How to teach your kids about money

I stumbled upon some rather interesting content today on the web about the intersection between money and children. For example, this article on Inc.com says that parents are not discussing a crucial topic with their kids–student loans and credit card debt, based on “research” done by an online lender called SoFi, which was really just a survey of a thousand people between ages 36 and 65 (most likely their customer base only) about their attitudes on money.

The author then went on to provide three tips on helping your (millennial) kids become more financially savvy, from – you guessed it – an employee of SoFi (somehow I feel that this article was just another advertisement for the lender) – things like “teach them healthy habits early” and “help them develop a good credit history” to “create debt grids” (write down all your debts and keep track of them).

While there is some merit to this advice, I think that ship has sailed for many millennials. Their baby boomer parents were no doubt, lacking in details about personal finance when they were growing up, so of course, they didn’t teach their kids about money. Can you blame them?

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Photo by Eric Prouzet on Unsplash

It’s no surprise that all parents will come across this in their parenting journey–how to teach their kids about money and what to teach them about. I think that in many ways, teaching kids about money has the same elements as teaching kids about sex–you’d rather avoid it until it’s absolutely necessary because…well, it’s uncomfortable, especially if you don’t know much yourself or you’ve made some bad choices with money, you definitely don’t want to ‘fess up to your kids, right?

Or maybe you do, and you want them to learn from you. Nonetheless, it’s still an uncomfortable subject even for adults to talk about. No wonder why money is like the number one thing that couples argue about, because chances are, you probably married someone who has opposite money philosophies than you do.

My parents fit this mold completely. Not only do they differ in their parenting styles, but they also differ in their money philosophies. My mom is a saver, and my dad was a spender. Both of them taught me some very important lessons about money.

We didn’t have much money when I was growing up, due to my dad’s inconsistent job history and the fact that we lived in a third world country, where everybody else around us was poor. It was a normal thing to be poor. I knew this right away as a child–that we didn’t have much money and that I was much luckier than my brothers, who was born and grew up during the war. A famous line of my mom’s is “We didn’t even have enough money for food so I had to divide the portions into three meals! And I didn’t have much to eat so I couldn’t produce enough breast milk to feed my kids!” Luckily, when I came along, there was enough food to go around, so she was able to produce the milk.

Despite that, my dad was a major giver–he’d give away whatever he had left, telling people, “It’s okay. You don’t have to pay me back,” or “This one’s on me, buddy.” As a child, I didn’t understand why he did this. I thought, “Why on earth would he give away money when we’re already so poor?!”

Now, as an adult, I finally understand.

MoneyToon

From watching Ellen Rogin’s Ted Talk today, I learned that giving can be just as rewarding as receiving. It can make you feel even richer. In her talk, she advocates for giving back to the community through charity donations and volunteering your time. This was something my dad did a lot. He volunteered his time at our church (the main hub of our community) and he gave away whatever money he had left (after he’d spent the majority of it, that is). This solidified his position within our community–everyone respected him and loved him, and we were always invited to parties and gatherings. He was also a funny guy–that helped too. His philosophy on money and on life was so simple, and yet it worked.

My mom, on the other hand, is the opposite. Besides the tithe she gives every week at church, she is not typically a charity giving kind of person. Instead, she hoards her money in random places and tends to them in the same meticulous manner as one would tend to a flower garden. Unlike my dad who couldn’t keep a job long enough, she worked hard at the same job for many years. She was the financial rock in our family. Without her, we probably would be worse off.

Ironically, my dad was the one who bought a life insurance policy and convinced her to do the same. But that’s another story.

The point is–kids are like sponges. They absorb information so much, and so quickly. As discussed in Ellen’s talk and in this article, kids learn a lot from how we act around them.

…how our children will manage money in the future is being shaped by the atmosphere around finances at home right now. – Ted blog

Reading this reminds me that as an adult, as a parent in particular, I need to pay attention to how we talk about money at home. In fact, my husband may agree that we don’t really talk about money in front of the kids. Besides saying, “We don’t have money for this and that” sometimes we typically don’t give them any idea as to how we are financially. I think they’re too young right now. My daughter is old enough to understand certain things though.

My parents didn’t talk about money either, but I learned so much from observing them in my youth. I think it’s worth noting that in order to teach your kids to be responsible with money as adults, we must first model that behavior. But I also don’t think that you should go around and say, “Don’t do what I did!” until they’re old enough to understand, probably around teenage years, when the majority of them start earning their own income.

I don’t want to be like my mom, but I also don’t want to be like my dad either, so I strive to be somewhat in the middle in terms of money. Every once in awhile, I’ll take the kids out for a treat–bubble tea, baked goods or a Happy Meal. They love it because it doesn’t happen very often. It’s my way of saying, “We don’t always have money to do this, but when we do, it’s fun!” Delayed gratification, right?

What I learned from four years in banking

Last week, I ran into someone I knew from an old job on the train. It was 7 o’clock in the morning. He was heading to work and so was I. This wouldn’t have been any more common occurrence than riding the train itself, but every once in awhile I run into Paul. He and I exchanged a few brief sentences. He still teaches fitness classes for our local transportation system Tri-Met, he told me, and I told him about my new job. We then parted our ways when he told me he needed to get himself a cup of coffee.

It feels like ages ago but from late 2010 to late 2014, I worked in the banking industry. It’s an industry that I sort “fell into,” so to speak, because I didn’t specifically seek it out. Post college, I didn’t know what I wanted to do with my life. Coupled that with experiencing the recession, it didn’t make for a particularly easy decision.

I got a job at a local bank because I had customer service and sales experience. It was there that I learned the proper way to count and display money (something I never really took into consideration before) and how to be vigilant for possible security risks (for example, examining checks for signs of fraud or observing people’s behavior when they’re interacting with you at the teller window). I continued on to a local credit union after 8 months because the sales environment was a bit much for me. It was almost a cut-throat sales floor where there was always a weekly competition and a reminder from management that we might be fired if we didn’t meet our sales goals.

Luckily, when I got to the credit union, it wasn’t like that, but I still had sales goals to achieve. It was a much more flexible, open environment where I could call anybody within the company and they’d respond right away and give me helpful information, which makes the customer’s experience that much better. To this day, I still bank at that credit union and would not recommend anything else.

Still, during my years there I had some turbulent moments, but also learned quite a bit about people’s behaviors. I had no idea that all the stuff I learned in college, and what I read online via personal finance articles/blogs/sites that it was nothing compared to having access to people’s personal financial accounts.

I learned how much people made (and the majority of the members I helped made significantly more than I did) via their direct deposit and physical paychecks. I learned what people did on the weekends by simply glancing at their transaction history–where they went to dinner, what type of things they typically spend their money on, and how much they spent at the grocery store (always an astounding amount in comparison to myself, who before I had kids, tried to stay at around $200-$300 per month).

Many of us don’t realize that tellers, perhaps next to our priests, know so much personal stuff about us. Of course, we are not all defined by our bank accounts, but many things can be deduced from it. Take, for example, someone who goes to Starbucks a lot. It means they have a coffee addiction, right? Or someone who brings in a lot of checks and separates them out, and then makes you do multiple transactions that ends up taking at least 15 minutes means that they’re particular, right? (I did have one member who did that all the time).

Another thing I learned from my banking days is that you can never judge a book by its cover. I learned that although a lot of people make more money than me (post-tax), they still spend an exorbitant amount, so the day before their payroll hits, they only have $10 in their account, or they’re already overdrawn. Those are the non-saver types. Then there’s people who hardly spend anything. Instead, they only have savings accounts, and withdraws a certain amount of cash to spend weekly. There’s also the people who have a lot of money in their savings but also a lot of debt, given by their current credit balances are about as equal as their savings.

Finally, there’s people who are truly on the poverty level–they barely have any money, and when they do it usually comes from a state or governmental agency, like the IRS. I learned that those are the people who are most down-to-earth. They are also the ones who have horrible credit ratings, typically a D or C rating (550-690).

Of course, it’s easy to judge people by their credit rating, because credit rating equal credit worthiness, which in turns translates into human worthiness. How we’re able to pay back our debts has to do with our moral obligation to ourselves and our ethical beliefs, right? And how others view us contributes to that worthiness as well.

That can’t be more wrong. But unfortunately, in the financial world, numbers mean everything. I’ve heard people tell me about things that happened to them which brought down their credit rating by 200 points. Usually, all it takes is one major catastrophic event to make it happen, like a divorce, a legal battle, or a medical condition. These things happen, and even though we can’t really blame people for it (after all, it’s not like they choose to be sick), the reality is–we do. Banks and credit unions make a point from the previous recession in that they look at the person as a whole–financially, of course–and income and credit score is a major deciding factor in whether or not someone is granted a loan. Never mind the fact that they are now law-abiding citizens; if they so much as made a mistake in the past, such as declaring for bankruptcy because of a divorce, they will pay that price, literally in high interest, or a rejection for many years to come.

That brings me to the idea of privilege. For those who are privileged enough to have a good income that allows them to be approved for loans, it puts a bend in the road for those who wish to become good enough to have a loan, to get themselves back up again. I learned so much about privilege in my years there. But perhaps the most important lesson I learned is about personal finance. From seeing what others were doing, I learned how to manage my own money. I learned how important it was to have a retirement account. And I learned that credit can benefit you and hurt you at the same time.

The reality is, bank tellers don’t make a lot of money. They make a few dollars above minimum wage, but besides the benefits, salaries for that particular job is very stagnant, with a possible increase of 25-50 cents per year. What most people don’t know is that tellers do a lot more than just counting money and receiving them. They are the agents for money exchanges and customer issues, in addition to selling additional products, balancing their till daily, and for some, like me, manage the entire branch’s vault, which requires additional duties.

Not surprisingly, the ones that I related to the most belonged in the last category that I described above–ones who hardly had any money, the ones who seems to be perpetually struggling. Like Paul, who only has a few hundred dollars on average in his account, I felt that I was struggling too. But somehow he manages okay. He’s happy making other people healthy and fit. You’d never think that if you look at him and his bank account.

The same goes for another customer, whose name I’ve long forgotten, but who I remember clearly because he was a mild-mannered man who dressed like he was poor. In reality, he was rich. He had about $50,000 in his account that he never touches, and after a conversation once when I tried to get him to talk to our financial advisor, and he turned it down, telling me that he made some bad choices with his money in the ’90s, so he only wanted to keep his money liquid, I wondered if he was an Enron victim.

The next time you’re at the bank, ask yourself–how much does this teller know about me? Chances are, it’s a lot.