Personal finance, from the gutter. Basically.
Numbers have always been my thing, financial planning and understanding, not so much. As kids, my mom tried to teach us to save using envelops. She really did try! The idea was you could have an assortment of them, writing on the front what each one was for and then writing your entries in to the envelope, much like a checkbook balance. While this method, as I have come to learn, was very normal back then, it was already very outdated, and I learned nothing about impulse control and spending, or saving.
I mean when that ice cream truck came ringing we were like little savages to our envelopes. "To hell with the new Nintendo game! We will just ask Santa!" A similarly far fetched idea that we truly believed in for quite some time. And I have to hand it to my parents here, our Christmas's were always splendid and chock full of presents. More than they could have afforded at the time for sure. We used to say Santa must have wrecked his whole sleigh in our living room, and it was glorious. I also carried that habit forward for the first few years of my sons life, before I realized he barely played with half of the stuff, because it was just too. much. stuff. And he often invented cool things out of the boxes instead of playing with the $50 toy I created all the debt for, anyway.
Back to the point, banking was way different back then, and I don't feel like I ever really was taught, or maybe I just didn't learn, the ways to be smart with money. I worked hard, sometimes three jobs at a time, my work ethic was never a problem, more so was that I created really bad spending check-to-check habits. I enjoyed eating out and shopping as soon as the bills were paid, never worried about savings, or debt. I bought a house pretty quickly out of high school, had a new car, and then came the credit cards.
Before long I was in over my head, I had no clue how to really budget. I paid whatever bills were already due, and then the rest was "extra", I laugh now knowing there really is no such thing as "extra" in my income bracket. I reached out to my parents for help, and they bailed me out more than once, thankfully. Still not really grasping how I had failed, the cycle repeated. Every time I got caught up, another wave of balance due notices arrived and I was under water again. Enter abusive relationship stage left, which to keep this part short I will simply say, ultimately landed me in bankruptcy. Devastating.
For the longest time, I couldn't admit that to anyone, it was such a shameful experience. Even the lawyer, who you pay to help you made me feel worthless. They sort through all of your spending, habits, bills, weaknesses and then they slap a big warning label across your credit and say
"YEP! You suck at money, here is your reprieve, we take everything, you pay nothing more, and no one will help you for years to come. You are welcome. Next!"
It was awful. But, it helped me learn. Fast forward to the bad life being behind me. I started to look for ways to improve my credit. Over the next four years, I made every payment on time, I stayed ahead of bills, I made and held myself to a budget, and got my menial credit score back up to, meh not so bad. Slowly and surely, I worked at being more financially conscious. And these days I am the proud owner of an excellent score. Thank you, thank you very much.... no really I worked my ass off for it!
So recently, my son started working, opened his bank accounts and had his first, "holy crap, where did you spend ALL of your money?!" moments. Well, that was my moment actually, but you get the point. I thought, how do I teach him, when I never learned? So here is my advice to him. Very simple for getting started, rather than trying to play catch up.
Make a budget. And then, stick to it. (There is a lot of online help available, free even!) This is difficult when your checks are not consistent, but I would say start with the bare minimum you could make in an average month. List out all of your debts, bills, and necessities. You have to be really real here, and it took me a few months to iron it out, based on my spending. It's easy to say "I will only go out to eat once per week" until you end up with a Birthday dinner a school fundraiser, and another event all in the same week, for example. Sure you can say no, or just get a water out to eat... but who loves to do that? Not I. So I took my averages for that too. My fun money, the vet bills, the extras for Josephs school, even haircuts and lunch money. I evaluated my money like an auditor. Of course his budget is more like; ring dance dinner money, ten dollars at Starbucks, and a few dollars here and there at a convenience store. I decided starting in June he will also be paying his cell phone bill, letting him get adjusted before then. Adjustments are always necessary.
Pay your savings first. Like a bill. Notice I didn't say "pay myself first", yea that made me feel like I was entitled to spend it. When I treat it like a bill, I don't touch it. I even set it up to come out of my check automatically in to savings, which I highly recommend if you have that luxury. He pays 30% first into his savings. So far so good.
Allow for fun stuff too. This can be a slippery slope, so I told him there were two options. He could take meticulous care of his allowance, using his debit card, and not go over - doubtful. Or, he could take it out as cash, once it's gone, it is gone. He decided he was ready for his card, and slipped, tumbled, and fell hard in to the overdraft zone... probably an important experience to have rather than taking my word on it. He went in to action, deciding to pay it back out of his savings and then on the next check, repaying the savings debt. I was impressed.
That's where we started, that's it. I started there in recovery mode, but as basic as it is, it is helping him too.
Money is usually a learn-by-living deal, but I really wish they had better classes available to kids on the matter. Not that any thing would be less important, but maybe it could be built in to a math class. Instead of setting them off in to a sink-or-swim setting, they could actually have some experience before the "real world" starts. Just an idea.
Regardless, we all start somewhere, or we never learn and struggle for the rest of our lives. Hopefully he is learning to cope and manage better, from my struggles, and that they won't end up his reality.
We do the best we can.