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Real-life money lessons

Tracking Our Spending on an Awesome Weekend Road Trip

Awhile back I came upon a question on Reddit — “What did your family teach you about money and finance?” I love these types of topics (almost as much as I love topics like, “Besides your main job, what additional income streams do you have?”). There is always a wealth of information, and it’s a great opportunity to pick up a new idea to try.

One Redditor mentioned that his family did driving vacations almost exclusively. By the time he and his brother were 10 or so, they were responsible for keeping track of the “trip binder” where they logged expenses into categories and maintained receipts. Their mom wanted them to appreciate how much things cost and think critically about if they felt things were worth the price.

What a great idea! I bookmarked it for the next time we took a trip, which was this past weekend. We went to Brooklyn for a family birthday party and to the Statue of Liberty the next day.

Trip Log

I put together a basic log and organized our preliminary expenses — the Airbnb that we prepaid for as well as the tickets for the Statue of Liberty. I knew we would be traveling on toll roads, so I even tried to research which tolls we’d incur (based on what roads we planned to travel).

All grand plans!

And it didn’t work at all.

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Start saving young

How National Bank of Mom Rewards Savings

By this time, you already know that we subscribe to a three-envelope system (complete with registers) for savings, spending and giving. At times, we also use an additional envelope for short-term savings — when J is saving for a larger purchase a few months in advance.

The first stop in our banking process (and the reason for the name of this blog) centers around the savings envelope.

Every month on the 9th, I pay interest on the total in J’s savings envelope. To make it enough that he can see a tangible result (and earn more than the few cents he would at a bank), I pay 3% monthly.

I create a bank statement, give him a printout and also email him a copy. He writes the interest amount in his savings register to balance the account.

I developed a spreadsheet to calculate the amount and format a nice-looking statement for him. (Download a copy of the spreadsheet.) Fill in the sections in blue on the first sheet. Each month, enter the deposits made in the appropriate section, and the interest and totals will recalculate. Print a copy or save as a PDF and email away.

What is interest?

When borrowing money, interest is the money that you pay on top of what you borrow. Borrow money, pay it back AND extra.

When saving money, interest is the money that you earn. The bank “borrows” money from you and gives you a percentage of that money (for the privilege of using it). Put money in and get that amount back PLUS more.

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Start saving young

Banking for Kids

In order to maximize savings and provide a good learning experience, I subscribe to a three-bank system. J has savings accounts at the National Bank of Mom, our local bank and an online bank.

Bank of Mom

The first stop for savings is the National Bank of Mom. J divides his money between his savings, spending and giving envelopes, and I pay interest monthly on the money in his savings envelope. He gets a statement printed and emailed to him, and he writes the interest in the register, keeping the account balanced. We make note of the increasing amount of interest each month, which will prepare us for a more in-depth conversation about compounding. Right now, our focus is on putting at least 10% of all money into savings and the idea that your money can make money.

Local Bank

Every few months, we take the cash from the savings envelope to our local bank. I think it’s important for him to go to a physical bank and deposit money. (So much happens electronically nowadays, and I think it can be difficult for kids to understand. This is why I pay his interest and allowance in cash, so that he can hold it in his hands and work with it.) The tellers are also very nice to him, which adds to his experience.

When looking for a bank, you might want to start with your own bank, but you could also look at other local banks or credit unions. Also important when choosing a bank:

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Real-life money lessons

Practice Makes Perfect

Last month we started talking about percentages in the 10-10-80 savings plan with our focus on the 10% that goes to savings. I want J to save at least 10% of all money he receives, so we’re working on how to calculate 10% of any amount.

I showed him two ways to calculate 10% last time:

  • Use the 100-grid and divide the amount into 10 equal parts. $3.00 divided into 10 equal parts gives you 30 cents in each 10-block
  • Move the decimal one place to the left to find 10%. $3.00 becomes $.300 or 30 cents

J got a calculator for Christmas, so we integrated it into our practice. I showed him how to find the decimal equivalent of a percentage by moving the decimal point two places to the left (10% becomes .10).

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Money conversations

Let’s Talk

If you haven’t guessed, I’m a little bit of a perfectionist.

A few weeks ago, I had what I thought was going to be tough conversation with J. Before that, I had stressed about it for weeks — what if he was upset at what I said? What if I didn’t express myself clearly or completely and he was confused? What if I looked like a bumbling idiot? What if it didn’t go perfectly?

The same set of fears manifests before each post I write. What if I can’t get across what I want to say properly? What if it’s confusing, boring, incomplete or worse? What if I sound completely ridiculous or like an amateur? What qualifies me to be able to write about these topics?

I have this idea of how things should be — how our conversations should go, what our relationship should look like, how this blog should read and on and on and on. I measure myself against an impossibly high standard, and I’m always scared of falling short.

Eventually I mustered up the courage to talk to him. I put aside my fears of not being perfect and took action. (I even managed to be calm during our discussion!)

And it couldn’t have gone better.

Because I was calm and talked about things in a friendly, yet matter-of-fact tone, he responded in kind. I set the tone.

Each time I do these things, I’m setting a precedent that our relationship is important to me. It’s one where we can talk about things — things that are difficult, things that are important, things that are on our minds, or even trivial things.

Those things also include talking about money.

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