I have an eleven-year-old son who is clamoring for a cell phone. 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. I’ve observed some very interesting things about his behavior too:
1. He likes to pay for things. 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. 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. But…
2. He simply wants to buy stuff without thinking. 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.” Then he’ll think of chores he could do to reach his goal, which is good. The things that he wants to buy terrifies me though: an iPhone, an iPod … the list goes on. It’s all consumer-related stuff. Never has he said that he wants to save or invest. But who could blame him? 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. 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 “newly rich” Chinese buying expensive luxury items. I’ve seen them snapping up properties in other countries without regard for value. 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! 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
There are many situations where we could make the effort to learn skills before we need them. For example:
- Managing money.This is something we have to teach ourselves if our parents don’t teach us. And if you are a parent, you should make every effort to teach your kids about money.
- How to be a leader. This is such a critical skill to have as you grow older. Many times, we learn by observation and bring our own personalities when we’re asked to lead and manage. But it’s best to be mentally prepared for it and make an effort to read and learn as much as you can.
- How to be a good parent. There are no schools to teach this, although there are seminars and lots of books. But I think we should learn as much as we can from others and reading what experts have to say. Hopefully, we become better parents as we go along; I hope I’m better off because of it.
- How to be a good spouse. Uh, I’ll leave this one blank!
But back to my son … I’m now on a mission to make sure that he spends his money wisely. I’ll update you folks as the journey continues, but I think the big lesson for now is that if we don’t learn how to manage money — or anything like responsibility, parenthood — then we make our lives so much more difficult.
Here are two questions I’d like you to ask yourself:
- What would I do if I had a million dollars today?
- What improvements would I make at work if I got promoted today?
Please comment and share your thoughts.
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(This is a repost of an article that was originally published on September 20th, 2010)
Photo Credit: gotgenes
If I had a million dollars today I’d retire from my job. And I wouldn’t go nuts and spend all the money. I’d do some sorely needed remodeling to our home and we’d stay right where we are. I’d pay off the mortgage right away and all our credit cards (~$65K). If I were promoted, it would depend on what position I gained. I’d like to think if I were somehow promoted to CEO, heads would roll. LOL. I think any other position below that would just be as frustrating as the one I’m in currently. I know you’ll do well teaching your son to be responsible with his money, Mr. Credit Card. Great post.
School House Rock had the episode of “dollars and cents” that showed how to save to buy things, and also to take a loan to buy things. It’s fun, catchy and like all of those School House rock videos from my youth, makes for a good intro to a more serious topic. That is a lead in to a trip to the bank for a passbook account, and share the 529 account information with your son as well.
Re million dollars today does not make much difference! Seriously! At age 41 with future expenses, it is not the game changer that you would think. No yachts, most money would be in retirement accounts and not so easily available. It is nice to dream about the sort of wealth to retire, but the path to wealth is the steady accumulation of assets and managing them. Remember in your hypo that the million dollar example is why most people who win the lottery eventually go broke. Even a large infusion of capital cannot compensate for poor money management or living beyond your means.
Million: pay off debts, repair the house, put some away for college tuition, and I desperately need a new car. I don’t work, so no promotions in my future!
1. Donate 10%, buy a home, save the rest.
2. Hire more awesome employees!
I’d be tempted to give it all away. There are plenty of places/organizations that could use it wisely. But since I’m married and we discuss such things, we’d probably do a combination. Give some, and save toward retirement.
1. What would I do if I had a million dollars today?
Buy a house and put the rest to some kind of saving bank account. Then probably go to school and learn about investing.
2. What improvements would I make at work if I got promoted today?
If I got promoted today…increase productivity and efficiency (I still have to do that whether I’m promoted or not)
Len, May I have your son? It is amazing that he offers to pay…. go with it! (this is going to my round up today) or is it Mr Credit Cards Son? Either way, I’ll take him 🙂
Barbara – yeah it’s my son! He does offer to pay for stuff! I’m happy and yet at the same time, it kind off a “want to play with your new toy syndrome”. He just got his cell phone and gmail address. You would not believe how many times he wants to check his email!
My son offers to pay for stuff too, Mr. CC. It looks like both our sons are a little too generous sometimes! That’s okay though, because I’d rather my son be generous to a fault rather than the other way around. 🙂
$1 million plan:
1. Walk out of job, never look back.
2. Become local real estate investor.
Promotion plan:
It would take about 4 promotions for me to actually accomplish meaningful change at my huge, slow, top-heavy company.
I think allowing children everything they desire has run its course in our culture. We’ve tried it, it’s not working. Perhaps we should return to real discipline and the school of hard work and sacrifice. Egads right?