I’ve always thought that one of the most important classes that high schools offer is Personal Finance. It’s the course that teaches them about the basics of not ruining your life as a young adult. But guess what? My stepson did really well in that class, but was a disaster in his own life! Why is that?
Kids learn many of their habits in their formative years between the ages of 4 and 7. That doesn’t mean they stop learning after that, but it’s interesting how much that impacts what they do later in life. I’ve learned this from my 7 kids, 5 of them being my stepchildren.
Our Different Outlooks on Money
Attitudes about finances are mostly learned from the parents. My husband, his ex-wife, and I all have very different attitudes about finances.
Me: As an accountant, I budget, save, invest, stay out of debt, and spend money only when I have it. I believe in paying cash for slightly used vehicles, rather than financing them. I believe in maximizing my retirement contributions. I believe in making additional payments on my mortgage to save hundreds of thousands in interest. I believe in never carrying balances on credit cards and paying off the balance each month. I believe in well planned and infrequent travel and investing in an assets for recreation, such as our cabin.
My husband: He is probably like most people and isn’t irresponsible with money, but believes that financing an expensive vehicle is fine. He also believes that if he can afford a payment on extras like an expensive computer, a motorcycle, etc., he can afford to buy it. He believes in putting away a good amount in retirement, but not if it cuts into his extras. He believes that making the minimum payment on our mortgage is fine and expected. Again, he is probably where most people are with their personal finances.
My husband’s ex-wife: Until very recently, she has always spent everything that she made and then some. She would not pay her rent, her bills, her student loans, her credit cards, or her personal loans, all while buying clothes, paying for hair extensions, eating out all the time, taking expensive vacations, and more. She was never taught well and I have assisted her with creating budgets, buying her the Financial Peace University kit and cheering her on as she tries to do better. In the past 6 months, she is paying down debt and fixing her credit score that was below 400.
As you can see, we have three very different approaches to personal finance. It’s interesting to see how our approaches have affected our 7 kids, depending on which parents were influencing them at each age range. Personalities of kids are also at play, but I’ve noticed some consistencies.
My stepchildren were raised by my husband and his ex-wife until the youngest was 3 and the oldest was 14. As parents, they didn’t talk about money, whether they had any, whether they could afford anything or whether they couldn’t pay bills. When my husband was paid on pay day, his ex-wife would go shopping and buy things for the kids and herself, without much regard for what else needed to be paid. The kids had no concept of budgeting, paying bills, or debt. My husband found himself going further in debt until they divorced, at which time he quickly reset his finances and was able to pull himself out of most of his debt and move much of her debt to her in the divorce. Still, he felt so bad for the kids that their mom had left, that he still never discussed finances and would spend more on them than he probably should have. He also didn’t require them to help out around the house and just wanted them to be kids.
My kids were raised by only me until the youngest was 12 and the oldest was 15. I grew up in a very poor household and always wanted to teach my kids how to avoid poverty. As a single mother (even during the few years I was married, which is probably a story for a different post), my kids were taught to always work hard to contribute to the household by doing chores and earning money when they could. I encouraged them to pay tithing to the church. I bought them play checkbooks to write me checks for things and keep their own balance. I got them low balance credit cards when they were 10 years old and taught them how to use them. I taught them how to use gift cards and keep track of their balances. I put money in investment accounts and talked to them about their investments. I talked to them about money and let them know when we couldn’t afford to do things and explained why. When they earned money from their investment accounts and had to file tax returns, I showed it to them and had them sign their returns. It was so cute when my daughter wrote her name with hearts and flowers! I remember discussing the difference between renting and buying a house as they got older. I talked to them about how expensive debt was and why they never want to have debt. I really didn’t hold anything back on my knowledge of personal finance. I always treated them like they were capable of understanding it and they often had really good questions for me.
My youngest stepdaughter was only 4 when my husband and I were married. The rest of the stepkids were ages 8 to 15. When their mother would visit, she would buy them whatever they wanted and take them out to eat (remember, she was a disaster at the time and didn’t even pay her bills). Their mother didn’t pay child support, even though all of the kids lived with us. We were on a tight budget, so at times when we told our youngest that we weren’t going to buy her something that she wanted, she made comments that her mom had a lot of money and bought her whatever she wanted. I took those opportunities to teach her that we had to pay bills, pay for the house, and buy food. She was so surprised that we even had to pay for water! Also, when we first got married, I traveled a lot for work or worked from home. When I was home, I would take her to Starbucks with me. She always wanted a cake pop and apple juice. When she was in kindergarten, she began to learn basic math, so I decided to teach her about money. I had her buy a Starbucks gift card with $20 of her birthday money. On our trips to Starbucks, we would look at her balance, calculate how much a cake pop was, and determine whether she had enough and how much she would have left over before she couldn’t buy any more. It was a basic lesson that most people don’t think to teach their kids. Now she is 15, and just the other day we were having a conversation about me owning my own business, paying employees, how to calculate net profit and that the owner gets paid from what is left over. She totally understood when she said, “Then why don’t you go work for a company?!”
As the stepkids have gotten older, I set up high school checking accounts with them when they were 14, got them a low balance credit card, and I’ve sat them down to help them budget their money. Most of them started working when they were 16 or 17. In some cases, there were times when it was working pretty well, but most of the time, they would revert to bad spending habits. To be honest, I’ve also learned that even though principles are taught and experiences are shared, most kids just need to experience their own mistakes to learn valuable lessons. No matter what I have attempted to teach them since I’ve been in their lives, remember that the other influences have still been present, and some personalities are just not interested in my expertise or the lessons that I try to share with them.
One example is my stepson, who is almost 22 now. When he got a job at 16, he really exceled in the workplace. He worked hard, received raises and was promoted. With every paycheck, assuming he would get another one in two weeks, he quickly spent all of his money eating out and paying for video games. As he was promoted, this became thousands of dollars in tacos and gaming! My efforts to teach him were futile. Once he became an adult, he then started to go into debt with us, due to his car expenses. As his debt increased, his dad thought it was a good idea to cosign on a motorcycle since he had a good paying job at the time. Our son planned to move to another state within a year of this time and promised to pay off the $6,000 motorcycle by that time, as well as save up plenty of money for his move. I created a budget for him and went over it with him every couple of weeks. I showed him how much money he continued to blow on tacos and gaming, but he thought he had plenty of time to pay off the motorcycle and save up for his move. When it came time to move, he still owed $4000 on the motorcycle and had $2500 in savings. He began his drive to his new home and on the way, his transmission broke. He took it to a shop that charged him $2500. Well of course his dad paid the bill and told him that he only had to pay half of it back. The next six months he went further into debt with us because his dad gave him one of our credit cards for “emergencies.” He then moved back home. When he was home, he made an effort to pay us back most of the money he owed us and 2 years later he is still paying on the motorcycle. Before paying us back fully, his father also told him that he could continue to pay us monthly payments and go ahead and finance a gaming computer that he couldn’t afford because gaming is so important to him. What lessons is his dad teaching him? He definitely learned the worldly approach to personal finance. What lessons did I teach him? Well, I’m not sure exactly, since it seems to be rejected, but I hope that some day he can draw on that. What I tried to teach him: It doesn’t matter how much you make…it’s how much you spend that makes the difference!
My kids moved out when they were 18 and began supporting themselves, although they did have small savings accounts to assist with school, a car, and my son married early and put money down on a house. They have never come to me for money, although without them asking I have assisted with medical bills, home repairs, etc. Even with the influence of their stepsiblings and stepdad later in life, they had the most consistent upbringing with me as their parent that is at one end of the spectrum of personal finance.
The four oldest stepkids all spend quite a bit of money on gaming and eating out. However, the results of their dad’s and my effort to teach them is beginning to show through the older they get as they begin to start families of their own. This is encouraging to see, even though there were no signs of them ever changing their spending habits in their teens and beginning as young adults.
As I mentioned, our youngest is 15. I see her spending every penny she makes, following in the footsteps of her siblings. She has still had the influence of her mother and her dad, who as a reminder, isn’t irresponsible with money, but enables her when she wants to buy unnecessary things.
All of this brings me to the 6 ways to teach your kids about finance:
- Start them really young (no later than 5). Get them a gift card to spend from, help them learn to calculate what they are spending with cash.
- As they get older, set up checking accounts with debit cards and ensure that they reject payments from debit cards when the money is out. We tried connecting their accounts to our credit cards to make sure they didn’t get charged fees, but it was a disaster and didn’t teach them to stop spending. It’s okay for all their money to disappear from overdraft charges. It’s a great lesson. Credit cards may or may not be a good idea depending on the personality of the kids. This has gone really well with some kids and creating a lot of debt owed to us by other kids.
- Talk about money with them their whole lives. I don’t know how discussing finances became something that parents thought was too stressful for their kids to hear, but how will they learn? Sit them down and talk to them about your household finances. Let them know if there is a deficit in your household and talk to them about ways to save money and stick to a budget. As they get older, help them create a budget, reconcile their checking account, save for something they really want, etc., they will come to understand that it isn’t about how much money you make, but how much money you spend that makes the difference.
- Be consistent. Try to create a united front with your spouse on what things you want to teach them about handling their money. My husband and I struggle with this and I can see the negative affects it has had on some of our kids. Sometimes, what we want for our kids is detrimental to their life lessons. This issue also continues to be a stressful topic in our marriage. If you are the stepparent, you may have to let it go to keep your marriage happy and see what you can do in more of a life coach capacity.
- If they don’t have enough money to get what they want, give them opportunities to earn money by doing extra jobs around the house. If you cover the difference for them or loan it to them what are you teaching them about debt or buying things that they can’t afford?
- Let your kids learn from their mistakes. Talk to them, without scolding them, about their consequences, but let them experience them. There is no better teacher than experience. If they spend all of their money and don’t have gas to drive to school, they can take the bus or get a ride. I guarantee you that they will set money aside for fuel the next time they get paid! If they buy a car they can’t afford, let it get repossessed! It might sound harsh, but how else will they learn? As an aside, my husband would NEVER let that happen to one of his kids! However, see number 4. We are still figuring out our own differences on the subject.
Even if you feel like I’m more extreme on this topic than I need to be, I hope I’ve given you some great ideas on what you can teach your kids to help them with personal finance and help them avoid trouble in the future!
My last suggestion: Whatever you do, ask yourself what the kids will learn from your examples and messaging before you respond to them or offer guidance. It might change your decisions! Good luck and feel free to offer other great ideas below!
What is blended family?
According to Your Dictionary, “A blended family is defined as a family made of two parents and their children from previous marriages. An example of a blended family is a woman with two children from a previous marriage who marries a man with three children from a previous marriage.”
What are common problems and challenges for blended families?
Common problems for blended families include children not feeling loved or feeling left out, sibling rivalry, children manipulating parents, ex-spouses, dreading holidays, vacations, marital problems, finances and discipline (or lack thereof).
Can blended families be successful?
Although many stepfamilies seem doomed for failure, it is absolutely possible for a blended family to be successful. While some situations are unhealthy for everyone involved, many families can be saved if there is a desire to work through the problems.
How common are blended families?
Blended families are becoming more common. According to Pew Research 62% of children in the U.S. live in two-parent households and 15% of those are living with parents in a remarriage.