Life Skills Every Kid Should Know: How to Manage Personal Finances (Part 1)

In March I announced that we’d be starting a new series on The Risky Kids: Life Skills Every Kid Should Know. The response was wonderful – it turns out you agree that there are many things kids need to know beyond what they’re taught in school. You agreed with our suggestions for the series, and came up with many more life skills you’d like to see added to the list. You can find posts from the entire series on the Life Skills Every Kid Should Know page.

My vision for the series is not so much a tutorial or a set of instructions, but more of a personal reflection on how we’re trying to teach these skills to our kids, with tips and resources. I’d love for it to turn into a discussion and sharing of ideas between us of what we can do to help each other help our kids. We’re all in this together, after all, and what we teach (or don’t teach) our kids to do for themselves will ultimately affect an entire generation. So I encourage you to read, comment, and share with your friends. I also have a board on Pinterest dedicated to these life skills, with ideas and inspiration to further help us all out as we empower our kids to be responsible, competent adults.

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I’m kicking off the series with a hefty topic: personal finance. Because it’s such a weighty issue, and a skill that many adults haven’t mastered, I’m splitting it into two posts. Today I’ll give a little background on our journey to learning about personal finance, and why we’re so adamant that our kids will master this essential life skill. In the next post I’ll share how we’re passing the knowledge on to the kids, as well as give tips and resources to help you along.

Personal finance is a topic near and dear to our hearts. Like most couples, Mike and I were raised quite differently when it came to how finances were handled in our homes. In Mike’s home, you just didn’t talk about it. In my home, it was talked about, but I was never really included in the conversations. What we had in common was that we didn’t  know what we were doing! We were both raised with a strong work ethic, and had part-time jobs throughout high school and college. But what we were supposed to do with that money once we earned it was somewhat of a mystery.

One of my first and strongest memories of handling my own finances was a traumatic one. My parents sent me off to college with my first debit card. Until then, if I needed cash I simply went to the local credit and withdrew money from the real, live teller behind the counter. I had no idea how to use a debit card! A few days into school, I found myself getting low on cash. I think I circled the ATM machine a few times, uncertain how to proceed. I finally worked up the courage to make a transaction, and quickly realized that I should’ve memorized my PIN. I thought I knew it, so I kept plugging in numbers. After the third try, the machine ate my card as a security measure. I went straight back to my dorm room and cried, both panicked (how would I get money?) and humiliated.

I eventually figured out not only how to use an ATM, but also how to use a credit card. I saw my parents use them, but I never knew that they only charged a few things and paid the bill in full every month. Mike and I graduated from college, got married, and immediately started doing what we thought all adults did. We bought cars and furniture for our new apartment. We didn’t budget, we just assumed that we’d make enough in our grown-up jobs to cover it all. We didn’t save, because we’d never really learned how much we should be saving, or why it was important. And just like kids who are thrown in the water without being taught how to swim, we soon found ourselves drowning. Just a year into our marriage, we were over $100,000 in debt. Credit cards, car payments, rent, school loans … you name it, we’d signed up for it.

Some people spend their entire lives living that way, but we were lucky enough to wake up and realize that there was a different way. That we could pay off our debt, live on less than we make, and save for the the things we wanted. You can read the rest of our personal finance turnaround here. We learned a lot from that experience, but the biggest take home for us was that we would equip our kids to handle money wisely.

Like so many essential life skills, we can easily assume as parents that our kids just inherently know what to do. We’ve been doing these things for so long, they are second nature to us. We also wrongly assume that just because they’ve seen us doing these things, whether it’s the dishes, how to make a doctor’s appointment, or making financial decisions, they are silently absorbing the lessons. It’s simply not true.

I was reminded of this myself as an adult not long ago. We’ve visited Mike’s hometown in Ohio several times a year from the time we first began dating in the 90s. Every single time, when we reached the last leg of the trip there, or drove around during our visit, he would drive. For whatever reason, a few years ago I found myself in the driver’s seat and Mike sleeping as we drove into his hometown. I had to wake him up because I had no idea where to get off the highway, and no clue as to how to find his childhood home. He couldn’t believe that after all these years, I didn’t know the directions.

On those countless trips, much like our kids today, I had simply been a passenger along for the ride. I didn’t pay attention, because I didn’t have to. Somebody else would get me where I needed to be. It wasn’t until I did it myself, first with directions, and then with practice, that I could get myself there. And that’s exactly what kids need to master important life skills that we, as adults, take for granted: personal, hands-on instruction and plenty of practice.

It takes time, it takes your active presence, and it takes lots of patience. But like the things that are most worth doing in life, it’s 100% worth the effort on your part. They might roll their eyes, or complain, or insist they have better things to do. Heck, I feel that way about it, too, at times! But I always think back to my younger self, crying hot, embarrassed tears in my dorm room, and know that it’s my job to empower my kids with skills and knowledge.

Stay tuned for the next post, where we’ll get into the nitty gritty of how we’re helping our kids learn to manage their own personal finances. In the meantime, I’d love to hear from you. Did you start your adult life knowing how to manage your finances? What do you wish you had known when you were just starting out?

 

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  1. […] This post is part of a Risky Kids series: Life Skills Every Kid Should Know. You can find all the posts in the series on the Life Skills Every Kids Should Know page. This is Part 2 of How to Manage Personal Finances. You can read Part 1 here.  […]