Friday, May 5, 2017

Teaching Finance to the Teenager

I'm going to discuss a non-fitness related topic this week but before I do I need to do some housekeeping.  First off, I want to throw out a huge shout out to both my God-Mother and her son (whom I affectionately refer to as my God-Brother) who are currently undergoing huge transformations that deserve some recognition.  Thus far, she's lost over 100 lbs and as of this writing he's approaching and may have already surpassed 50 lbs lost.  It's fantastic watching them discuss and post about their continued progress and I have no doubt they're inspiring others to look in the mirror and ask the questions that can lead to their own changes. Congrats you two and keep up the awesome work!

Second, a quick update on my fasting.  The first week actually went really great.  I learned a lot about the process and also realized I still have much information to gather.  I've begun documenting the changes I've made, have tried some things that worked and others that didn't and am actually looking forward to the coming week because I feel as though the further I delve into this, the more streamlined the process will become.  I'll be getting more in-depth on the subject later but prefer to do so after another week or two of information gathering.  That said, on to something a little different this week.

The past couple months Caden has been saving up for an IPod and last week he finally accumulated the necessary funds to purchase it; or so he thought.  Experienced Amazon shoppers understand that, 1.) If a deal seems too good to be true, it probably is. And 2.) Before purchase it's important to always to check the rating of the seller.  When it came time to buy Caden's new music player he learned the two lessons and unfortunately in doing so, found that he was actually $15 short.  He was bummed but it dawned on Shawna and I that we were being presented with an amazing opportunity to teach a financial life lesson and it was one that we absolutely could not pass up.  So, rather than simply send him away to save up the rest of his money we instead made him an offer; one that would allow him to purchase the IPod that night but would cost him more than sales price.  In one fell swoop the subjects of credit, interest, collateral, and financial planning were ours to teach.

Once the plan was formulated, we presented it to Caden as follows:  He could save up the rest of the money and purchase what he desired when he'd saved enough.  Or, we could loan him the remainder of the money so it could be purchased that evening with a couple conditions.  The first was that he needed to put up his X-Box controllers as collateral and would not get them back until repayment was completed.  The second was that he'd be paying interest on the borrowed sum.  So, his $15 dollar loan would become a $20 dollar repayment.  Unsurprisingly he initially balked at the $5 finance charge, which is understandable, until we informed him that once he qualifies for credit in real life, a 25+% interest rate would not only not be out of the question but likely.  We could have put a time limit on it as well but decided it best to keep the initial lesson as simple as possible.  Here's the best part though. He's already paid it off.  I don't know if it was not wishing to owe money or the fact there would be no XBox until he'd paid (I highly suspect it had more to do with the latter) but regardless, not only did he learn lessons, it's lead to conversations regarding money that many, if not most, kids don't have in 2017.

In all honesty I haven't been the greatest with money over the years, which is a big reason I want Caden to learn some of these lesson's early.  I don't want him to fall into the, "student loan with thousands in credit and loan debt" trying to start a life in his early 20's with no hope of actually pursuing not only dreams, but just a regular life that doesn't include crushing debt.  The reality is not only are kids not going to get the financial education they need within the school system, they're probably going to hear information that's been past down for years but no one will admit is wrong. We cannot rely public education to teach our kids the realities of money and finance, we must bear that responsibility ourselves.  And though others may disagree, when kids hit a certain age I think doing it in no bullshit way is preferred.

When you really look at it, it's easy to draw a parallel between losing weight and saving money/working out of debt.  With each people tend to start off motivation and positively about how much they're going to lose or how much they'll save and how life with change without all the debt. But then little invitations begin to arise.  Perhaps you go out to eat and the cake at the end is simply irresistible so you indulge.  That one piece of cake could simply be an outlier and you're back to eating right by the evening.  Or, and what seems to generally happen, that one piece of cake is like dynamite hitting a a damn and the floodgates to old habits opens up.  The same thing happens with money.  You'll be doing well and then you see something you just, "have to have!" and after that you're quickly back into your old ways.  I'd say it's all self control but I think it goes much deeper than that.  Perhaps I'll expand on this further at a later date but given I'm over tired and not a mental health expert, I'm going to stop that discussion here.  But, again, the parallel's between physical and financial freedom and independence are hard to ignore.

When I changed the premise of this blog, I did so with the intent to make it more than a place to read about fitness.  That's what today was because I think not only do I fall into a large segment of society that has issues with the physical weight they carry, I think I also share traits with millions who carry a large financial burden as well.  But with both, there is hope.  Just like losing weight, losing financial requirements can be done with perseverance, attitude, and education.  While not exactly where we'd like to be, Shawna and I are working very hard to pay down debts; many of which we've accumulated through poor decision making.  Obviously not all were done in that manner but enough so that things we desire to pay off quickly take longer because we can't focus solely on them.  It's frustrating but if we've learned one thing during this process, it's that being patient can pay dividends.. And yes, I managed to drop some dad jokey financial humor into this.. But for real, talk to your kids about money.  Do it often, use examples, create and take advantage of situations to help them learn and if you're saving for something special, close the Amazon tab because chances are you don't need whatever's on it right this moment (unless of course it's the item you've been saving for and then, by all means, have at it.)  Don't just use today to become physically better, use it to take one step closer to reaching your financial goals as well.  And while you're add it, share the lessons you learn for both to the next generation for no other reason than eventually... those people...they'll be the ones in-charge.


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