As I was clipping the grass around the trees with hand clippers just now, it occurred to me that this was a task I used to have as a child. It was part of the chores that I did to earn my allowance. Every night I dried the dishes (Mom washed), every weekend in spring, summer and fall I trimmed up the grass around the house, gardens and trees with the hand clippers. I also had to iron, make my bed, clean the wood floors in my bedroom, help Dad when he worked on the car and help out with special projects (like painting the rental house).
Doing these tasks, for my 25 cent a week allowance, taught me lessons. I learned that when you work for someone else, they get to set the minimum job well done standards. I learned that if I worked, I earned and therefore could save, spend or give my own money. I learned that sometimes it isn’t fun to work, but that you just buckle down and do it anyway. I learned that doing a good job builds trust from others and trust in myself.
Have you ever considered the skills you learned as a child and how they relate to your financial successes and failures?
Another thing that, according to the National Foundation for Credit Counseling (NFCC), happens in childhood that affects our adult finances is that we learn from the financial behavior of our parents. Some people never think about how their financial behavior compares to that of their parents. The NFCC did an online poll to explore the question and found:
“Of those who had contrasted their adult financial behavior against their parent’s, 12 percent chose to embrace financial habits that were exactly opposite of their parent’s, while nine percent admitted their habits were very similar. Not surprisingly, 35 percent indicated their financial style was a blend of how their parents handled money and their own attitudes.”
Although my parents didn’t seem to make specific efforts to teach me financial lessons, their behavior modeled several. They were savers. I became a saver. They didn’t use credit (I’m not even sure they ever had a mortgage!) until late in life and then only credit cards. They paid off the card balance each month and bragged about using the credit card company‘s money for free for a month. I do the same (although I did used to have a mortgage). They gave good effort for their pay and understood the importance of steady income. I try to also give good effort and have worked hard to maintain a secure income level.
Not all children, though, want to replicate parental behavior – that 12% in the NFCC poll want to do the exact opposite! Sydney, in his reader story on Get Rich Slowly, writes that his parents divorced due to money. They had low paying jobs and huge debt loads.
“Credit card debt has put both of my parents through hell. I shudder to think about how much money they threw away over the years in interest, fees and penalties.”
His lesson learned: “Avoid credit card debt. Credit card debt is bad. Just don’t do it. If you can’t afford something, just leave it in the store.”
Others don’t really learn much at all. Thayer Cheatham Willis in Navigating the Dark Side of Wealth – A Life Guide for Inheritors, noted that her parents kept knowledge from her about the family’s wealth, so she didn’t have to worry about saying stuff that would cause her problems with other kids. As she grew up, she found the lack of knowledge and training to be a problem.
First generation wealthy folks typically grow their wealth over time, whereas if it is inherited, the wealth is already established, along with the myriad of potentially complex investment vehicles and legal structures to hold it. When parents withhold financial information, children do not have a chance to start learning simple financial concepts before they are overwhelmed with vast amounts of information they have to assimilate.
‘A primary challenge of inheritors is to develop an understanding of the nature of the wealth for which they are responsible’.
Her lesson learned was to teach children as they grow, no matter the wealth level of the parents.
I hope my kids learned at least a few good financial lessons from my spouse and I. They are doing well financially, so I hopefully we had some positive part in that.
What childhood skills and parental behavior affected your financial life?