Learning financial responsibility is an important part of growing up and it is something that I plan to instill in my daughter from a very early age. I think it is so important to teach our children the value of a dollar (Oh man, I think I just made myself sound 102 years old by saying that, but it’s so true!), especially in a world that values instant gratification and living beyond our means.
When I went away to college, I remember how excited I was to be out and doing things on my own, but I also remember the reality check that came along with adult responsibilities and paying bills. Money wasn’t dispensable anymore, even though some of my friends seemed to think so. I remember friends who would go out to eat on a daily basis and were constantly buying new clothes and other things I just couldn’t afford. I remember being baffled and wondering how they could afford to live this kind of lifestyle on a student budget? The answer: credit cards.
Now, don’t get me wrong. Credit cards are important and they’re a great tool when used properly, but many of these young co-eds had no idea how to use one. For many it was the first time in life they’d ever had any experience with financial (ir)responsibility. Credit card applications showing up at their front doors on a daily basis and they couldn’t resist the allure of all this “free money.” I knew better though, thanks to a very valuable financial lesson my dad taught me when I was only 13-years-old.
We belonged to a local credit union and they had this program where your kids could get their own credit card. For many parents this was probably just an easy way to keep track of what their children were spending and a way to give them an allowance without having to always have cash on hand, but not for my dad. He asked me if I would be interested in getting one and I eagerly jumped at the chance.
The credit card had a $300 limit, which might as well have been a $30,000 limit in my 13-year-old mind. My dad carefully explained what a credit card meant and how it worked. All I heard was “interest rates,” “monthly payment,” “blah, blah, blah … ” as I readily tuned him out in favor of daydreaming of the amazing designer closet that $300 was going to buy me. (Ha!)
I’m sure you will be completely shocked to find out (*insert sarcasm here*) that I quickly maxed out my card within the first weeks. I got some clothes, treated a few friends to meals to show off my newfound swiping skills, but aside from that I had very little to show for all that credit card usage. That’s where it all got real. I suddenly realized, “Oh wait! I have to pay all that back!” I remember that I decided to avoid talking to my parents about it in the hopes that they would just forget about it or bail me out … just this once obviously. No such luck. The bill arrived in the mail one fateful summer day and my dad came to tell me how much I owed. I cried and asked him how I was ever going to be able to pay that back, to which he replied, “Well, start babysitting.” And so I did.
I spent the rest of my summer babysitting for the kids next door. They were jerks and the mom was always kind of cheap about paying me, but it was a job. When my friends were out having fun, I couldn’t drop what I was doing and go with them. I had responsibilities now. I had to work so I could make that credit card payment. By the time the first day of school rolled around, I had little to show for my summer aside from a few outfits I was already bored with, a lot of babysitting, and a paid credit card bill. There was no extra money either. It all went towards that bill.
As I paid off my bill slowly, but surely, I remember my dad started talking to me about how to use a credit card the right way and about being financially responsible. This time, I actually listened. I vowed that I would never have another credit card again. Obviously that didn’t happen. I grew up and realized that credit cards are a useful part of life when you use them wisely, but I never went crazy again or purchased items that I couldn’t afford to pay off. Now as an adult, my husband and I own a home and a few cars with no payments. We have zero debt aside from a very small student loan that I’m still paying off. And I credit all of this to my dad, who taught me a valuable lesson in finances all those years ago and really set the stage for my lifelong financial responsibility.
While I may not teach my own daughter financial responsibility in the exact same way, I definitely plan on instilling its importance through little things like chores and allowances as she gets older and starts to understand the concept of money. I want her to understand its the value and I want her to be smart with it, especially as a young woman. I want her to know that women can be wise investors of their money, the same as men, and that she can have pride in herself and be able to care for her own needs without having to depend on someone else.
How are you/do you plan to teach your children the importance of financial responsibility?