Since I had my first child, life has never been the same. At first, my husband and I couldn’t believe how our spending went up with our first little one. This meant that we had to go back to our budget and re-work a few things. My husband ended up picking up some freelance work to supplement our income a little and I pushed for that promotion – once I went back to work – that was long overdue. We also – obviously – had to make a number of cutbacks on unnecessary expenses. No more grande caramel macchiatos for me!! Then, we had our second and our boot straps had to get even tighter.
After we stopped at two kids, we started to really get to grips with our finances. All I can say is that it’s been quite the journey. Raising two kids in the 21st Century isn’t easy – keeping up with the technical gizmo demands alone can cost you an arm and a leg. Part of what I’ve had to use is to really take a step back a lot of the time and reassess if buying these things is the right thing to do and if I’m sending the right message to my children. My parents always tried to instil the importance of working and earning things that you buy. I had a paper round at a very early age and although it didn’t buy me much, it gave me a lesson in the value of money. My husband was in the same situation and we both feel that it’s up to us to ensure that our kids get the same message.
At the same time all of this was going on in our minds, a bad situation fell on us. My husband lost his job and having two small kids on one income isn’t the easiest thing to deal with. Not when you have a mortgage and you’re living in one of Canada’s largest urban centres. When you live a certain lifestyle and trying to provide a good life for your two kids, you need money. Money isn’t the most important thing in life but developing a good relationship with it is essential for living in the Western world.
Since my husband and I had already spent a lot of time on building a budget earlier in our marriage, that helped. Before panicking when the job was lost, we took a step back and tried to be a bit creative. We looked at our income and noticed that my husband was making a fairly decent amount of money on his freelance work – with little effort on his part of attracting new business. Also, he had received a decent sized payout from his employer since he had worked in the firm for quite some time. We also knew that he could always get Employment Insurance income if he needed it. So we had options.
I’m not saying that it was good news but life could be worse. We sat down and devised a plan. Luckily, for us, the loss of this job was a real positive for our lives. My husband realized that he had an entrepreneur that was itching to be released. He took 10% of the money he got in his severance and put it towards starting his own business. The result? A successful business that has added a lot of flexibility to our lives. I’m not going to lie – we’ve had to scale back somewhat but it has really helped us understand what’s important and has taught our kids a good lesson in the process.
So, back to being financial role models….
After all the ups and downs over the past few years, we feel that we’ve become good financial role models for our kids. There is still more work to do but we’ve learned a number of useful lessons that we hope to enlighten our kids with as they grow up. When I sat down to think about a way to summarize these elements, I was able to bring it down to 4 essential elements that have helped me become a good financial role model for my kids.
1) Be open and honest about your situation – this point relates to being open and honest about finances with not only your kids but you and your partner too. It’s incredible to realize how many people there are in the world that are in denial about their own financial stability. Even if you know you’re struggling, how many of us are completely transparent with our partners about finances? Many of us get into relationships and a poor financial situation can actually be a bit of a skeleton in the closet that you don’t want to let out. However, it’s best to do it before it gets out of control. Worst of all, if you keep things hidden this will send the wrong message to your kids. If you’re experiencing hard times, tell your kids so they can see the steps your taking as a parent to improve the situation. This will do wonders for helping your kids understand the value of money.
2) Teach them to earn their keep – as I said before, this is something my husband and I both stood strong on. Even if you are doing well financially, make your kids realize the value of money by getting them to earn some early on. Then, when they want that tablet computer or laptop for Christmas, they’ll realize that it wasn’t earned overnight.
3) Have a healthy relationship with money – kids pick on things easily and money is no different. If money provides you with ongoing stress this message will extend to your kids. Even in times where money is tight, try to improve the relationship by being proactive. Try to speak about money in a positive light and be hopeful that negative situations will improve by hard work and effort.
4) Ask for help when you need it – in addition to being a good financial role model yourself, connecting your kids to other people who have a positive relationship with money can strengthen how your children will handle money as an adult. There is no shame in asking for short-term assistance. Some of the most successful business were founded on seed money – teach your kids this lesson and you may be raising the next successful entrepreneur.
In my financial journey, I know that these 4 tactics have really helped me. I’m sure there is much more for me to learn as we try to save more for our kids post-secondary education but at least it’s all a step in the right direction.