How money works
I read this article recently about all these things you should teach your daughter. The list was okay, insofar as it was all stuff I taught my son {sex appropriate, as he isn’t a princess – unless he wants to be, which would be fine by me}, and already planned to teach my daughter.
One item in particular, however, really groused me:
How money works.
I grew up with practically no concept of financial planning. I created my first budget years after starting my first career. Financial literacy is not a prerequisite for college — and it should be!
If your daughters do not learn money management from you, they will learn it one way or the other — perhaps at the mercy of credit card debt or college loans. Start sharing your budget with them from an early age.
“Why do we keep it a secret?”
I know why we keep it secret.
And by “we” I mean “people who are unable to make ends meet“.
Not people who have enough to pay their bills and simply don’t DO budgets because there is plenty of money to cover everything so it’s just not necessary.
Not people who don’t talk to their kids about ANYTHING so why would they talk about money?
And anyway, I don’t know that “secret” is the right term. I think the more appropriate phrasing might be:
“keeping my kids from knowing the dark, sad truth so they can have a few years of precious joy before they grow up and realize how shitty everything is”.
You really wanna know why?
The reason economically oppressed parents don’t teach their kids to budget is because in doing so they might have to reveal that there isn’t enough money to pay the electric bill this month.
They might have to show the mathematical genius that going into deciding what the minimum payment on the water bill REALLY is, not just what they are asking you to pay – the least amount they will accept without shutting you off.
They might have to let their kids see that by paying for items at the scholastic book fair, or ordering school pictures, or even paying school fees, there won’t be enough for good groceries this week.
Where “good” means fruits and veggies, so instead we have to settle for Raman noodles and tuna, hotdogs, and boxed macaroni.
Steak and pork chops are definitely off the list.
We didn’t keep it secret forever.
… um … if you say so …
By tenth grade our son was getting pretty annoyed with our lack of funds. When he started asking about it, speaking out about what he wanted and not understanding why we couldn’t afford his letter jacket {lovingly supplied by my own mom, thanks!}, we realized the time had come to share the truth.
He already knew we were low income.
That much was obvious from our consistent lack of, well, just about everything, as well as the fact that he qualified for free school lunches every year.
But he didn’t know how bad off we were.
So we made a chart.
First column:
The grand total our monthly income – expected paychecks plus child support.
Second column:
The minimum payments due that particular month for all our regular anticipated outgoing expenses – utility bills for the most part, since we don’t have credit cards or loans – like water, electric, gas, internet service, cell phone, Netflix.
And just a note:
1. Don’t try to tell me that internet service is a luxury. We all know it’s necessary these days. My kid has homework she has to complete online daily. And she also needs to know how to navigate websites if she is expected to function in the world as a contributing member of society. Not to mention that we sell stuff online, I write online, and our home phone is a combination of Magic Jacks and Google voice.
2. Don’t try to tell me a cell phone is a luxury. Tell that to our families who harass us constantly about the fact that I don’t have one. Tell that to my hubz’ employer who says they have to be able to reach him at any given moment. Tell that to my hubz’ employees who call him for assistance on a regular basis. Tell that to ME when it’s snowing and the roads are icy and our car is a piece of shit and my hubz is late coming home from work and thanks to the miracle of technology he can call to let me know he’s not dead on the side of the road; he’s just running late.
3. Don’t try to tell me Netflix is a luxury. We don’t pay for cable and the TV is never on unless we are specifically watching something. But okay, yeah. It’s a luxury. One we don’t feel guilty about since it’s the only luxury we have. It’s not like we go to Disney every summer, like some people who claim they are broke. It’s not like we own three shiny new cars. It’s not like we have much of anything or go much of anywhere. The fact is, Netflix IS our vacation.
Third column:
All our regular expenditures for living – groceries, gas for the car – and anything else unexpectedly arising that particular month.
Like car insurance or a flat tire or someone’s birthday.
Then we did maths.
Add the totals for the second and third columns – bills plus expenses, all the outgoing payments.
Compare the total income from the first column with the total outgo.
Cry when you see that the income isn’t enough to cover the outgo.
Don’t Panic.
1. Take another look at the second column – the bills.
Originally we had entered the minimum payment due.
For example, our electric bill might be like $300 because we hadn’t been able to pay it in full the last couple months, and the balance due kept rolling over. Now the electric company isn’t asking for the entire $300 balance. They only want the past due balance – probably in the neighborhood of $150.
Adjust that “minimum balance due” to reflect instead “minimum amount we can pay so the electric company sees we are throwing them a bone and decides not to shut off our power”. I would like to say the new amount would be at least half of the minimum amount due, but more likely it’s only like $50.
Adjust each bill using this tactic.
2. Take another look at the third column – the expenses.
We always start out saying we will allot $150 per week to groceries, which isn’t too extravagant for a family of four, but which is also not easy, because if we purchased fruits, veggies, and meat according to the Food Pyramid recommendations, we’d spend more like $250 per week.
But whatever.
$250 was never an option, and $150 clearly won’t work, either. So adjust groceries down to $100 and keep fingers crossed we won’t have to go any lower because mama needs toilet paper.
3. Add new totals from Column two and Column three.
See that the grand total is still like $25 more than the income listed in Column one.
Cry again. Then pull yourself together.
Engage in more adjustments.
4. Repeat.
Do this activity until the outgo is equal to {or less than} the income.
5. Go online and pay bills immediately.
If you wait even thirty seconds, another emergency will arise and suddenly you won’t have money for groceries OR electricity.
So that’s why.
Explaining to your kids how money works, when you are poor, is setting them up for depression and guilt.
It’s not always the case that parents avoid this conversation with their kids due to oversight or some case of odd pride wherein the parent thinks it’s not a child’s place to be privy to these private numbers. This isn’t the 1950s.
Sometimes, it’s a conscious decision made in order to allow children to be young and carefree for one more year.
When we did finally teach our son budgeting, his demeanor changed.
Whereas he had never been one to ask for a lot of material objects, now he hesitated even to ask us for stuff he actually needed. He was very understanding, but it also granted him a sense of guilt and responsibility we never intended to bestow.
As he got older, graduated, and joined the adult work force, he became bitter and sullen. Not necessarily at us, per se, but just at his financial lot in general. He is currently living with his buddies, and can’t afford a cell phone any more than we can afford one for me. His gym membership expired and he hasn’t re-upped it. His financial aid for school ran out, so he can only take one or two classes per semester at the local community college, since he is now paying out of pocket.
He is seeing that he is pretty much stuck in the same pattern we are in now. And he hates it. I don’t blame him. I hate it, too. I hate it for us, and I hate it for him.
So yeah.
This is how money works.
Basically, it doesn’t.
Not when you don’t have any.
Class dismissed.
