Family Financial First Aid: When You Know Better, Do Better and Pass it on!
Nothing can make you feel more empowered and in control as understanding your finances, making solid decisions and watching your money grow.
Nothing can make you feel as out of control, inferior and in panic and chaos as NOT understanding your finances, making poor decisions and feeling like you’ll never get out of the hole.
I’m not wealthy, I’m not rich. I really don’t have a whole lot in my retirement, but I’m proud of the time I made up in my 20s in the last couple of years.
I realized that upping the contributions to my 401k at my last job was a smart thing to do. I’ve changed two jobs in about two years, and when I left each job, I rolled my 401k investments into an IRA.
When things got funky with my financial aid this past semester (don’t even get me started my blood pressure has finally returned to a normal state), even though it was part of my “last resort,” borrowing money from my IRA was an option that saw me through a tough time.
I grew up in a middle class family, but my parents– neither of them college grads, but who did better than their parents, did not have a financial education. They winged it.
While my dad is a very intelligent person, he fears credit cards and hates debt of any kind.
My mother, also a very intelligent person, had addictions to store credit cards, as evidenced by our bi-weekly trips to the local department store to pay her bill, and the harassing calls after she lost her job.
So once I got a job and was given an application in high school, I got a credit card and quickly built my credit line to the point where as a college junior I had a $5,000 limit. Being young, dumb and at Howard, where the most fashion-forward folks go to get educated, I surprisingly didn’t squander my good credit on clothes. It was actually footing the bill for spring break to book planes and hotels for me and my friends and paying for my boyfriend’s car repairs (because how else will he get to work?).
In my early 20s, the joy of getting a full-time job after college and seeing larger checks in a low cost-of-living state had me living beyond my means and depending on overdraft protection, acting like it really was my money. I assumed the overdraft fees as just the cost of doing business and kept it moving without a care .
It took a very, very long time and a five-year financial education program to help me improve my credit and pay down my debt. It was a proud moment to be eligible for a good credit card again, and in comparison to the last time I purchased a car, to go from having an 18% interest rate for a used car about 5 years old to an 8% interest rate the next time I purchased a same year model, brand new.
That’s where the feeling of being in control and accomplishment kicks in. But that feeling had to come from making some big mistakes, and then doing what it took to correct them.
I didn’t necessarily fear credit, but I needed to learn that it was a tool. Unfortunately, my father’s mindset that all debt is bad didn’t help, and neither did my mother’s habit of paying a card off, so you can just get more stuff, in a constant never-ending cycle didn’t shape the best habits in me either.
I am, however thankful for having friends who discuss stocks and watch stock tickers on the news and discuss them with their parents casually as if they were discussing sports scores. And I’m slightly jealous of the edge those financially-conscious parental gave my friends, that I just didn’t have.
Like my parents, who surpassed their parent’s earning potential, here I was with a college degree, but financially, I was winging it too. Having to figure it out on my own.
One of my best friends has been buying and selling stocks for years and her parents taught her to do so. At 33, I finally asked her for help today, mentioning how I admired that in her household discussing finances is as normal and healthy as saying good morning. And she’s excited to do it and already looking up some educational classes around the next time I visit home.
It never hurts to ask for help. We are often shrouded in silence when it comes to matters of money, because we don’t want others to know how much we have, or don’t have. I was particularly interested in investing more aggressively, because I want to replenish the funds I had to take from my IRA, and while I put aside money from my paycheck to pay it back, as a single, childless person, who isn’t in her 20s anymore, my window is closing to be as aggressive as I could have been if I started thinking about money more seriously in my 20s.
While some of my friends still live at home with their parents because it is so expensive, I realized I was pouring my money into high rents in the DC area for the last decade (and paying off my college-incurred debts for half a decade), and they were learning how to be aggressive with their investments, taking advantage of the financial power staying at home with the ‘rents can provide, so they can eventually leave the nest and afford to maintain.
Having a household that talks about money openly is healthy. We have to remove stigmas around modest living or what the reality of your financial situation is. It takes hard work and discipline, but building good financial habits is something that’s crucial to your future and that of your family.
I appreciate everything my family has done for me, so I’m not knocking them at all, but I can’t help but wonder what other kinds of goals and dreams my parents could have accomplished if they had the tools.
From time-to-time, my father asks me about how much I make. I now artfully avoid it after the one year I told him, and his eyes widened and said, “You’re almost catching me.” Yes, I do think my dad is trying to be in my business, but I also think it’s a matter of him feeling like some financial progress is being made and his baby girl is secure and successful and that hopefully, by some chance I’m making better decisions than he did. Sometimes he says it outright, relieved that I’m an adult to be able to really understand his point.
While my parents have never asked me for money, I do care about their lives as they enter their golden years. A part of me wonders that because I am still single and without a family of my own, and geographically closer than my sister, who does have a family, will I have to really step up for them and how will I be prepared to do so in a way that is respectful and commensurate with how wonderfully they provided for me, knowing some of their financial sacrifices and missteps will contribute to how comfortable their retirement years will be?
I don’t know the answer to all of those questions. And as a family, we’ll have to work together to figure them out.
What I do know is unlike my parents, I have way more access to information than they ever did.
The Internet is a great equalizer. Just this morning, I’ve read several Forbes articles on how to get started with the stock market and I’m energized and excited. There’s so much to learn and I’m mature enough to get help and figure out how to make my financial future and that of my family’s a whole lot brighter.