5 Things My Parents Never Taught Me About Money
Many parents don’t talk to their kids about money or teach important lessons about money management. For me, growing up in a household with a less than ideal financial situation, these conversations were slim to none. As kids we pick up on the habits, both good and bad, that we see around us. If these conversations do happen, they tend to only skim the surface. However, getting a good grip on managing one’s finances takes a bit more than that. Here are 5 things that my parents never taught me about money:
Debt and how expensive and awful it is. My first exposure to learning about debt was with my student loans. I had no idea how interest rates worked as it related to debt, and how expensive it is to have debt. Because of the lack of resources at the time, student loans in this case were my only option. It wasn’t until later that I realized that there were more favorable alternatives to debt.
Taxes. Once again, the first time I learned anything about taxes was while I was preparing my very first tax return. Granted, my first tax return was fairly simple but it still involved a fair amount of googling. At a higher level, tax shelters and ways to lower the tax bill was never a conversation in my house either.
Using Money As A Tool. In many households, mine included, money is often viewed as the goal rather than a tool. The mindset is usually “work harder to get more money” rather than “work smarter/use money to make more money”. I wasn’t taught about the importance of investing and using time and interest as a means to make money. We also didn't talk about the importance of investing time and money into myself and how that could lead to more/better opportunities.
Pay Yourself First. Saving money first and THEN spending is an important lesson. Even if it’s a small amount. A small amount consistently is better than nothing. The important part here is forming the habit so that when those checks get bigger, the percentage going to savings also gets bigger. Spending first and then attempting to save whatever is left can work, but I wouldn’t consider it a good strategy. What if my check is only enough to cover necessities? Write out a budget and go from there. Can you squeeze $5-$10 out of your check to pay yourself first? Start small if necessary. Speaking of budgets…
How to Budget. In hindsight, I remember my parents budgeting for bigger purchases. They never prepared a written budget/spending plan or talked to me about the importance of budgeting though. Budgeting isn’t something that should only be done when preparing for a big purchase. A budget should guide you and give each dollar a place and a purpose. If not, you’ll likely be wondering where all of your money went. A budget is a plan. It’s not meant to restrict you, but rather allow you to see ways that you can do more with your money.
I get it. Talking about finances is still taboo even within families. If there are limited financial resources, these conversations are pushed even further to the back burner. However, learning these lessons early on could’ve saved me (and possibly you too!) from a lot of stupid decisions. Each of these lessons/habits can be broken down into several stages based on age appropriateness. If you are a parent, I encourage you to start some of these conversations with your children. Make it fun! Leave a comment and tell me some things that you wish your parents would’ve taught you about money.