As a child, I wasn't ever taught anything about money. If I had it, I spent it. And so I've made many, many mistakes. I started thinking about the lessons I have learned and what I would like to teach my own children, and then decided to put it together in a blog post.
The big number one rule is to NEVER SPEND MONEY YOU DON'T HAVE! If you don't have it today, you don't have it. Don't spend future income, because you have no idea what the future holds. Obviously, if this rule is followed, it will prevent trouble with credit cards.
The corollary to this rule is to NEVER SPEND ALL THE MONEY YOU DO HAVE! This is where I made the biggest mistakes in my early adult years. I had no experience with what kind of things can and do go wrong, and I never even thought of saving any money that I earned. Looking back now, that seems insane, but it's true. I also had no real long-term goals that I thought it necessary to save for. I could have easily saved $10,000 before I got married, but instead I had a negative net worth.
The one exception to spending money you don't have is getting a mortgage. But I think this should be done the old-fashioned way: save up 20% as a down payment and make sure the payment is not much more than 25% of your income. We finally are at that point of 25% and it really is so much more comfortable. Also, make sure you still have some money in savings for inevitable repairs.
There are also two general principles I have learned over the years. One, it takes a lot of money just to maintain the status quo. In my youth, I never realized this. Money to make sure your appliances work, money to make your car go, money so that the roof doesn't leak, money to replace a cracked windshield, money to replace the toilet that the twins have messed up...all of those expenditures do nothing but give you what you already had! How frustrating, not to mention expensive!
The other principle is that EVERYTHING will take longer than you thought and cost more than you thought. Just plan for this and always give yourself wiggle room. I could give many, many, many examples of this from my own life. Here's one: our house was supposed to be ready long before Mary was born, and we moved in when she was two months old.
Some closing thoughts: I think, in general, that never having saved up for anything did make me less appreciative of what I had. It would have hurt a lot more to sink money that I had saved up into something silly than to charge it. It also devalued hard work, because I had never really worked to get anything.
I wish we had realized a long time ago that it was not sustainable over the long term to have so little income. It seemed like we could make do for a while and bail ourselves out with credit when necessary. As I've said before, I don't know why I thought not caring about money exempted me from having any!
I think my children are doing better than me so far. I have tried to be more transparent about money than my parents were (which isn't hard). My oldest son is very good at budgeting and economizing, but I do worry that he spends money a bit too freely. Gabrielle is already saving all her money for a trip to Scotland, and both girls saved up for their American Girl dolls. So saving is not a foreign concept to them as it was to me. Ryan even saves his money in a piggy bank.
My husband and I will spend probably the next decade reversing the damage we have done to our finances. I hope that through that time, I will be able to teach my children better approaches to money, and then someday actually have the money to help them out in their lives, whatever God calls them to do.
