A Richer Understanding: Lessons on Saving and Spending
Often when I look at myself in the mirror the reflection I see staring back at me is one of my 18 year old self; young, thin, full head of hair with eyes wide open attempting to see into the future, eagerly anticipating the next chapter of my life. I become tongue tied when asked how old my kids are, not because I can’t remember (although this is normally the case) but also just as I see my 18-year old image, I see them in their infancy.
With Davina and Aaron I came into fatherhood poorly equipped, perhaps that is a series for another blog, however it has not hindered them from setting attainable goals, planning and seeing them to completion. You would be hard pressed to find any parent not proud of their children and I am no different. Recently I had “money” textversations / conversations with them and their maturation always impresses me compared to my maturity level at their ages.
Davina, On Saving
Davina is very intelligent, a combination of book smart and common sense. I don’t write that because she has my blood but because it is true. She, since I can remember, has had a demanding personality with unmatched attention to detail and the power of concentration when completing her work. She recently graduated from Old Dominion University.
She was able to acquire a job within 2 months of graduating. I asked if ODU offered any financial literacy classes either before or after graduation. Her reply “Before graduation, we had the option of discussing and setting up a repayment plan with a financial counselor or setting up our repayment plans on our own via web.” While I understand a good foundation and understanding of financial concepts should happen at home, still I believe it should be required of our education system, especially universities and higher learning institutions.
When I asked if she is using a spending plan she said yes and that it was very easy to follow with most of her money going towards bills, groceries, gas and student loans. The cost of tuition at ODU was close to $21k/year ($94.5k roughly for four and a half years) Davina’s student loan debt totaled $35k after graduation.
She says her number one priority on payday is to carve out a nice piece for herself first.
Aaron, On Spending
Aaron drives a used Hyundai that his mom and step dad purchased for him; he has been driving it for three years. It is perfect for in town driving; work, school, home … repeat. He is also working a full-time job where he makes pretty decent money for someone his age and he wanted to know my thoughts on purchasing a newer, more reliable car. We talked about the basics; financing, projected budget (after purchase) and credit.
At his age without an established credit history it’s more difficult to buy a car and without cash to pay for a car outright (or at least part of it); he needs to be realistic about how much he can afford. The purchase of the car is only the beginning of expense items; he will need to consider higher insurance cost, gas and maintenance. He (before hand) had researched and determined that he would save and apply a down payment of at least 20% and he for a term no longer than 48 months.
I encouraged him to drive the car until he couldn’t, however I understand the desire for something more reliable. It is not about appearances for him but about making appearances. He has a strong connection with family; his mother lives in Fayetteville, NC and we have more family spread across Virginia. A newer, more reliable car gives him the ability to connect with them more frequently.
Most of what I learned about parenting I learned the hard way. What Davina and Aaron have learned is how to budget, how to make and deal with spending decisions, the value of hard work and most importantly how to delay gratification.
Obey. Love. Serve. Excel. Plan. Invest.