Nov 15 2007

Teach your children well

A few commenters on my blog have been impressed with my frugal mindset, especially since I’m 22 years old.

I’m flattered, but really, it’s because my parents have taught me about money.

Yesterday, I went to the library and checked out a stack of books. One of them is the popular “Total Money Makeover” by Dave Ramsey. I hadn’t heard of him before I read about him in the blogosphere.

I’m about halfway through the book, and I’ll post my general reactions to it later.

One thing that struck me is the ages of people mentioned in the book. While there’s a few people in their 20s, most seem to be in their mid-30s to mid-40s. They had huge credit card debt–some had $30,000, some had hundreds of thousands in debt if you factor in their cars and home.

Whoa.

Happily, they were able to dig themselves out.

I don’t want to have to dig myself out of a bottomless pit of debt. I want to prevent myself from getting there in the first place.

I’d rather be 35, have no credit card debt, no car payments, and own my home outright. Wouldn’t you, too?

Yet, it seems people in my age group are saddled with debt with no way out. There’s student loans, credit card debt, and little in assets. Many in their early 20s are getting their first “real” jobs. It takes some time to build wealth and shed the debt from the college years.

Still, I’m not satisfied with how personal finance is taught to high school and college students. A rigorous course in personal finance should be mandatory in the high school curriculum, AND in college settings. But, parents should be actively involved in teaching their children about money–whether the schools teach about it or not.

There are actually college students who don’t know how to balance a checkbook–or even write a check.

But, these same students have 3 credit cards and several thousands of dollars racked up on it. Hmm. Something’s not right.

When you’re a college freshman, during your first few weeks of school you’ll pass dozens of people on the sidewalk, trying to get you to sign up for a credit card. You’ll get a t-shirt or maybe a sandwich when you sign up.

If parents and educators don’t tell kids “Hey, I don’t want you to sign up for a credit card when you are 18. Here’s a few reasons…” then chances are, they won’t realize how bad it could be.

You know how you teach your child “If someone offers you a cigarette, you tell them no.” Right? And then, if they are ever offered a cigarette, they remember that their parents taught them how to react.

These credit card hounds are essentially the same thing as a “friend” offering a cigarette.

“Want a credit card? Easy money! Buy now, pay later!”

“Sure! Sign me up!” or “No thanks, I’m responsible with my money. Bye.” Which will your child say? Are you sure?

I’m not saying every 18-year-old will be irresponsible with money. But tell me, why does an 18-year-old student with no (or very little) income need a credit card? Just say no.

Parents absolutely have to teach their children simple finance and gradually build to more complex ideas. How will I know how to budget, if no one teaches me? Sure, I can figure it out for myself, but it really is important that parents teach their children well–especially before they move out of the house.

So, if you are a parent: Get to it! If you don’t have a great grasp of finance, it is your responsibility as a parent to learn, so that you can later teach. Learn together if you want. You don’t owe your children money, but you do owe them a good education in personal finance.



12 Responses to “Teach your children well”

  1. Total Money Makeover is definitely the best Ramsey book–he’s such a crappy writer, but has great ideas! When I was little my parents made do on a very small income so my mom could stay home with us–so many great frugal lessons learned there. I did fall for the first day of college credit card scam!–I don’t think my parents had any idea about this practice. I’ve made so many money mistakes I think I’ll be able to cover any money topic with my kids as they grow! My son already picks up a toy he wants and asks “is this on clearance?” :)

  2. You will love Dave Ramsey. He also has a TV program on the Fox Business Network 7pm CST M-F. He preaches over and over again, that you finanacial habits are 80% behavior, 20% education/skill. Which means that anyone, yes anyone, can do this… I’m interested to hear your thoughts after reading TMMO.

    Enjoy…

  3. Kudos to you and your parents! Kacie you are very wise to be 22!

  4. VERY well said Kacie!

  5. My 6 Year old already knows what intrest is — because whenever the cute little girls (usually your age!!) ask me if I want to sign up for XYZ store card – I tell them “Nope I’m allergic to intrest” And do you know they still say “But you’ll save 10% !! Uh – yeah and pay 17% intrest – no thanks!

    My son asked me what I meant and explained it to him a(using M+Ms as $$ yeah, he picked up on that FAST)

  6. I enjoyed Money Makeover. It’s good some pretty straightforward, common sense stuff, but it’s put into a program so that someone can apply it.

    I was raised well regarding debt (I married mine). I hope to raise my kids well enough that even if their soulmate is in debt, they’ll be able to manage. :)

  7. I’m with you, Kacie- If we start right, we’ll end well too. We’re 23, and have been careful to make the best financial decisions we can NOW, because we know that interest can either work against us now (with credit card debt), or for us in the long run (retirement accounts & savings) I know that living frugally now will also pay off in the long run because we’ll know how to live below our means, and not have expensive habits to support in the future. It sounds like you guys are starting well, too!

  8. You are so right. We’re one of those old people in the book, 30’s (literally in the book). If we had your mindset, when we were in our early 20’s, we’d be halfway to being millionaires at the age of 33. Great post!

  9. Well said! My parents taught me the right way to handle my finances but I still managed to screw it up. But I am now on the right track now. I guess I had to learn my own lessons. I wish I had your attitude when I was 22! Keep up the good work on this blog!

  10. Great post, Kacie. I believe you are absolutely right about the role that parents and family plays on a person’s financial tendencies. My parents were always frugal and that wore off on me. My husband and I are now working on getting completely out of debt and plan to stay that way. I’m looking forward to the day when I no longer have to pay a bill other than for utilities!!!

    Oh and you’re should enjoy Dave Ramsey. His ideas and his book have been a great help and encouragement to us.

  11. Two things my parents did for me that I really appreciate: when I was a teenager whining about pricey fads, my mom started giving me a clothing allowance. And I was responsible for ALL the clothes I needed; one year, it was a winter coat, so I had to save for several months. Taught me to shop in thrift stores and on sale.

    The other thing was that my dad signed me up for a credit card when I was 18. He held it up in front of my face and told me if I didn’t pay it off every month, he was cutting it up. It had a very low credit limit and I quickly learned that it wasn’t “magic” money because I had to pay the statement at the end of the month.

  12. I think you are doing the best thing you can at your age. You get “it” at a young age and that will take you so far in life. Too many people get their first paycheck and see they can finance a new car, get a credit card and before they know it they are deep in debt.

    I’m 29 so I’m older, but luckily my husband and I finally got it this year. We were not putting to good use the income that my husband earned, we owed $ on cars and had a credit card. We learned about Dave Ramsey and the Total Money Makeover. We will be debt-free in the spring and I can’t wait! Before it always felt like we were just spinning our wheels but never getting anywhere. Now we are getting somewhere and it feels good.

    Keep up the good work!

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Hey! I'm Kacie, wife to Shane and mother to Jonathan (7), Vivienne (5) and Amelia (2) . I write about my family's finance: how we save money, improve our spending, and plan for the future.

I hope I can inspire and encourage you to improve your situation. See disclosure.

I'm adopting a much slower-paced posting schedule, and treating this as a hobby blog now.

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