In planning for becoming a parent, this is something I have been thinking a lot about lately. It’s so important to raise your children to be productive, independent, hard workers, and financially savvy. I have seen the devastating effects of financial struggles – particularly on relationships- so I have been thinking about what I need to teach my children to ensure they make wise financial choices.
SO MANY PEOPLE are plagued with debt and are drowning financially. It is so sad to see, and my heart aches for those who have no control over it. (These are the people we want to help! That’s what God calls us to do.) But… I do not feel sympathy for people who are poor stewards and make unwise financial choices. Much like anything else worthwhile, it takes discipline, and many people lack that. Our society tends to think we ‘deserve’ things & shouldn’t have unfulfilled longings.
I cannot STAND to owe anyone anything, and I sure as heck hate the idea of paying interest!! Obviously you can’t plan 100% for the future and you never know what will happen, but as of right now we are on track to be debt free in the next 5-7 years, and that’s with me leaving my full-time teaching job to be a SAHM in May (so thankful for the blessing of an incredible “plan B” income opportunity). Right now our only debt is our mortgage, but I know that no debt is ‘good debt,’ so we are working fervently to pay that off as quickly as possible. The less time we are paying interest on it, the better!! I cannot imagine what an awesome feeling of freedom that will be, and how it will allow us to be so much more giving. We both have a big heart for helping those who are TRULY in need.
Anyway, I’ve thought a lot about our upbringing because I know it’s OUR responsibility to teach our children how to manage money. Finances are something most of us tend to keep private, but I have learned that there seems to be a rather high percentage of people who have poor money management skills. And I think that’s because they were never taught HOW to manage money.
Jon and I have talked about it a lot (thankfully we see 100% eye to eye on financial issues- something I think it’s important to discuss before marriage) and decided that we take a very COMMON SENSE approach to our finances, and that works well for us. (In fact, I’m pretty certain it would work well for anyone that applies the simple principles.) And that is what we plan to teach our children. I’ll talk a little bit more about some of our “financial concepts” at the end of the post and get some ideas from others, but first I wanted to share a little of what has shaped us.
My dad is THE hardest working man ever…(well, him & Jon are tied)….and Mom too, so I grew up seeing that daily in our home. Jon’s parents are also both incredibly hard working people as well, so I’m thankful we both had that example growing up. We were also both very spoiled!! I can remember people commenting on that my whole life, & I’m sure people thought the same thing about Jonathan.
This is the deal though. Although both of us were spoiled, we both learned to be hard workers at a young age too. This has been one of THE most important factors that has helped Jon & I with our finances. (I know other people who were not spoiled, but their finances are a wreck. I think it’s way more important to focus on the things you ARE teaching your children than what you do or do not give them.) When we were younger, Jonathan and I both had really good grades, were very involved in school, and worked extremely hard in sports too. We were expected to work hard in each of those areas. I think that taught us both to be DISCIPLINED, which is a huge part of being financially savvy. We both had part-time jobs by age 15 and have worked multiple jobs ever since. I can’t remember the last time in our lives either of us were “just” working one job. When other people are at home watching t.v., we are usually both still working some sort of plan B (or C) income. We don’t do that so we can be rich or have more to spend more (we are both also VERY frugal!!)…we do that because we know if we work hard now, we can be debt free.
We have also chosen (or been blessed with the opportunity of) a “plan B” that allows us to work together- and we have a BLAST doing it! We don’t care WHAT we’re doing, honestly, as long as we’re together…so may as well be doing something productive that will help our family achieve our goal of debt freedom (rather than watching 8 hours worth of Duck Dynasty!). Right? That’s why we’ve worked so hard the last 5 years. We wanted to save enough that I could stay home with our babies and it not be a financial burden on our family. We had to start planning and preparing for this a long time ago…and that’s where most people get into a mess. They can only think in the moment and do not plan for long-term or set financial goals for the future.
Two of the main things I have taken from my parents is the importance of being a hard worker and the importance of giving.
Those are both HUGE an SO important! But there is another aspect of that which needs to be taught too, and I think this is where lots of parents miss the mark. We have to teach our children about spending, saving, budgeting, prioritizing, and the difference between wants and needs. it is okay to go without. THIS is what really sets people apart regarding finances.
Here are some of the other concepts Jon & I live by that we plan to teach our children…
- GIVE, GIVE, GIVE. The Lord LOVES a cheerful giver, and you can’t outgive God!! I’ve heard people say they can’t “afford” to give 10% to the church, and that blows my mind. The way I see it, you can’t “afford” not to. Tithing is a non-negotiable for us, and it’s the very first thing we so when either of us get paid. It’s God’s anyway, so you might as well give back to Him what is HIS! (He’s the one who allows you to have that income and can just as easily take it away.) And I have always tithed on my “gross” pay. I think of it this way…do you want a ‘net blessing’ or a ‘gross blessing’??
“If among you, one of your brothers should become poor, in any of your towns within your land that the Lord your God is giving you, you shall not harden your heart or shut your hand against your poor brother.” –Deuteronomy 15:7
“The wicked borrows but does not pay back, but the righteous is generous and gives.” –Proverbs 37:21
- If you don’t have it (as in CASH, IN the bank), DON’T SPEND it. God is not going to continue to bless you if you’re not a faithful steward of what He has already blessed you with. Yes, this takes discipline, but discipline is a choice and a habit that becomes easier with practice. We do have one credit card that we use for points, but I only use it like a debit card. I wouldn’t dare put anything on it if I didn’t have the cash to pay for it ASAP. Actually, we put everything we can on that card because not only does it give travel points, but it also has a spending tracker that is very detailed. It breaks down your spending so you have an extremely accurate record accessible at any time (also helpful for taxes and budgeting). I do NOT recommend ANY credit cards unless you are 100% sure you can only use it like a debit card. If there is even a slight chance you will be tempted to charge, don’t even allow yourself to be in the position.
“Owe no one anything, except to love each other, for the one who loves another has fulfilled the law.” –Romans 13:8
- You MUST work hard to prosper. I have found that lots of people are just plain lazy and unwilling to work hard. They want something for nothing and think they are “owed” something by society, their parents, grandparents, company, the lottery, whoever. We want to work hard now (especially before we have a family- we want to be around for our kids!) so we have more freedom later. There was a period for a stretch of a few years where Jonathan & I were working around 6 jobs between the two of us. I know I’ve said it a million times, but I am so thankful Advocare came into our lives because it has allowed us to eliminate most of those side jobs, and like I said, I won’t be teaching after this year so I can stay home to raise babies (but will still have income). It’s perfect for us because it’s a company that rewards hard work, and you get out what you put in. So now we’re not working any harder- just smarter.
“The soul of the sluggard craves and gets nothing, while the soul of the diligent is richly supplied.” –Proverbs 13:4
“For even when we were with you, we would give you this command: If anyone is not willing to work, let him not eat. For we hear that some among you walk in idleness, not busy at work, but busybodies. Now such persons we command and encourage in the Lord Jesus Christ to do their work quietly and to earn their own living.” –2 Thessalonians 3:10-12
- No debt is “good debt.” Thankfully our only debt is our mortgage because it allows us to be laser focused on paying it off (since our money isn’t going 8 million directions), and it’s also a great “investment” that is going to yield a pretty high return if decide to sell in the future. We refinanced to get the lowest possible interest rate, but we do still OWE money to someone else. And that’s not cool. We calculated exactly how much additional money we would have to put toward the interest to pay the house off in 5, 7, or 10 years, and work hard to do that every month.
“…The borrower is the slave of the lender.” –Proverbs 22:7
- Do not bank on money coming in that you don’t have yet. This seems absolutely absurd to me, but people do it all the time. They know they have a tax return, a bonus, a raise, etc. coming, so they spend it before they even have it. This makes ZERO sense to me. What if it falls through? I always plan based on what we HAVE, and if we do get the extra, that’s fantastic. I plan for it ahead of time (which typically includes saving the majority of it), but do not SPEND any of it before I have it.
- Live within your means. It is so important to create a BUDGET and stick to it. Re-evaluate the budget often. Write down spending. I was talking to someone the other day who said they had no idea how much it costs them to live per month, and I thought “Wow, how scary!” So many people are trying to keep up with the Jones’, and that is a yucky cycle. If you have steak taste and a hamburger budget, it’s imperative to be disciplined about spending. I think many people are also spending more than they realize. I remember one point when we realized Jon was spending an extra $25 a week on drinks at the gas station. I can think of LOTS of things we could do with an extra $100 a month. Saving to put it in an IRA would put you 1/5 of the way there! The point is, sometimes we have lots of little expenses that add up and we don’t even realize where our money is going.
- Be aware of the costs of hobbies. Hobbies can be CRAZY expensive! I am blown away by what some friends spend on their hobbies. And although I do think leisure/hobbies/entertainment are important, I think it needs to be in moderation, because it can be VERY easy to become obsessed and overspend. Our “hobby” is working out, so we pay around $45 a month for a gym membership. We also like to eat out on weekends, so we budget for that too, but that means we don’t eat out during the week, and we have also stopped going to the movies.
- Start thinking long term NOW. Start saving for retirement. Open an IRA & DON’T touch the money. Put at least $5000 in per year (that is the maximum allowed anyway). My accountant told me that an individual who puts money into an IRA annually starting at age 30 will have DOUBLE the amount of an individual who puts money into an IRA starting at age 40, even if they put double the amount of the 30 year old. Basically, you need time on your side and should start saving, like YESTERDAY. I know I’d rather live like no one else now so I can live like no one else later. (Put money into retirement rather than new clothes, etc.)
- SAVE! If you don’t make enough to save some money, you have two options: 1) Cut some things out that you don’t need (yes, there are things in your budget you can do without!); or 2) Find a way to earn extra income. Get another job. My vote is direct sales because it is typically something you can do on your own time, working WHEN you choose (so you don’t have to take time away from your family), and you can reap a pretty high return for your efforts if you choose the right one for you. I have read that both Dave Ramsey AND Clark Howard (two figures I have a great deal of respect for concerning financial matters) both suggest direct sales as one of the best ways to make a significant amount of money in today’s economy. (I know I tried the other route- getting additional degrees- and that sure didn’t work!) One of the reasons some people are not successful with direct sales is they do not follow the direction of their leadership and they give up too soon.
- Plan for the unexpected (and the expected). You never know when you’re going to need a major car repair, have a health issue, lose a job, whatever. That is why it is so important to SAVE….so when things come up, they don’t ruin your finances. As much as it stinks, there are things in life we HAVE to pay for, but that we don’t like to spend money on. Like tires for example…who in the heck wants to spend their hard earned money on a set of TIRES? But it’s a necessity, so it’s important to plan appropriately and have enough money to cover it. There is no sense in paying extra for them- more than they’re worth- because you have to finance them (can you even finance tires?) or have to put them on a credit card. When we were getting ready to buy a house, for example, I saved up enough to furnish and decorate our house (a planned expense) and stuck to the budget I allotted. It was such a relief to be able to pay cash for that!
So here’s what I want to know…
What has shaped your finances the most?
What did you parents teach you or model for you that helped you become financially savvy?
What is your biggest struggle with finances and what (if anything) could have prevented that?
What are you teaching (or do you plan to teach) your children??