Ways I Cheap Out and Blame It on My Parents

Recently, I was doing some reminiscing with Mr. Frugal Rock and was waxing romantic (rambling) about my childhood when I mentioned something that my family did that I thought was totally (or mostly) a funny quirk about 80's and 90's families- like everyone wearing the same clothes in family pictures, or the desire for beanie babies. Some weird items must have been in the water that made us all go collectively crazy about these things... BUT it turns out it was just a funny, frugal quirk about MY family. Frugality was a household norm when I was a kid, and it's not a surprise that this imprinted on me (Thanks mom and dad!!). 

What happened to all the
beanie babies? Does everyone have
a hidden stash in their attic? Is there
a beanie graveyard somewhere?

I love me some research and I have been noticing more studies lately about kids and how they learn about money- both the good and the bad, and how it impacts behavior. Research has begun, unsurprisingly, to demonstrate that high debt loads of parents shows a correlation with poor child development and behavioral concerns. A recent paper, documented that this appears to be the case with what the study called 'unsecured' debt, or credit card debts (as opposed to home/student loans). Families who had a lot of credit card related debt, presumably have higher stress levels, which can result in impact on their children. This could be due to a lot of reasons- maybe parents with higher debt loads, are also working multiple jobs resulting in more time away from their families- but either way, the important take away is that money habits, even debt load, impacts children more than we think!

From looking online, it appears that more research can be done on the positive role of parental behavior on teaching kids about $$. While there are a lot of 'curriculum' ideas of activities to do with your kids around money, my gut is that it's the day-to-day interactions and behaviors that will help the most in teaching kids to be frugal adults!

While the Frugal Rock household, doesn't have any Frugal Pebbles (kiddos), I did round up my favorite financial lessons from my childhood of ways I learned about money- without knowing I was learning about money.

1. Avoiding Entitlement Traps

My parents would take us to the budget night at the theater ($2 Tuesdays, ya'll), but my siblings and I learned early that we would have to smuggle in cans of soda/candy if you wanted a snack. I learned fast that a sweat shirt held more soda cans, and that you should always wait until the movie started to pop the top (of the soda can that is). I still have been known to bring snacks to the theatre on the rare occasion Mr. Frugal and I go to the movies, much to his embarrassment probably. #noshame

#raisenetsorbust

Now I'm not advocating that you teach your kids to smuggle contraband or that you begin too, however there is value in teaching kids that just because something is available, doesn't mean they have to have it. This is true, even if you can afford it. Delaying gratification is a great life skill, no matter the age! We learned early to shop for deals, go on nights when events are more affordable, and that buying in bulk was cheaper than buying individually. A lot of lessons in one evening of family fun.

2. Saving is NOT optional

Birthday money? Graduation gifts? Christmas money from the grandparents? All great things, but there was a rule for as long as I can remember that 1/2 of the money was mine to do what I saw fit. I could spend all of it at the dollar store or candy store if my little heart desired but the other half went to my savings account. Non-negotiable- from birth through my teenage years. Even if it was $20, $10 went into the bank. Until I started doing the research for this post- I never realized how much of my personal finance skills was learned behavior! While the Frugal Rock Household is not at a 50% savings rate (see this post on our retirement savings habits if you're curious) but it's still a goal that I have. A common trend among early retirement folks is the high savings rates of 50%+ so I hope to move more in that direction.

3. Re-use: The Art of Hand Me Downs

My parents were into re-using before it was a trend. They really sold us on the fact that hand-me downs were cool and that they could save you money. I'm not sure how they convinced us of this- maybe it was the idea that all three of my sisters and I would pool all of our clothes in the same closet or that we got to 'shop' each others dresses for different events. Shoes and accessories could be purchased, but my parents would give us a deal- we could re-wear an already bought dress (often originally bought for over a $100) and they would pass along part of the savings of not needing to buy a new dress to us often about $40. If we declined, they were willing to take us out and purchase a new one, but no extra spending money for you! I distinctly remember wearing the hand-me down or thrift-ed dress and pocketing the cash.

 

In hindsight, this was a perfect strategy not only to keep the clothing costs of three teenage females in check, but it also taught a great lesson in the value of re-using what you already have. By passing along some of the savings, it made the benefit more real to us. To this day, I am much more likely to shop my closet when I have a big event coming up. I find myself looking forward to the challenge of whether I can pair something I already own in a new way, rather than purchasing something new.

So how do you teach your own family about finances? Looking back are there any money skills you learned without even realizing it?

The Markets and Dr. Strangelove: How I Learned to Stop Worrying and Love the Stock Market

For those of you who aren't familar with Dr. Strangelove, you may want to stop everything you are doing, Netflix, Stream or Amazon Fire, Dr. Strangelove and revisit this post, only after basking in the glorious irony of the 1964 Stanley Kubrick classic. This movie, is a timeless and hilarious depiction of how awry things can go. The movie tells the story of one army man, General Ripper, that goes more than a little crazy. Convinced during the cold war, that the USSR was using fluoride in the drinking water to endanger Americans through 'precious bodily fluids' ( a line that comes up repeatedly), he sends nuclear bombs into the USSR in effort of starting a nuclear war. Hilariousness ensues as the various generals and politicians scramble to determine how to react to the impending 'doomsday'. But what does Dr. Strangelove and the Cold War hysteria have anything to do with stock markets and investing you ask?

 If you have followed the stock market over the past ten years, you may be all to familiar with the alarms and warnings of calamity. For many folks, raised and coming of investing age during the great recession, there appears to be a grand mistrust of the financial sector ( http://money.cnn.com/2015/03/11/investing/investing-millennials-stocks-markets/index.html). Afterall, many of us, saw parents needing to push off retirement due to a suddenly shrinking portfolio. Some of us struggled finding jobs at time of graduation due to the economy, and on the news every night were stories of investment bankers and financial companies lies exposed. A favorite book of mine, The Big Short (soon to be a movie!), is all about the lies and frauds of big banks and the housing crisis. It's probably not suprising that many in their 20's and 30's place much more of their funds in cash than in a stock, money market, bond portfolios.


Even today if you follow the 24 hour news cycle there are daily warnings of impending calamities. The infectiousness of investor confidence (or lack there of) can make or break a company. It can be hard to follow the market news without feeling a little like General Ripper, ready to pull the trigger sure that doomsday is already upon us! It's no wonder that many choose to stay out of the investing game entirely.

I remember after investing my first significant amount outside of my retirement account, weathering my first down turn. Logging into my account that night, and seeing my returns reduced and the amount lost in one day and thinking, "I must be doing something wrong". It took a seasoned investor to remind me, that my balance sheet today was just one step towards the one I wanted in retirement. I was reminded that when the stock market dropped, my money that I invested actually went farther. For example, if the stock market goes down, I may be able to afford more of the stocks I wanted, increasing my chance for income in the long-run. Investing is a marathon, but the daily reports, market watch updates often make it feel like a sprint!

 A shocking number of folks will admit to not knowing much about their finances or investing. According to a 2015 Pew Charitable Trusts survey, only 51% of American households felt financially secure and only 27% of families felt that they were making the right decisions with their money. It's a startling low number, and while their are whole companies related to helping plan your financial retirement, you can hire investment managers, financial planners, etc. Many make huge amounts of their money, by managing your money for you, when studies show, they often underperform compared to well-set index funds (check out this fun article over at Motely Fool http://www.fool.com/investing/general/2012/03/20/the-cold-hard-truth-about-brokers-and-financial-a.aspx). Their business model thrives on our lack of confidence in how to handle our own money!


I am a BIG believer that no one cares as much about your future, your finances and your family, as you do. So it's time to build some investor confidence. Seek out personal finance blogs (like this one!) and other helpful ones (GoGirlFinance and MrMoneyMustache are some personal favorites of mine) to get a well-rounded perspective. Check out finance books from the library (for heaven-sakes don't buy them- this is Frugal Rock Finance- emphasis on the frugal!!!). While I've checked out my share of finance books, there has never been a strictly finance book that seemed 100% what I was looking for. You may be better offer looking online for the information you need.

 Some large financial firms offer helpful articles and webinars that can provide a good amount of knowledge. I personally like Vanguard's online video streams.** Vanguard's webinars offer the ability to watch them live and message in questions or you can read or watch the playback later. While some are incredibly specific- a look ahead to 2015 financial markets for example, others like the benefits/drawbacks of EFT versus mutual funds can be very educational (https://investor.vanguard.com/investing/webcast-videos).


Check out information on index funds and portfolio management- these were really important for how I developed my investing philosophy! They also have videos on estate and financial planning. Total disclaimer, the goal of these videos is to promote their specific products, so while the information regarding global markets or retirement is helpful, take their promotion of their products with a grain of salt! You do not need to have a Vanguards account to watch the webinars and they are all about an hour or less- I've put them on while making dinner to gleam some additional financial knowledge.

Does it surprise you that most people don't feel confident managing their money? How confident would you say you are in managing your money?




**Disclaimer: while I use Vanguard for some of my investment accounts, I am not reimbursed by Vanguard in any way and do not benefit from you educating yourself about investing, other than, you know, the satisfaction of one more financially-literate person out there in the world!