Sunday, November 14, 2010

The Fine Art of Finance

I have struggled with money my entire life. When I was a kid, I got an allowance. I saved my allowance until I had enough money to buy the thing(s) I wanted. I remember saving for months and months to buy my much coveted black and white 9" television. I saved and spent, saved and spent. I never just saved. I never learned how. Is this something that is learned or something that is innate in us? I wish I knew.

My father never understood why I wasn't "good with money". After all, he never paid interest on a credit card in his life and had A LOT of money in savings. What was wrong with me? How could I not be "good with money" like my father? Of course, my father never talked to me about money growing up. He never talked about saving or spending or investing or anything. How was I to know about financial responsibility?

At age 20, I got my first credit card and so began my decades of debt. I am 45 years old and for the first time in my life I am credit card debt free. It is an amazing feeling, one that I can't really describe.

I don't want to make the same mistakes that my father made with me. I want Princess to know and understand money. I want saving to be second nature. I want to offer her the opportunity to learn about financial responsibility without "teaching" her. At first we started with an allowance and a fairly sizable allowance. She was to use her allowance to buy the things she wanted. And with that, I watched her do exactly what I did. She saved until she had enough to buy the thing she wanted. Obviously, this wasn't working.

Time for a change.

We went back to buying her the things she wanted. But how do we share the practice of saving money? Then I came up with this idea. We continue to buy her the things she wants AND give her an allowance with the express purpose of saving this allowance. We've talked about donating money to causes. Princess has decided to donate to Village Home. It is up to her to decide how much she would like to donate.

We also talk to Princess about money. We talk about how much money we have and what we can afford to spend. We talk about saving and credit card debt. We talk about our struggles with money. We don't keep anything a secret and she is free to ask anything she wants to know about our money.

Is this the answer to learning financial responsibility? I have no flippin' idea. We're just doing the best we can in the hope that she won't have to go through decades of financial struggles like we have. At the moment she is pretty darn excited to watch her savings grow.


  1. You know, it's interesting. I never thought about it that way.

    Daughter does the same thing, saves ALL her allowance until she can afford what she wants and then spends it ALL.

    Maybe and idea for us is to introduce her to the idea of saving part of her allowance (and what she earns working) and also leaving some for cash flow?

    Money can be a touchy subject for parents, especially if they're not great at handling it themselves.

    I think your approach is brilliant. :D

  2. Sheri, I sure hope you're right about my approach being brilliant. Only time will tell. It is a really hard subject...

  3. I have seen a special piggy bank (not pig shaped) that is divided in three parts. One for saving, one for spending and one for charity. Someday when I have some money I will get it for Violet.

    Ahem...we are terrible with money and I struggle with how to teach responsibility to Violet.

  4. We tried our version of that when Princess was younger. We bought 3 piggy banks at Michael's Crafts. We decorated and labeled them, "save", "spend" and "give".

    Princess seemed more frustrated by it. Saving for something took forever. I could see things heading in an eventual spending direction, just like I did.

    After all those encouraging words ;) I hope it works better for Violet.

  5. We give G $5 a week, with the agreement that he saves (long-term) $1 and gives $.50. $3.50 is for him to spend or save to spend on something bigger. This seems about right now because he has to save about 6 weeks to get a $20 toy. And yet after a year he still had $52 in savings because he doesn't touch the long-term savings. As he gets older we will eventually increase the amounts with the agreement that he automatically save 20% and give 10%. We only give him toys/etc on holidays anything else he wants he has to buy. I blogged about it when we first started and included some links to good articles on the topic:

  6. Very cool Sherry! Thanks for the links. I will have to take some time over our break to check them out. I had someone else post their way of handling money with their kids over on Facebook. I should put that into a comment here to share it, too. I'm getting such awesome feedback!