A while back I wrote a post about my son’s $1055 phone bill and it seems to have resonated with Mr. Credit Card over at www.askmrcreditcard.com.Â Today, he is going to share some thoughts regarding his observations that many of us are not prepared when money and responsibilities suddenly come to us.
I have an eleven-year-old son who is clamoring for a cell phone.Â He is going to middle school next year and it seems that’s when parents around my area start giving their kids cell phones.Â The parents use the rationale (read: excuse) that it is to keep tabs on where their kids are! (“Hey!Â Remember to come back by 4!”)
But cell phone aside, my son has been getting an allowance and, quite often, Granny tops off his piggy bank during Christmas and his birthday.Â I’ve observed some very interesting things about his behavior too:
1. He likes to pay for things.Â Now that he has some sizable savings (by his standards) in his piggy bank (more like wallet), I’ve noticed that he likes to volunteer to pay for things. He will ask me if he could buy a candy and, if I say yes, he’ll volunteer to pay for it.Â He even volunteers to pay for my meals at McDonald’s!
And you know what, I’m actually glad that he is willing to pay for his own stuff now that he has some pocket change.Â But…
2. He simply wants to buy stuff without thinking.Â Now that he has some financial means, he wants to buy stuff without really thinking if it is a wise choice. For example, he will say, “I need another $150 to buy an iPod.”Â Then he will think of chores he could do to reach his goal, which is good.Â Â The things that he wants to buy terrifies me though – an iPhone, an iPod…the list goes on.Â It’s all consumer related stuff. Â Never has he said that he wants to save or invest.Â But who could blame him?Â I have not gotten around to teach him that yet.
The Dangers of Being Ill-Prepared
My son’s behavior really intrigues me though because I can recall other instances of people being given a lot of something and having no clue on how to make use of it properly.
For example, I’ve seen people promoted, given a lot of responsibilities and then not know how to behave.Â Instead of acting like a manager, I’ve seen some newly-promoted people become arrogant and show their true colors! Or worse, misuse their authority.
I’ve been traveling abroad lately and I’ve seen many of the “newly rich” Chinese buying expensive luxury items. I’ve seen them snapping up properties in other countries without regard for value.Â The Japanese did the same thing in the 1980s when they bought up American real estate and we panicked – but it turns out they overpaid!Â Hey, there’s nothing wrong with that if you have money. But spending it wisely is still important whether you have lots of it or not.
Closer to home, I’ve seen folks who get inheritances and then squander them.
And we have obviously seen what happens when students get out of control with their student credit cards, or when folks have too much easy access to mortgage credit, home equity lines of credit and instant approval credit cards!
Lessons from all this
I think one of the key lessons from all this is that we have to learn how to use a tool that is new to us before we use it.Â Sometimes, though, it is just not possible. We are simply thrust into situations in our lives where we just simply have to learn on the fly.
Still, there are many situations where we could make the effort to learn skills before we need them.Â For example:
But back to my son…Â I am now on a mission to make sure that he spends his money wisely.Â I’ll update you folks as the journey continues, but I think the big lesson for now is that if we do not learn how to manage money (or anything like responsibility, parenthood), we make our lives so much more difficult.
Here are some questions I’d like you to ask yourself.Â Please comment and share your thoughts.
1. What would I do if I had a million dollars today?
2. What improvements would I make at work if I got promoted today?