The My Story series is about how I got to where I am today through the lens of finances. In this first post of the series, I will explain the importance of establishing financial habits and focusing on education.
THE BEAUTY OF CHILDHOOD IGNORANCE
The beauty of being a kid is you are ignorant to all societal concepts. I never knew my familial situation was considered odd by traditional standards until I started attending school. I am the only daughter of a younger single mother. We lived in my grandparents’ house while my mother attended college for a traditionally male dominated field. Establishing a lifestyle around frugal practices was just what we did, out of habit and necessity.
I didn’t know that my entire family was considered poor. All I knew as that I was feed regular meals, I had a place to live, and most importantly I had a family that loved me. I never wanted for anything.
Somewhere along the way, I was poisoned with the idea that you should always want more material things…
I forget when it exactly happened, but I think it started after my mother and I had moved out of my grandparents’ house and they got cable. Whenever we would visit my grandparents’ house, I would be parked in front of the television. My mother didn’t subscribe to cable, so their house was the only place I could watch my favorite Cartoon Network programs.
ESTABLISHING A FOUNDATION OF SPENDING HABITS
I remember being fascinated by all the toys I never knew existed advertised during the commercial breaks. I would record the price of things in a little notebook and estimate how long I would need to save up my allowance before I could buy it. My grandmother also received all kinds of catalogs. I would fold over the corners of pages on things I liked. Then I would add up everything I wanted to estimate how much I needed to get everything I wanted.
When I saw the astronomical prices to get everything I wanted, I started paring down the list to things I only really wanted. Then I would remove a few things I still wanted, but decided were less important than other things. Eventually I would get it down to a list of things I absolutely couldn’t live without (in my childhood mind). I would then estimate how much longer it would be until I could buy everything in that list. The time frames were usually measured in months to years.
I would try saving for the list of things for a week or two, which felt like eons at that age. Then I would eventually give up and not buy anything off the list, or just forget that list and move onto the next one. The idea of asking for a loan never entered my mind. I always thought you needed to have all the money before you bought something. The concept of credit didn’t exist to me. This system, my young age, and lack of capital prevented me from buying a lot of junk. Not to say I didn’t buy junk at all, but I never spent more than I earned.
NATURAL INCLINATION TO SAVE
I don’t know how a kid addicted to Cartoon Network and fuzzy coloring posters did it, but at one point I had saved over $500 in my piggy bank. Apparently my system of obsessively analyzing every purchase, and denying myself the ability to purchase anything in a short time period, had allowed me to accumulate more cash than any child of that age usually has at their disposal.
Realistically, realizing I had all that money should have made me want to blow it all on ice cream and toys at that age. I must have been possessed at the time, because I suddenly had the urge to open a savings account. The savings account that earned less than 0.001% per year, but I didn’t know about interest at that point. All I knew was that I wanted to open a bank account.
The second miracle: I didn’t touch the money once it was in the account. I had created my first emergency fund without even realizing it.
MY FIRST JOB
I got my first job in college. Before college, I did not have a real job. I had a couple odd volunteer jobs that paid for part of my high school tuition, but I never earned spending money from them. My family wanted me to consider my education my first job, so my mother made a deal with me. She said, when I started high school, that as long as I kept my grades up and got involved in some extracurriculars, I wouldn’t have to get a job. She would pay for my necessities (housing, food, transportation, etc).
I did not mind this deal at all in the beginning. I still had my allowance for spending money. When I started school, my family wanted to incentivize good grades, so they would pay me set amounts based on how many A’s and B’s I got on my report cards. This trend continued in high school, and the payouts became greater. I started considering them my paychecks in my head.
DESIRE FOR MORE
When my friends started getting jobs, I started seeing the deal in a different light. They all seemed to be making so much more, and I wanted more things. I wanted cooler clothes, nicer shoes, and fancier school supplies. I also started thinking that I would be behind the curve when I actually wanted to look for a job. (Yes, I have always been 10 years older in my mind.)
I went to my mother and told her I planned to get a job. And she told me if I got a job, our deal would be void. I would need to start paying for everything. I had no choice. There was no way I would have been able work enough to pay for everything. My grades would have suffered, and I wouldn’t have been able to participate in all the extracurriculars I was involved in.
Admittedly, I was not happy with the result at the time. What teenager in a rebellious phase wants to be thwarted by their parent? I wish I could go back in time and make myself see why this was one of the best gifts my mother gave me.
I still use the “list” method of buying things from my childhood. Now it is with online shopping carts and wishlists. I would like to say I’ve stuck to the don’t-buy-more-than-you-earn philosophy too, but that has slipped slightly while I pay off my student loans. There have been times where I have taken advantage of credit cards floating the bill for a month while I wait for a paycheck. To continue making extra payments on the loans, of course.
Over the years I have changed banks, switched to high yield savings accounts, and contributed regularly and more to the emergency fund account. I still have an emergency fund, albeit not the original $500 from my childhood, but it is much more efficient.
When I started receiving college acceptance letters, I also received slews of scholarships for my academic merits and involvement. The highest scholarship was for $40,000. I would have had to work much more than part time at a minimum wage job to earn that kind of money over my four year high school career. Applying myself academically and being involved paid more than any high school level job I could have applied for.
The reason I bring up these stories is to reinforce that I was not an expert when I started this journey. I just started. Yes, I already had good inclinations, but I also found a way to control my bad habits and promote the great habits. I set up a system, stuck to it, and optimized it later. My story is comprised of a bit of luck, but a lot more hard work.
TO BE CONTINUED…
My financial picture looked rosy at the end of high school. However, college is known to turn finances upside down. In Part 2 of the My Story series, I will talk about why I decided to go to an expensive private college.
Did you display good financial inclinations as a child? Are there financial habits from your childhood that you still use? Tell me in the comments below!