The Hardest Things I’ve Learned #2: How to Manage My Money

I’m back. After a long and beautiful hiatus of wedding planning, getting married, and enjoying a tremendous honeymoon, I began my “summer” a bit later than usual.

Now that I’ve settled in to married life, however, I thought I might get back to the blog series I started working on before I got engaged: The Hardest Things I’ve Learned.

During our engagement, SW and I started going through pre-marital counseling, and we learned that what we needed most to discuss was our finances. We discovered that both of us tend to lean towards the responsible-but-may-spend-a-bit-more-than-we-should-and-would-like-to-save-more-and-I-don’t-pay-enough-attention-to-my-money category of people.  While we are responsible with our finances, neither of us feel like we know enough about it to really feel totally confident in our financial situation. I always thought that he would be the one to be all over finances, and he figured that I was. Now, we’ve decided to manage it together. Yet, what I want to know is this: how in the world did two children, educated at some of the finest schools in the country, from financially stable homes, never learn how to become masters of their own assets? 

And we arrive at: The Hardest Things I’ve learned Lesson 2: How to budget my money, invest, and save. 

One reason this lesson, which I am still learning, was so hard to learn was that as a child and teenager, I did not get to practice managing money.  Like all parents, my parents wanted nothing more than the best for me. They wanted to “provide” for their children.

But here is a question for parents now: what EXACTLY do you want to provide for your children? A life free from any struggle or worry for the first 18 years, or a foundation for a successful adulthood? I grew up literally never having to want or wait for anything. Now, I am not complaining. I loved getting a car when I turned 16. I loved that I could go to summer camp instead of getting a job. I loved that I could play sports every season of the year without having to worry about paying for equipment or travel fees. Or rather, I loved all of that until I needed to figure out how to live on my first paycheck.

I think that there needs to be a balance between parents providing items and providing opportunities to learn about finances. Parents, don’t give your children everything they want immediately. Make them work for it. Don’t give your children an allowance- never again in their lives will they be given something for nothing. Let them manage their money they earn from chores. Make them pitch in a percentage of big ticket items like a car. (Now, I know that I’m writing for a small percentage of people who have enough money that their children do not have to work, but it is an important percentage.)

One thing my parents did make me do was get a job over the holidays and over the summers as soon as I was old enough to work. I will be forever grateful for the lesson of what minimum wage really paid in comparison to what I was used to spending. Work for 4 hours just to go see a movie and get popcorn? Whoah!

Secondly, and perhaps worse, I never took a personal finance class in school. My math classes involved trigonomitry, algebra, calculus, and statistics, but no math teacher ever taught me about how to balance a check book or what types of investment options I might face. They never taught me how to make a budget or how to analyze stocks. Before I graduated, I had never heard of an IRA, I never knew what tax bracket I might be in, and I never knew about costs for health insurance.  I did take an economics class in 8th grade, but I hate to say it, I don’t remember much except for the Stock Market Game.

I truly think it is inexcusable that students can graduate from high school with theoretical knowledge about statistics, but not know anything about managing their finances. What better way to APPLY mathematics than with personal finance lessons?

What I think every student should learn before he or she graduates from high school:

– How to balance a check book, open a savings account, open a checking account, and open an investment account.

– How to write and stick to a budget that includes costs for housing, utilities, transportation, healthy food, savings and charity dontations.  Students should practice “living on their budget.”

– Know why you should pay the full balance of your credit card every month, and know how to pay down debt in a credit card, mortgage, or other loan. Know how to check your credit score and why your credit score matters.

– Know what stocks, bonds, mutual funds, IRAs, and Roth IRAs, etc. are and why you would invest in these options.

– Know, based upon a theoretical paycheck amount, what you can afford to spend on big ticket items like a house, a car, or education.

– Know how to balance out investments (“not put all your eggs in one basket”).

– Know how to create a plan for savings for retirement, education, and other future expenses.

– Did I forget anything?

In a world where we have a different financial crisis seemingly one right after the other, isn’t it imperative that we educate students about how to better manage their personal finances? If we have citizens who know how to manage their own money well and with confidence, won’t we then also have people who know how to manage their companies’ money well and with confidence?

My husband, SW, and I still have to sit down and talk about our finances. How much do we want to save? When will we start saving for children (if we have any)? What will we spend each month? What will we save for retirement? What kinds of vacations will we go on? Do we have separate accounts for individual expenses? Looks like next Saturday we’ll be hitting the books! Any advice will be considered and appreciated!

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2 Responses to The Hardest Things I’ve Learned #2: How to Manage My Money

  1. tsadtler says:

    Love it! So much emphasis is given nowadays to literacy (digital literacy, cultural literacy), but the one thing that, without exception, 100% of our learners will have to deal with is questions of finance and economics–the micro decisions (do I pay more for the bigger shampoo bottle since it’s cheaper on a per-ounce basis?) to the bigger, tougher to calculate ones (does the eco-premium of a hybrid car make sense in my situation, and do my environmental concerns carry “value,” just like my money does?) SO many opportunities for real-life, integrated learning. I’ve always wanted to do a course like that. 8th grade Econ could be it, but like you say, the Stock Market Game is the durable memory, and really that’s just a practice in gambling and short selling to capture four months worth of gains. Kids learn, with little guidance, to trade–not to invest!

    My late grandfather taught me his approach to investing, which was comically rigid but useful nonetheless. Since then Grandpa, my mom, and I have spent countless hours talking Coke v. Pepsi, whether Apple will ever pay a dividend, and if Such-and-Such Corp is priced well relative to its competitors. We’ve all accidentally bought shares in competing companies and had great laughs about who was right (answer=we all were, it’s rarely zero sum). In what turned out to be the last years of his life I received so much from Grandpa in the way of advice. He died feeling like he was passing something along that would endure. This had less to do with money and more to do with relationships.

    I assumed that I should learn to manage my finances because that’s how you secure retirement. What I FOUND was a deeper understanding of how our country works. Just how does Walmart’s healthcare cost savings (yay for shareholders) affect the overnight stockboy (boo for sick people). What does the Penn State calamity mean for companies headquartered in and around College Station? If a South American president starts talking about nationalizing industries, what does that mean for the Bolivian mining company whose shares my pension fund just bought? What is collateralized debt and why is it radioactive? What common behaviors can we identify in the tech bubble, oil bubble, China bubble, and finally the housing bubble? Can you educate yourself OUT of falling prey to these cycles of boom and bust? Or is there some programming error in human psychology that compels us to think that there’s always another day’s worth of profits to be made, despite the chatter and plain, old math? Math, science, cultural literacy, history, politics and civics, economics, behavioral economics, language; to say nothing of creativity, critical thinking, problem solving, communication and collaboration. What a course that could be…

  2. epdwilliams says:

    I completely agree! After reading books like Freakonomics, Nudge, The Tipping Point, The Omnivore’s Dilemma, and watching Ted Talks by Dan Ariely, I am starting to think that so much of what is interesting to me about human nature is played out in the realm of economics. I wonder, really, how different an English teacher is from a stock investor. We both have to read patterns in large bodies of data, we both have to make judgments about human nature and about the patterns we find, and we both bank a lot of who we are on the fact that people can be, as Dan Ariely puts it, “predictibly irrational.” I would love to take a course that touched on the trends and how we see those trends played out in the Economy, and then work to figure out what that means for me as an investor and as an earner. Also, I love the idea about the values we ascribe to things, both economically and ethically. We want cheap food, but then we get high costs for health care and for the environment. Then when we pay to fix the environment and our health, we complain about how expensive fresh food is. Everything has a “cost”–hidden or otherwise– and I wonder if it might be an interesting exercise to try to do a Visa commercial to parts of life. For example, visit to your doctor-$50, whooping cough vaccine-$50, not passing along a horrible virus to your child- priceless. Could we do that for the environment? For our health? For keeping business afloat? For hiring new employees?

    Who will teach this class? when can I sign up?

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