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Going broke on a six figure salary: First Blame the Kids
By Anita |
I admit that “first blame the children” is a mantra of mine. I use it when I can’t find something, when something breaks, when I’m running late or if I’m having a bad hair day.
Apparently the “first blame the children” mantra can also be used when your salary is six figures and you’re basically broke.
Of course I instantly slipped into judgmental mode when I read about the Millers in Park City, Utah. They have a nice house and an income at least three times the national average. Yet they have no emergency fund and dip into their home equity line of credit each month to pay bills. They buy their kids way too much stuff. Their daughter recently racked up a $150 text messaging bill. Oops.
“I look at how much money we spend and I think, ‘Where is it going?’” says Kerri, 44, who is a stay-at-home mom.
This is proof of how a earning a high salary does not guarantee that you’ll know how to manage it. Income is not wealth. Wealth is what you save and accumulate. There are probably many people with average and even below average salaries that have more wealth than the Millers.
We spend so much time preparing for careers. But who teaches us about personal finance? Schools and colleges don’t tend to require personal finance courses. So most of that responsibility has to fall on the parents.
Neale Godfrey, author of Money Doesn’t Grow on Trees, makes a good point:
“All kids ever see you do with money is spend it. They don’t see you save, and they don’t see you pay the bills. At the end of the month, have your children watch you write the checks for the mortgage, electricity and car insurance - and even the credit card - so they see that plastic isn’t free money.”
When my oldest daughter was 9 or 10 years old she used to beg to write my monthly checks for bills. She carefully filled out the payee and dollar fields and I signed the checks. That phase didn’t last long but I hope it made an impression. Now I pay most of my bills online but I should still show my younger kids how the bill paying process works.
“One day I hope Mike will do his Quicken work and say, ‘Oh my God, we didn’t go over this month,’ ” says Kerri. “When that happens, he’ll be doing backflips.”
He uses Quicken. This is good. Unfortunately he’s using it to assess the damage after the money has already been spent. It’s much better to use Quicken before the money is spent so you can tell each dollar where to go.
Topics: Income |
December 15th, 2007 at 4:42 pm
I completely agree that we need to teach kids about money. I just wrote about that this week, too. If we don’t take the time to teach kids, they just think credit cards are an unlimited source of cash.
I also like the way you differentiated between income and wealth. I never thought of it that way before, but you’re absolutely right.
December 17th, 2007 at 12:00 pm
[…] how to avoid it, I encourage you to read Overspending for the Kids at Consumerism Commentary and Going Broke on a Six Figure Salary: First Blame the Kids at Debt Free […]
December 19th, 2007 at 2:09 am
[…] if your kids understand your financial realities, Flexo wrote. That concept was also embraced by Anita at Debt Free Mom, whose 10-year-old daughter asked to help her write out monthly checks to pay bills, back in the […]