My Journey to Financial Literacy

fin_lit_carnival_2014
A lot of people get the “Aha” moment with their finances when they’ve hit rock bottom. They’ve declared bankruptcy, their bills are up to their eyeballs or they see the amount of debt that they’ve accumulated. Some people see their parents struggle with finances and vow never to go through that. Some get the “aha” moment and see the light after going to a financial seminar or after reading a book from a financial guru. I don’t have an interesting story about an “Aha” moment, because I don’t think I ever had one. Rather than one moment which instantly changed my thoughts on finances, my journey in life has shaped the way I deal with my finances.

Frugal Role Models

Growing up, my parents were always frugal with their money. We had all the necessities like food on the table and a place to live. No, cable television and fancy clothes are not necessities. I don’t remember a specific lesson or lecture that my parents gave to teach me about financial literacy. I think I just saw the way they valued money, and learned that spending money frivolously was not something that was appropriate.

I remember one time when my mom brought my sister and me to the mall. I don’t remember how old I was but I was a pretty young child. We went to the toy store to purchase a gift to bring to a birthday party. At the store, I saw a toy that I really wanted. It was a children’s tool set. (Thinking back, I find it quite odd that I had an interest in tools as I am not handy at all!) I told my mom that I wanted it, but she told me that we were just there to buy a gift and that I had plenty of toys at home. We left the store, and later on when it was time to go home, my mom looked at me, and said, “you never ask for anything, if you really want it, we can go back and get it.” Even at that young age, I could tell that she really wanted to buy me that toy, but also understood that money was not to be wasted. I looked up at my mom and told her I didn’t want it that much, and that I did have toys at home I could play with. Maybe that’s why I’m not that handy, I never got that tool set! Mystery solved.

Saving

As a child, I’d often receive money for Christmas, Chinese New Year and my birthday. My parents allowed me to put the money into a piggy bank. Once in awhile, my mom would ask my sister and I if we wanted to transfer the money from our piggy bank into a savings account at the bank which was held in trust for us. She explained that we would earn “interest” from the bank, and that the money would be saved for us to use in the future. Never being the type of child who had issues with instant gratification, I jumped at the chance to accumulate interest from the bank. My mom would show us the interest that the bank paid out in the bank passbook and that motivated me to save more. Back then, the interest rate was a lot higher. Unfortunately, the 1 percent interest rates nowadays aren’t too exciting. Now, of course I did keep a portion of my money to buy basketball cards and snacks at the cafeteria. But, even as a young child, I always planned for the future and was fond of saving my money.

Investing
Wall_Street_Kid When I was about 11 years old, my father bought me a Nintendo game called Wall Street Kid. I was a nerd and loved that game, but I hid it when my friends came over as I would be teased mercilessly for playing that game. Not only did my father buy me an investing game, he invested in a mutual fund for my college education. They didn’t have 529 plans back in the day. The mutual fund did really well and my father showed me the statements with 20% to 40% growth and I was hooked. I continued to be interested in investing as I grew up, and signed up for the deferred compensation plan immediately after starting my first job and opened an IRA. While I learned the hard way that you can’t always expect 20% to 40% growth investing in stocks, I understood that investing was a great way to build wealth.

It would be great if schools would teach financial literacy to their students as it is such an important topic. However, ultimately, parents are the best teachers of how to manage your money. Children will always look up to their parents and model their behavior, good and bad. Even if you aren’t good with your money, don’t worry, you don’t necessarily need to be financially literate to teach your kids about money. If you’re interested in volunteering for an organization which teaches young people about money management and how business works, check out Junior Achievement. My sister volunteers for them and they send her to schools, with a lesson plan teaching financial literacy based on the age of the students. When she taught a classroom of kindergarten students, the lesson was to teach the difference between “Wants” and “Needs”. Of course, the little kids labeled television and candy as “Needs”! It’s never too early to teach children about financial literacy. Actually, I think there are many adults out there who still struggle with differentiating a “want” from a “need”.

April is Financial Literacy Awareness Month, and Shannon from The Heavy Purse has invited many wonderful personal finance bloggers to write about financial literacy. Please check out the excellent articles written by my wonderful fellow bloggers by clicking here.

Please share your journey to financial literacy in the comments.

59 thoughts on “My Journey to Financial Literacy

  1. Pingback: 2014 Financial Literacy Awareness Carnival: Money A-has – The Heavy Purse

  2. Brian @ Luke1428

    Consistent modelling at home by the parents is the absolute best teacher when it comes to anything, even money matters. Like yourself, I had great role models growing up, in that my parents showed me what it was like to be disciplined and sacrifice to make ends meet. Even with that, I still managed to get off track for a while in my adult life. I guess that goes to show I didn’t completely internalize what I learned growing up until I ran into my own problems.

    I’m really curious about that Nintendo game. I missed that one growing up. Sounds fun!
    Brian @ Luke1428 recently posted…How Shopping for Shoes Changed My Financial LifeMy Profile

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    1. livingrichcheaply@gmail.com Post author

      You’re right, even with good financial role models, sometimes you have to make your own mistakes and learn from that experience. Yea I don’t think that game was too popular…I wonder if there are similar games nowadays.

      Reply
  3. Income Surfer

    Thanks for sharing Andrew. Your childhood sounds like my own, although I don’t think I caught on to delayed satisfaction until I was 12 or 13. My parents also modeled frugal behavior. That’s why it was such a splurge when we’d do something wild once or twice per year. Clearly their parenting approach has paid off :o)
    -Bryan
    Income Surfer recently posted…If You’re A Dividend Growth Investor……My Profile

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    1. livingrichcheaply@gmail.com Post author

      12 and 13 years old definitely is still a very young age! Glad you also learned frugal behavior from your parents and that you’re going the path to financial freedom.

      Reply
  4. Laurie @thefrugalfarmer

    Andrew, that story about your mom and the tool set made me tear up – how incredibly sweet!! It’s amazing how the little things like that show how much our parents truly love us. You are blessed, my friend, to have parents who worked hard to raise you right, and it’s evident they did an awesome job, and that you are doing the same for your little one. Thanks for sharing an awesome story.
    Laurie @thefrugalfarmer recently posted…Our “A-ha” Money MomentMy Profile

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    1. livingrichcheaply@gmail.com Post author

      Awww thanks Laurie. My mom was pretty touched when I told her that story. It really was something little like that which showed how much she loved me!

      Reply
  5. canadianbudgetbinder

    Haha that was cute about the tool set… maybe you should have said yes lol. It sounds to me that you got just as excited about interest in the savings account as I did as you may read in my blog post today. My parents sound similar to yours when it comes to finance and frugality. I’m happy I learned the way I did because without those lessons I might not be where I am today. Cheers Mr.CBB
    canadianbudgetbinder recently posted…The money-box inspired my passion for financeMy Profile

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    1. livingrichcheaply@gmail.com Post author

      Haha, yea I might be more handy nowadays if I had been exposed to the tools! Just read your post and that’s pretty cool you got excited about interest in savings accounts too.

      Reply
  6. Dave @ The New York Budget

    Your childhood sounds AMAZINGLY similar to mine. My parents were great financial role models as well. I do think there needs to be more in the education system addressing personal finance, though. You and I were lucky, privileged even. A kid who grows up without a financial role model is not an issue that is discussed in our society today, but one that is a pretty big problem in my opinion. Even if that role model is a teacher, it’s better to have that influence than be one of the unlucky ones who never learned financial lessons.
    Dave @ The New York Budget recently posted…Watch the TV You Love AND Save $100,000My Profile

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    1. livingrichcheaply@gmail.com Post author

      Financial lessons are definitely very important to learn at a young age. Imagine the difference if we had a society of people who handled their finances better.

      Reply
  7. Shannon @ Financially Blonde

    Financial literacy is definitely a journey and some people have just been on the road longer than others. I love hearing about your continual journey from a young age, because I absolutely have my son on one and I am hoping he has similar positive results. PS: I had no idea that game even existed on Nintendo. Hysterical!
    Shannon @ Financially Blonde recently posted…Salary HostageMy Profile

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    1. livingrichcheaply@gmail.com Post author

      Great to hear your son is on that journey at a young age! I don’t think most people have heard about that game! Probably wasn’t that popular =)

      Reply
  8. John @ Sprout Wealth

    Thanks for sharing your story Andrew! It’s amazing what modeling behavior and actions will do for a child, both positively and negatively. That differentiation between wants and needs is such an important one to make, especially at a young age. I didn’t begin to make that until I was in debt, which is part of the reason why we work on it with our kids so they can began to establish those habits now.
    John @ Sprout Wealth recently posted…How to Start Investing in the Stock MarketMy Profile

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    1. livingrichcheaply@gmail.com Post author

      Oh yes, wants and needs are pretty basic but even that is not learned by many. Great to hear you’re teaching your kids good financial habits and I’m sure you guys are modeling great financial behavior.

      Reply
  9. Anthony @ Thrifty Dad

    Great post, Andrew! A mutual fund for your college education? Wow, that’s fantastic. Back in those days, who would’ve thought of that? I’ve started an RESP (similar to a 529) now for my kids. But I certainly can relate to your story. I remember my brother was always asking my parents for money and it made me feel bad to ask. So even later when I borrowed a $20, I did whatever I could to pay them back, as quickly as possible.
    Anthony @ Thrifty Dad recently posted…When I realized that my financial future was in my handsMy Profile

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    1. livingrichcheaply@gmail.com Post author

      I started a 529 plan for my son, and would also like to open a savings account and perhaps a mutual fund for him as well…much like my parents did. It’s funny that siblings growing up in the same environment and same parents have different mindsets on money. Where your brother always asks for money, you felt bad to borrow any money and paid it back asap.

      Reply
  10. E.M.

    I love hearing about how other people’s parents set them up for financial success. Those lessons your parents taught you were very valuable! I am more in the camp of seeing my parents make mistakes and knowing I didn’t want to end up like them. Their mistakes were valuable lessons for me, though.
    E.M. recently posted…Moving: Part OneMy Profile

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    1. livingrichcheaply@gmail.com Post author

      Yes, they were very valuable. I’m not sure how I would have turned out if I wasn’t exposed to those lessons. I think that watching mistakes of parents and others you are close with can also be a great lesson. You learn from their experience and avoid repeating those mistakes.

      Reply
  11. DC @ Young Adult Money

    Great post, really enjoyed hearing some of the stories from when you were growing up and how they have impacted you today. I think that how we were raised and what we were exposed to as children has a much greater impact on our current life than we give it credit. I actually taught that Junior Achievement lesson recently and I definitely think that wants and needs need to be taught to adults as well haha.
    DC @ Young Adult Money recently posted…When I Realized Ownership and Passive Income are Key to WealthMy Profile

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    1. livingrichcheaply@gmail.com Post author

      Yes, I also love hearing stories about how people grew up and how that affects their mindset. Pretty cool that you’re involved in Junior Achievement!

      Reply
  12. Tonya@Budget and the Beach

    See this is where you and I differ and probably why I had so many problems: I totally would have gone back to get the toy! lol! Your parents and the way you were raised sounds awesome! It’s amazing what children pick up on, and those tools set you up for a great future!
    Tonya@Budget and the Beach recently posted…Progress, Not PerfectionMy Profile

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    1. livingrichcheaply@gmail.com Post author

      I probably wanted to go back too, but would feel guilty. It really is amazing what kids, even at a young age, can understand.

      Reply
    1. livingrichcheaply@gmail.com Post author

      Definitely…have a good financial role model is very important…you learn by example

      Reply
  13. Shannon @ The Heavy Purse

    I love that your dad bought you an Ninetendo Wall Street game. Now that’s the kind of video game I can get behind! LOL! It’s amazing the things our parents can teach us and it always warms my heart when I see parents teaching their children good money behaviors. It really can make a difference. I wish more parents would talk to their kids about the power of savings and compound interest … they would be more inclined to do it themselves if they realize what a huge impact it can have. But for most kids saving/investing seems like something “old” parents do. Sure, they (hopefully) do, but it’s a lot easier to grow money into large sums with you start when you’re young. :) Thank you so much for sharing your story with us today. I appreciate your support and participation!
    Shannon @ The Heavy Purse recently posted…2014 Financial Literacy Awareness Carnival: Money A-hasMy Profile

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    1. livingrichcheaply@gmail.com Post author

      Haha, well that game introduce the stock market to kids, but it definitely wasn’t the best for teaching frugality. Actually the point was to make money so you could spend it on luxury items to keep your fiancée happy and to buy a mansion. I hope there are games nowadays that introduces investing to kids. Thanks again for hosting and inviting me!

      Reply
  14. anna

    I am so impressed (though not surprised) that you weren’t an instant gratification kind of person even as a child – I would have said yes to the tool set in an instant (well, for me it was probably My Little Pony or something). That’s so great that your parents instilled in you strong money values, and even showed examples with their mutual funds. I’ll have to take that into consideration when we hopefully have kids, as well, since I agree financial literacy starts at home. Thanks for sharing this story, Andrew, even with admitting your non-handy skills. 😉
    anna recently posted…My Biggest Money A-ha MomentMy Profile

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    1. livingrichcheaply@gmail.com Post author

      Thanks Anna! I remember My Little Pony! I definitely hope to teach my kids to be financially literate…Shannon has some really helpful articles.

      Reply
  15. Kim

    I would have so gone back for the toy! Yes, I believe parents have the biggest role in determining how kid’s learn to use and appreciate money. My parents did pretty well but always told us not to worry about financial things. My Dad liked to be the provider, but that did me no good out on my own. It would be much better for kids to have the Aha moment at a young age.

    Reply
    1. livingrichcheaply@gmail.com Post author

      Haha, yea I think most normal kids would have! It’s definitely better for kids to get the Aha moment or learned important financial lessons while they’re still young.

      Reply
  16. Dee @ Color Me Frugal

    I loved hearing the story of how your parents taught you personal finance growing up! That’s so important, and honestly it’s something I wish I would have gotten more of at home. I didn’t really start to learn much about personal finance until I thankfully married a pretty financially savvy guy, and somehow he set me straight! To this day I am amazed at how he did it, since he never really sat me down and laid down the law or anything. He just clearly cared very much about me and our financial future, and that rubbed off on me and helped me to care as well. Anyway, great post!
    Dee @ Color Me Frugal recently posted…Compound Interest: Einstein’s Friend (and YOURS!)My Profile

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    1. livingrichcheaply@gmail.com Post author

      That’s great that your husband is financially savvy and that you were willing to become financially literate. I see some couples where the person who isn’t as financially savvy refuses to change their ways even in face of mounting debt. You should definitely have Mr. Color Me Frugal write a post about how he did it!

      Reply
    1. livingrichcheaply@gmail.com Post author

      Very true. I know someone who says one thing about spending to his kids but does the opposite. Of course the child is getting a mixed message.

      Reply
  17. Pingback: Link Love 04/18/14 « Everybody Loves Your Money

    1. livingrichcheaply@gmail.com Post author

      Yea, my dad liked to get me “educational” games. I did save up $10 to buy Double Dragon from a friend! Wonder if they have any investing games geared towards kids nowadays.

      Reply
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    1. livingrichcheaply@gmail.com Post author

      I agree and I know you guys are doing a great job in Hawaii which is also an expensive state.

      Reply
  20. Kay @ Green Money Stream

    It’s great to read your story Andrew. My parents didn’t have much money when I was a kid so that experience instilled frugality in me as well as the determination that I would not have to struggle financially when I grew up. My focus has always been to be able to take care of myself.

    Reply
  21. Emma @ Make Money Without a Job

    My parents were great frugal role models, but they also taught me how to make my own money. They owned a store, and when I visited the wholesaler with my mother, she gave me some money to buy my own products to sell in the store. It taught me a lot about supply and demand, profit margins, forward planning, etc. I was about 10! Now I’m constantly looking for ways to make money.
    Emma @ Make Money Without a Job recently posted…IntroductionMy Profile

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    1. livingrichcheaply@gmail.com Post author

      That’s great your parents also taught you how to make money and let you visit the wholesaler. It’s good to learn these skills while you’re young!

      Reply
  22. No Nonsense Landlord

    I think the way your parents raise you, and their attitudes about money, get ingrained in you. Both of my parents were savers, and always paid their bills. When my mother was getting older, she said “if I die before my hospital bill gets paid off, be sure to pay it off with what I have left”

    Of course when it happened, I sent in the death certificate, rather than a check…
    No Nonsense Landlord recently posted…Long Distance Property ManagementMy Profile

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