an apple tree.   Then we store it away for the cold winter months.  (It makes me feel a bit like a pioneer.  A pampered pioneer, but a pioneer, nonetheless.)  Right now we have a deep freezer in our basement that is filled with plums, grapes, blueberries, strawberries, and applesauce.  If we didn’t have money for groceries, we have enough fruit to easily last us for two to three months.

Having an emergency fund as well as a stocked pantry doesn’t sound like a problem, right?

Right.  I’m being financially responsible and preparing for a time when money will be tight.

Here’s the problem.

I don’t like to dig into my stash.

If I have a financially lean month and I’m faced with a large expense like a car repair, I don’t do what would be logical–dip into my emergency fund.  Instead, my first inclination is to put the repair on my credit card and leave the emergency fund intact.

If I have a month where I don’t have as much grocery money, I’m more likely to put groceries on my credit card than make a significant dent in our food stash.

My behavior makes.no.sense.  No sense.

And yet it took me years to figure out that I do this and to realize that I have to fight the natural inclination to go in debt rather than dip into my reserves.  Part of why my family struggled with credit card debt is because of this irrational behavior.  Now the credit card debt is paid off, and I have a chance to start anew, well aware of my weakness.

What’s Your Financial Weakness

So, what’s your financial weakness?  What completely irrational behavior do you exhibit?  Are you even aware of what it may be?

Honestly, finding the chink in your armor, so to speak, may take years.  I think it took me nearly 15 years to figure out mine, and I made a lot of financial mistakes during that time.  I’m not sure why I exhibit this behavior except that perhaps growing up, I always saw my parents struggle with money.  They never had money to create an emergency fund.  Credit cards were their emergency fund, and they had to use them frequently.

I’m guessing for most of us, the experience is the same.  Financial behaviors we saw in childhood and learned as normal become the basis for some of our adult decision making.

What is your financial Achilles’ Heel?

How to Handle Someone Who Gives Too Many Gifts

First world problems, right?  How can you complain about someone who gives too many gifts?

Believe it or not, that’s something I’ve struggled with this holiday season.  I have one relative who, simply put, is buying too many gifts for me, my husband and my kids.

If this relative was independently wealthy, that would be one thing, but I know that she’s also trying to save money for some home repairs and a trip of a lifetime to Europe.  I wish she would buy each of us just one gift and put the rest of the money in her vacation fund.

Do you also have problems with someone in your life who buys too many presents?

If so, there are things you can do.  (Though you’ll probably want to implement most of these suggestions AFTER this holiday season.)

Too Many GiftsSet a gift giving limit.  Most people buy gifts because they want to be nice, and they want to do something special for you.  However, people can overstep their bounds.  This year between all of my relatives who like to give gifts to our kids, the kids are getting more than enough presents.  Combined with the gifts my husband and I were going to give, my kids were going to have way too many gifts.

I set aside some of the gifts I was going to give; I’ll use them next year.  I also had my mom set aside some of her gifts for birthdays.  I’ve also asked some of the relatives to set a limit of one or two gifts in future years so that our children are not drowning in presents.

Accept and be appreciative.  Another idea is to simply accept the many gifts and be appreciative.  After all, as Trent Hamm, guest blogger on The Christian Science Monitor, points out, “These gifts are given out of love.”  Hamm, who struggles with his family members giving his kids too many gifts, explains, “People give our kids gifts because they love them so much and it’s their way of expressing it.  For me, telling them  not to do so is akin to saying, ‘Please don’t express your love and caring for our children.’”

If someone like a grandparent routinely goes overboard with the gift giving, you can reduce the number of presents that you get your kids and save money.  You can just reap the benefits of saving money, or you can take the cash that you saved by not buying so many gifts and instead give the cash as a present to the prodigious gift giver.  Everything comes full circle this way.

Direct the gift giver’s generosity.  I remember when I was little, my mom’s friend wanted to get me a Christmas present.  I was a prolific reader, and she got me Green Eggs and Ham.  I was well beyond that book.  Too often, people try to be generous by giving a present, but the gift they give is not necessarily what the recipient needs or wants.

You can direct the gift giver’s generosity by steering her to a wish list.  You could create it on Amazon, and then you would be able to keep track of what has been bought, and you could also have some say in the plethora of presents coming into your house.

Do you struggle with well-meaning relatives buying too many gifts?  If so, how do you handle the situation?