Leaving a Legacy of Personal Finance Mastery

O Psychic One turned 13 this week and has developed quite an appreciation for personal finance.

He got money for his birthday, and I gave him the change jar one day when he did something nice for me, and so now he finds himself with $68. His dream is to save enough for the new Wii that is coming out a year from now.

He has asked me if there is any way to smooth and flatten his money so it looks new. I once knew a guy who admitted to ironing his money, but I didn’t reveal that as I don’t really want that practice to spread.

He also asked me if I would let him get animal fries at In n Out as long as he paid for it himself. No.

And he asked me what he could do to earn more money, sparking a lively and hotly disputed discussion about his role in the family that merits no payment, and what extras he might undertake for pay.

I see this as a rite of passage. My baby is making his first explorations into the wild and wacky world of money.

The other day as we were driving, he said to his older brother, “I looked this up on line. If you get a job and you make $5000, and you put all of it in a savings account, then by the time you’re 65 you’ll have about $500,000.”

Sir Empath, who has a vague interest in getting a job, but nothing too strenuous, has also been running numbers in his head. He commented, “But that’s like 50 years from now. It would be more fun to spend it.”

To which O Psychic One replied, “Yeah, but what would you be doing with that $5000 if you just spent it? You’d be getting Taco Bell for your friends, or buying stale red licorice at the dollar store. Is that really worth half a million dollars?”

Excellent point. Retire comfortably, or scarf enough Taco Bell and red licorice to keep you awake at night? Hmmm. Which one is the better choice?

I, in my wisdom, can remember being on either side of this coin, if you’ll pardon the expression.

I clearly recall being 22 and deciding not to scrimp in order to put money away for retirement, because that was 40 years away – a lifetime. In so doing, I actually pushed retirement out another 20 years.

I wonder what Miss 22 would have thought if she’d learned that her retirement age looked more like 82 than 62. Maybe she wouldn’t have bought that extremely expensive silk suit that by now has fallen to dust, just because the saleslady said it made her look like a fashion model.

I also clearly recall ten minutes ago, when I was stressing over losing a client and wishing that I had scrimped to put money away and had a cool half million dollars sitting in savings awaiting my retirement. Which by all rights might have been just a few short years away, if I’d been even marginally foresighted.

O Psychic One is a smart young man.

If I listen closely, I hear him teach me what he needs to be taught –

Saving money is better than buying stale red licorice from the dollar store, and that’s so OBVIOUS we need not even count the reasons why.
Putting away even a little has the power of exponential growth if you can just keep your mitts off it over the long haul.
Knowledge learned by researching one’s own questions has more staying power than a mother’s warnings, stratagems, and lectures.
The time to learn about money is before it becomes too powerful an emotional force to be met head-on, because if you wait until after that point you’re going to be on the short end of the stick.

I did not learn these things or really any other things about money as a child. My parents were too busy arguing about it to stop and figure out what to teach me. I wasn’t able to presage what I needed to know, as O Psychic One is doing. And so here I am, short end of the stick firmly in hand, fighting the good fight.

Too late.

How about you, World of Dreamers? What money lessons did you learn from your parents – or from your children?