Parents pass along many lessons and values to their children, but financial education is one subject often ignored. Clearly, the costs of ignorance can be high -- just how large is your outstanding credit card balance? Cheapism.com asked 15 financial professionals and personal finance bloggers what they wish they had learned about money as a child. Their answers may provide guidance about what and when to teach children about money.
Money Experts: What I Wish I Had Learned Sooner
Ron Lieber, who writes the "Your Money" column for The New York Times and recently published The Opposite of Spoiled, a book about how to raise financially knowledgeable children, recalls that his family didn't talk much about money while he was growing up. "I wish there had been more transparency," he says, a practice that his book promotes. Lieber observes that it would have helped him prepare for his financial future to know what his parents, and other adults in his orbit, were earning and what it cost to pay the bills.
This is a phrase repeated over and over during personal finance workshops, and one that Carol LeBlanc, a CPA and small business accounting specialist in upstate New York, wishes she had learned early on. Building up a nest egg by putting aside just 10 percent of your earnings can make an enormous difference to your future well-being.
Thomas Nitzsche's parents cut up their credit cards when they married, and he wasn't told anything about these ubiquitous plastic rectangles beyond a warning to avoid them. He wishes he had had a better understanding of why credit cards can be bad, how they work, and how they can be a useful tool. Today Nitzsche is a manager at the nonprofit ClearPoint Credit Counseling Solutions, which offers free financial advice and counseling to consumers with budget, debt, and housing questions.
Doug Nordman, the author of The Military Guide to Financial Independence and Early Retirement, says he wishes he had learned even the basics of checking accounts, investing, and credit cards earlier in life. "College was the wrong time to start those learning experiences," he notes.
When you're in the midst of a bear or a bull market, it's hard to remember that stocks go up and they go down. Gail Rosen, a CPA with a private practice in Martinsville, New Jersey, says her father prepared her well. He "sold" her stock in publicly traded companies for one penny a share and together they tracked how her "investment" grew and shrank. She is grateful for the training and now wishes she done the same for her children.
Many members of the affluent class use coupons, but some regard making and living by a household budget or using discounts as taboo. Michelle Perry Higgins, a financial planner and principal at California Financial Advisors in San Ramon, California, says that was the case in her family. She wishes she had been told that budgets are a good thing -- "sexy," in her words. It took her a while to understand that "smart, responsible, wealthy people live within their means and on a budget."
Nicole Rosen runs the Finance Diva blog and is the self-proclaimed CFO of her family. She says that understanding the difference between value and cost would have been a worthwhile early life lesson. She points out that sometimes it's better to spend a little more up front than to buy something very low cost and continually pay for repairs or replacements.
Robert San Luis runs several businesses in Orange County, California, that help others make better investment decisions. He's been in the personal finance planning and consulting arena for more than two decades and wishes he had been taught to "invest for income and avoid speculation." He'd rather invest in an asset that makes money right away than one that only holds the potential for gains.
Taxes and tax-advantaged accounts, such as the retirement-oriented 401(k) and IRA, can be confusing. Robert Palidora, a financial advisor at AXA Advisors in Bala Cynwyd, Pennsylvania, says the idea of tax-deferred growth was something he didn't "get" until he was older. But time had been lost: The greatest benefits accrue when you open such accounts while you're young.
Putting a price tag on the things around you can focus your mind on the value of a dollar and teach you to appreciate what discretionary funds can buy. That's according to Stefanie O'Connell, who runs The Broke and Beautiful Life blog and wrote a book by the same name. From toilet paper to health insurance, she wishes she had known the cost of mundane, but necessary, expenses.
Chenell Tull, who runs the debt-focused personal finance site Bright Cents, says, "I wish I would have been taught ways to get past the need for instant gratification." As an only child she was used to getting just about anything she wanted, a habit that was hard to break once she was older and possessed a credit card. The debt that accumulates becomes a burden and a drag.
Deacon Hayes, the owner of the site Well Kept Wallet, says he was late to the game since he didn't start saving regularly until he was in his mid-20s. By then he had already wasted a lot of money. Being taught the value of saving on a steady basis from a young age would have helped him financially as he grew older.
Christopher Cannon, a certified financial planner and accredited investment fiduciary near Pittsburgh, says he was given strong values while growing up but wasn't taught anything about money. This led him down the path to his current profession. "It seemed that finances were too adult and children were not part of the discussion," he explains. He wishes there had been more openness at home, but also notes that the school curriculum was devoid of practical financial education -- something he argues should be changed.
This isn't a spot-on lesson about money, but encouragement sets children up to take entrepreneurial risk and achieve financial success, asserts Alan Steinborn, founder and CEO of the online finance community Real Money. Steinborn wishes he'd been told that he "has what it takes."
Todd Tresidder, a financial coach and owner of the site Financial Mentor, says he was so money-focused as a child that he spent his time running paper routes and a small business. He wishes someone had told him to just slow down and be a kid. A reminder that he has a whole life to play what he calls "the business and money game" would have served him well.