It’s Never Too Late (or Too Early) to Start Learning About Money

Every year, 19% of us spend more than our incomes and only 40% spend less than we earn. This year, the average credit card debt is $15,480. No wonder talking about money is generally one of life’s  taboos.

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Several years ago I was hired to develop an interactive game aimed at teaching kids about money. I learned that our attitudes towards money are formed in our families, but unfortunately most parents aren't very informed about how to manage money themselves.

In fact, most of us have no idea how to talk to our kids about money, failing to help them distinguish clearly between “wants” and “needs” and sending them off to college with a handful of credit cards and very little information about how to use them wisely.  By the time kids learn about money, it’s often the result of a costly mistake.

Growing up in a small post-war garden apartment surrounded by other middle class kids, my “needs” and “wants” started out pretty basic; a Spalding Ball, Jacks and a Three Musketeers Bar, moving on to frosted lipstick, a transistor radio and a $ 3-dollar pair of stretchy pink ballet flats. (They were exquisite!) When I was 14, we moved to Great Neck and things started getting weird. My new “best friend” insisted I couldn’t wear “those shoes” to school and dragged me to the Pappagallo store, stressing my need for the $13-dollar shoes the rest of the girls were wearing. I begged for Pappagallo's relentlessly, until my mother finally gave in, and I was on well on my way to becoming a Jewish American Princess.

When I got to college I was in for a rude awakening. My parents put some money into a checking account in my name and I started writing checks. A few months later I got an outraged call from my dad asking me “why the hell I was bouncing checks.” My answer? There are still checks in the checkbook, so there must still be money. I learned pretty quickly just how wrong I was, and what it meant to live on a strict budget.

My father started dragging me to meetings with his accountant and luckily, l learned  the basics about saving and budgeting while I was still in college, discovering how essential it was to balance what was going out with what was coming in.

My own daughter is a math wiz, who’s been adding up our dinner checks and figuring out gratuities since she was in elementary school. She even helps me double check the sums of my receipts and business expenses when I file my taxes. At the same time, I haven’t been the best role model in the world (yet) spending too much money eating out in restaurants and buying 12 dollar freshly made mozzarella cheese. I keep vowing to change, and I do, for a few months at a time. NOW, it’s time to start again.

We all have areas where we overspend, but our budget busters are not always obvious to us. Sometimes we’d rather remain fuzzy about our finances, or wait until tax time to face our check registers and financial statements. This strategy is generally not such a hot idea. Especially when you’re planning for the future.

One thing’s for sure. You have to be really clear about your finances, before you can start breaking bad habits. I’ve found the best way to get back on track is by keeping a record of weekly and monthly expenses. You figure out very quickly what your weaknesses are, where you waste money and where you can cut back. You also get a handle on how much your fixed expenses are.

There are a range of great FREE online budgeting tools, enabling you to calculate your spending in any category and create a personalized plan based on your own spending history. One I like, Mint.com pulls your bank statements, credit cards, home loans and investment accounts into one place so you can see exactly where your money goes and make adjustments. This tool even makes suggestions to help you spend smarter, projecting how much you’ll save by cutting back in the areas where you’re overspending each month.

I also like BetterMoneyHabits.com, a new partnership between Bank of America and Khan Academy aimed at helping everyone understand their finances. This six minute video lays out the basics of budget in a clear, engaging and informative manner. And it's get to watch with your kids too!

Join the Conversation

Do you use a budget to track your own spending?

What are the key areas where you overspend?

What  money strategies have worked based for you?