Home

Finding Fulfillment Through Finance and Family

Leaving Children an Inheritance


Imagine if there were a way to increase your chances of living your life in a way that makes you feel more fulfilled, more aligned with who you are and what your values are, and more at ease about your future. Imagine you had the ability to teach this way of life to your children so they grow up with these same principles that they can pass on to their children and their children's children.  Sounds great, right?

For me, talking about money at home goes beyond the desire to teach financial concepts to my children. There is a disconnect in our society between money and values and this stems from the way we are taught about money. I want my children to connect with money. I want to leave them an inheritance that is worth more than money in the bank.

Research shows that adults are failing with money because of the money habits they learned as children. We historically have not been taught basic money management skills at a young age and therefore become parents who feel ill-equipped to teach these concepts to our children and thus the cycle continues.

Why are we not learning about money, a topic that spans so many other areas of our lives? First, the federal government cannot dictate education standards in the U.S because education is controlled at the state level. Schools are not required to teach young people about personal finance in most states. There are a few states that have incorporated money topics into their main curriculum but most have not. Organizations have recognized this and many have developed a range of programs aimed at improving the financial knowledge and capability of young people:

  • Teaching financial education in K-12 schools;

  • Providing “bank-at-school” programs;

  • Providing matching incentives in specialized savings accounts;

  • Providing non-school-based learning opportunities; and

  • Using online learning tools and resources.

 Although most agree on the importance of teaching financial education, there is little agreement about what makes up an effective financial education program. There is currently nothing in place to evaluate and extensively research these programs to see which ones are effective at promoting behavioral change and positive outcomes later in life. This makes it challenging for policy makers to choose a plan to implement.

Why is this a problem for our society?

Many young people are ill-equipped to make major financial decisions as they get older while at the same time financial services are becoming more complex. Young adults are forced to learn by trial and error in the real world which had led us to being a country crippled by debt. 

I agree with personal finance guru Dave Ramsey who claims personal finance is 80% behavior and only 20% knowledge. Kids need to be experiencing money lessons first hand long before they are launched into the work force and have to learn by making financial mistakes.

All of this has played into kids attitude toward money too. In a recent survey by T. Rowe Price, more kids believe they'll make a million bucks by becoming famous than by investing in stocks and bonds. I don't know about you, but this does not make me feel too optimistic about the future.

What can we do about it?

Programs continue to be researched and evaluated. As of 2014, 46 states have agreed to follow the Common Core Standards for education which establish minimum knowledge guidelines by grade so that students moving from one state to another get a consistent education. The Treasury Department has developed a website called moneyasyoulearn.org as a resource for teachers. The site offers ready made personal finance lessons that teachers can easily fit into their existing math and English lessons. The website will be expanding to include personal finance lessons for social studies, history, and science classes too.

In the meantime, there are ways in which we parents can go about teaching good money behaviors. It's just like teaching good manners but with money. 

#1 - Include kids in an ongoing conversation about your family's financial decisions. Things like whether you should continue putting money into your older car or if its time to purchase a new one. You all want to go to Disneyworld but how are you going to save for that? A great website to help you with the conversations can be found here. Like talking about drugs, you're hopefully not going to have one long conversation about money when your child is 12 and expect a decent outcome from that. You want to be discussing these topics over and over again. We all learn better by experience than we do just hearing about something so show your children how to save money. Take them to the bank. Help them to understand your deposits funding your debit card and how this differs from a credit card.

#2 - Give them tasks at home they can do to earn money. You can use simple envelopes to help them to divide up money into 3 different categories: Spend, Save, and Give depending on the values of your family. There are also board games and online games that enforce money skills. 

 #3 - Request for your children to open bills. Have them circle the due date and amount that is due. This will allow you to open a dialogue about your household expenses and what you are required to pay each month for services. It couldn't be a bad thing for a child to know exactly what you pay for data service on your cell phones each month, right?

#4 - Comparison shop. Ask your kids which one is the most expensive and which is the least expensive. Talk about why you think one is more expensive than the other?

This is an amazing time to be a parent who wants to be more intentional about showing children how to better connect with money and use it to better themselves and the world. The purpose is not to change our children or turn everyone into savers. The ongoing dialog and activities allows children to learn money concepts and what their natural tendencies are. We are meeting them where they are and hoping they make mistakes now rather than when the stakes are high. 

By teaching our children the value of money, why it is so important to buy items you can afford and not go into debt, how to work and earn money, and how to help others by giving, we are setting them up for a life that is about more than just having money in the bank. It's not about teaching them how to end up with a millions dollars, maybe that will happen maybe it won't, but there is a much better chance of that happening if they are not strapped with credit card debt. This is an opportunity to leave your children and grandchildren an inheritance of character and a deeper sense of fulfillment.

 

(photo by Lon Martin on flickr)

Simply Complicated - Health and Wealth

SalFalko.jpg

Finance is a complicated subject. It can, and has, made my head spin at times.

Building wealth, on the other hand, is very straightforward. No messy formulas to memorize or tricky equations to solve. Some may overcomplicate what it takes to build wealth by combining financial success with other topics such as investments or tax which can be complex.

Financial health is no different than other areas of our health. You do not need to fully understand cholesterol, body mass index, or high intensity interval training to know that if you eat junk food day after day and never exercise you will be unhealthy.

You do not need to fully understand income taxes, investment performance, or estate planning to become wealthy. Prosperity is achieved by spending less money than you make. Period.

Not just for one day or for one month, but putting the effort in to spend less than you make over and over again - this is what builds wealth. Wealth to allow you to extend your current lifestyle after you no longer have a paycheck. Wealth to perhaps help your children pay for a portion of college. Wealth to start a new hobby someday without financial worry.

Sure, investing, planning, and proper tax strategies can help magnify financial success, but only if you have spending under control or have ways to bring in more income.

I wish saving money was more complicated than this so I would have something to point to other than my behavior when I am falling short with my financial goals.

Building wealth requires resources, but it also includes sacrifice, understanding our attitudes and tendencies regarding financial matters, our sense of entitlement and personal expectations, even our history with money and personal stories play a part. None of us enjoy feeling pain or discomfort and making financial changes in our lives can sometimes involve some of these uncomfortable feelings.

Building wealth is simple. Look around though. It may be easy to understand, but it is hard to implement, practice, and maintain. If building wealth was a simple equation of spending less than we earn, most of us would do the math and be on our way.

I have enjoyed sugary foods most of my life. Breaking this habit is much harder than I ever imagined. It is now a day to day effort for me to eat healthy. I try to stay mindful of nutrition because ultimately a healthy lifestyle brings me happiness. The life I want for myself and my family is slowly becoming more important to me than my hunger for sugar in the moment. 

I am human though and I am not expecting perfection. Sometimes, sugar wins. It's ok. I have built that into my plan. No shame. No should be...

I just eat some chocolate and try my best to fully enjoy it.

Why should our financial health be any different? Perfection should not be expected in our journey toward building wealth.  We need to be honest with ourselves. We can assess our limitations, develop a plan, and have discipline. For some of us, this means disciplined health plans with some wiggle room. 

 

 

(photo by SalFalko) 

Guest post - When Your Personal Debt is Overwhelming

This guest post was written by Alanna Ritchie, a personal finance writer for Debt.org, a financial help website. 

 

Managing Your Personal Debt

While money doesn’t buy happiness, it can send you careening full-speed into debt. Before long, bills start to pile up, the hole becomes deeper and you wonder how you are ever going to get your feet back on the ground. 

Millions of Americans are suffering from what’s not in their wallets and how to pay the bills. It’s no wonder the stress seems downright unbearable:

The mounting pressure to get out of debt directly affects how we feel and it doesn’t discriminate. While there comes a time to honestly face the issues, the stress from the circumstances of financial difficulty often weighs heavily on us, causing us to put off searching for a solution. When you think about it, your next step is choosing how to eliminate your debt by developing a plan of action. Then as you dig out of the money pit, you may instantly notice some of those obstacles begin to fade away.

The Upsides of Debt Settlement

One of the best options for the young and cash-strapped is to settle the debt. Typical settlements can erase between 25 percent and 50 percent of the outstanding balance owed. This is rapidly becoming a popular solution for consumers with overwhelming financial hardships.

Debt Management: Overcoming the Attitude Obstacle

Awareness is the first step in changing your future. Before you become financially free, you’ll need to realistically address the debt-inducing habits you’ve acquired. Create a new thought process that keeps you on track and think twice before committing to monetary transactions.

Denial and an unstructured comfort zone can keep you stuck in a rut and dissatisfied with your money situation. Many people put off taking action to get out of various financial dilemmas. We think about our problems and constantly worry about them every day. However, most of the time, nothing positive or constructive gets accomplished.

There are no quick fixes, and we all wish there were, but if you stand a chance of realizing real financial freedom, you will need to cut expenses and start living well below your means. You do not need to take a vow of poverty, but living below your means requires unyielding restraint.

Remember that while you can get out of debt, it will take time. Keep pressing on even if there are hiccups here and there, and stay focused on the end goal, a debt-free future.

Alanna Ritchie is a content writer for Debt.org, where she writes about personal finance and little smart ways to spend (and save) money. Alanna has an English degree from Rollins College.