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From Financial Integrity

Teach Your Children

Stories abound these days of people who are drowning in credit card debt and who are now paying the price for living beyond their means. When I read these stories, I feel grateful for my dad. Had these unfortunate people been raised by my dad, they would probably not be in such a predicament.

My dad taught me and my sisters from an early age what money is, its value, and how to manage it. Here are some of his main lessons:

Money is for many things, not just for spending

When I first received an allowance at about the age of seven, my dad gave me three empty jars, each with a label on it. One jar was labeled “spending,” another “savings,” and the third “church.” We were to allocate our allowance among these three jars in any way we wished. With these three jars at hand, it never occurred to me to put all of my allowance in the “spending” jar. Instead, I put a dime of my 25-cent allowance into the “spending” jar, another dime in the “savings” jar, and a nickel in the “church” jar for my offering the following Sunday. My dad taught us that money is not just for spending; it is for saving and sharing as well.

Keep track of your cash flow

A few years later, my dad came home with gifts for me and my sister. We each received a book, bound in faux-leather, with the word “cash” embossed in gold on the cover. The pages were filled with columns. My dad showed us how to record our “income” in one column and our “expenses” in another. He told us “income” is the money we receive, like our allowance or gifts from Popo and Gung Gung (my grandmother and grandfather) or money we earn from doing extra chores. “Expenses” are when we spend our money, and it is important to keep track of how much is spent and what it is spent on. He taught us to subtract the “expense” column from the “income” column so we would always know how much money we had. From my first entry in that cash book of 10 cents for a bag of chips to my current use of the slightly more sophisticated Quicken software, I have kept a watchful eye on my cash flow.

You can’t have everything you want, so make wise choices.

In high school, my sisters and I were given a budget at the beginning of each year for our school clothes. We had $300 to spend in any way we wanted. But my dad warned, once the money was gone, that was it. We were not to come crying to him for more money. I didn’t dare test this boundary. I was convinced that if I had blown that $300 on a few pairs of shoes and a handbag, there was no telling what humiliation I would have had to face -- indignities such as having to squeeze into last year’s clothes, or to wear my older sister’s hand-me-downs, or even to be seen in public only half dressed! Both of my sisters and I learned to sew because it was much cheaper to make clothes rather than to buy them in those days. I scored a small victory when one of the cool girls at school complimented me on the dress I was wearing and asked me where I had gotten it. I nearly burst that dress with pride when I told her that I had made it myself! My dad taught us that you can’t have everything you want. You have to make choices, and you had better choose wisely because once the money is gone, it’s gone.

These lessons were not easy for me to learn as a kid. I may have resented the restrictions and the discipline at the time. I would have liked to have had more stuff, the latest stuff, the best stuff. But any “pain” I felt back then would have been eclipsed by the pain of learning these lessons the hard way, and as an adult. Just recently, I told my dad how much I appreciated what he had taught me.

I urge you parents to teach your kids how to value and manage their money. They may not like it now, but you will be giving them a gift far more valuable than the latest videogame or designer clothes. You will be giving them the tools to lead a life of Financial Integrity.

Interview with Colleen

Congratulations to Colleen, whose story was chosen as the Most Useful Entry winner in the first annual Financial Integrity writing competition! She was kind enough to answer a few questions so we could get to know more of her story.

FI: How do you describe yourself at parties: retired, FI?, something else? Or do you just change the subject?

Colleen: At parties, I try to steer the conversation away from work-related topics unless I'm there to network professionally. People have so many facets other than their occupations, and these other facets are what I find most interesting about a person.

FI: Was there a day that you celebrated as meeting the goal of financially independent?

Colleen: I do not consider myself to be financially independent yet.

FI: Who first inspired you to consider your financial philosophy?

Colleen: My parents strongly influenced my financial philosophy. They taught me and my sisters the value of a dollar. But I think I might have been born with a frugal mindset. When I was a young child, my family teased me about being a miser because I had built up quite a sizeable balance in my savings account.

FI: Did you develop any tools, exercises or habits that haven't been captured in a book?

Colleen: I try to focus on the small things I need to do every day to achieve my goals rather than on the goals themselves. That helps me to concentrate my attention and efforts on the things I can control and it makes a formidable goal more manageable. It also allows me to celebrate small victories along the way; if I do what I'm supposed to do that day, I can feel accomplished. Small consistent effort over time will lead to progress.

FI: What movie, story or music if any, inspires you?

Colleen: The movie Papillon inspired me. This may seem like a strange choice, given that the main character is a convict, but I found it inspiring that nothing could break his spirit.

FI: Were you worried or affected during the recent economic contraction?

Colleen: Yes, the recent economic contraction has negatively affected both my income and the value of my investments. What eases my anxiety somewhat is the knowledge that I can get by on very little.

FI: What advice would you give your 20-year old self?

Colleen: "Trust your instincts. Be open to other people's advice, but don't let it drown out your inner voice." Years later, I still have to remind myself of this.

FI: Would you give that advice to a 20 year-old now?

Colleen: In general, yes, but only if I thought that the 20 year-old had good instincts to follow.

FI: Have you changed your strategy as you've learned or aged?

Colleen: My strategy has not changed at all, maybe because I myself have changed surprisingly little over the years. There are things that I have wanted to change and have tried to change about myself but have not been able to. Now I'm just trying to accept myself the way I am.

FI: Are you drawn to tell others about your experience, or are you more likely to keep it quiet?

Colleen: I don't tend to give people advice unless I'm asked.

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