May I just take a moment to be a proud momma, and give a shout out to my oldest daughter. I am so proud of the young woman she has become, and proud of her choices – especially when it comes to money. She truly is a financially savvy child! She flew up from So Cal and came to visit the last two weeks, and while she was here we had several long talks.
OK, now I have to back up a bit to give you a few details so you will understand why I am so proud. On the way home from picking her up at the airport she informs me that the previous week she has in a car accident and totaled her car. That’s not why I was proud, by the way. She quickly explained that she didn’t want me to worry, and that’s why she didn’t tell me about it when it happened.
I informed her that was not cool.
The accident was not her fault; a distracted driver T-boned her car as she was slowing to a stop at a stop light; he was changing lanes and cutting across traffic. Idiot! Thankfully, she wasn’t hurt – her seatbelt and airbags saved her. She only had a few minor bruises from the shoulder belt and lap belt, and a slight rash on her arm from the airbag. Her Jeep Compass, which her grandparents bought for her as a graduation gift 4 years ago when she started college, was smooshed.
It was very sad.
So now the insurance company sends her a check. And it’s a rather generous check, too – more than what we thought the car was worth, according to Kelly Blue Book.
So here is where my story really starts. She comes to me a few days ago and asks me what I think of buying on credit. I pause, and thoughtfully reply that I try to avoid it, and have made it my personal goal to avoid buying anything on credit anymore. It’s taken awhile for me to become a financially savvy adult, and learn these lessons.
I have learned my lesson from living with her father; he was not very good at budgeting and managing credit. In our marriage, he was the spender and I was the saver. I paid all the bills and kept the finances in order. And let’s just say that he never met a credit card he didn’t like. I am not trying to be ugly here; but honestly, a lot of debt needed to be paid off when he passed away. And I am still paying it off. That right there is it’s own blog post – watch for that one soon! 🙂
She and I had many heart-to-heart talks about saving money, debt and the burden it places on you, etc. She knew something about our struggles with money and our efforts to get out of debt. I think being (somewhat) transparent with her regarding mistakes that we had made with money has helped her to stay clear of those same mistakes.
How did she become financially savvy?
Here are 3 things we DID NOT DO for her, and that I am NOT DOING for her younger sister:
- We did not give her an allowance. She was paid for extra chores that she did around the house and yard. She was encouraged to get a summer job during high school. She worked on our farm for her grandfather, and later got a job at Sonic in a nearby town. But we did not hand her money each week; the world doesn’t work like that. Unfortunately, too many people think it does! They think they are owed money from someone (the government?) simply for existing. We wanted both our daughters to understand that your level of income is tied to your level of work. You choose not to work, you choose not to be able to have the things you want. We always provided for her NEEDS; but for most of her wants, she needed to earn the money.
- We did not buy her a car when she turned 16. Scandalous! We had an agreement that we would match the amount of money that she had saved up when she was ready to get her car. She had to put in effort for her car, not simply expect mom and dad to have a new car waiting in the driveway on her 16th birthday. When her 16th birthday arrived, she trusted her Dad to pick out her car. He chose a big Ford pickup (I forget what year, but it was at least a couple decades old), built like a tank. He wanted to make sure she would be safe, and survive any traffic mishap. It was very “vintage” and she loved it, and her friends (especially the guys) thought it was cool!
- We did not get her a credit card when she was in high school, discouraged her from getting a credit card in college (which she did not), and never co-signed on a credit card account for her. We encouraged her to steer completely clear of credit cards, and therefore stay away from the debt they encourage. Can’t dig a hole without a shovel!
She was encouraged by friends to use the insurance check as a down payment on a brand new fancy car, and then finance the remaining amount. I ask her what she thinks, and wait expectantly for her answer. And she tells me that she isn’t comfortable with buying on credit, and she wants to take the money and pay cash for a reliable used car instead. Then she asks what I think.
WHAT DO I THINK!?
I am so proud right now. It seems like most young adults her age would be wanting the fancy, bright and shiny, NEW car. But she is practical; with college debt to pay off (yes, we had a college fund set aside for her, but when my husband was diagnosed with the brain tumor and our income was cut by 2/3, we needed to dip into that to live on), she doesn’t want to saddle herself with any more debt. Plus, she and her fiancé are planning a wedding (no date set yet) and she’d like to put some away for the wedding. AND she doesn’t want them to start out their married life together under a cloud of debt.
I have a wise, 22 year old daughter!!!
Yup, proud momma here! 🙂
What are your tips for raising a financially savvy child? Share them in the comments below.
And check out more posts about finances in the links below.