Managing Your Money

Recently, I was thinking back to when I was a child and how I often watched my parents fix all sorts of items. Anything from a broken radio to a ripped pair of jeans. They usually took the time to at least try to repair things. There’s something about that habit which made these items feel like they were more valuable, and even precious.

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Unfortunately, we now live in a world where things have become disposable. A broken electronic is instantly replaced; torn clothes quickly thrown out. In fact, how often have you seen people replace even perfectly good stuff just because there’s something newer or better that just came on the market?  So I started reflecting on the impact that my parent’s attitude toward things had on me, and what message my children are learning from the world they currently live in.

With that said, I admit that I don’t darn socks that have holes in them or patch jeans with ripped knees.  However, I do try, as often as possible, to repair broken items or somehow extend the life of my things.  For example, when my kid’s pants have holes in the knees, I turn them into shorts, or when a toy breaks, I try my best to fix it. There’s a special feeling you get when you put time and effort into repairing something which, in turn, makes the item feel worthier than if you were simply to discard it and replace it.  For years now, anytime a new iPhone has come on the market, my children have asked me if I will “get the new iPhone”, and my reply is always the same: “nothing is wrong with my old iPhone”.

So how do we teach our children and grandchildren about the value of money, or about not taking things for granted? In my opinion, by modeling, discussing, teaching and, more importantly, by creating opportunities to fail while they are still young. This provides them with learning opportunities when the stakes (and costs) are low. For example, a few months ago, I reluctantly let my daughter buy a light up toy for $10 on the streets of Old Montreal with her birthday money. Although I told her it was poorly made, and therefore, would break easily, she insisted on buying it. Sure enough, by the time we got home, it was not even lighting up anymore.

Another way I provide learning opportunities for my children is one that I learned from my mother. When I was 12 or 13 years old, I wanted a pair of jeans very badly.  I cannot remember what brand they were, but they were so “special”, and I had to have them.  So, my mom took me to the jean store, but when she looked at the price, she nearly had a fit!  To compromise, she gave me the $30 she would have spent on jeans and told me to come up with the rest myself.  When my son asked me to buy him some Adidas soccer pants, like my mom did for me, I gave him $25 (the price I would pay for pants), and told him he has to save his birthday money or his allowance to make up the rest. Although I can easily get him perfectly good Adidas soccer pants at a Winners, he tells me that ”they are not the right ones”. I remember how much more precious those jeans were to me because I had to spend my own saved money to get them.  I hope in turn my son will better understand the value of things and to earn what he truly wants.

While I’m focusing on children in these examples, we can all look at our own habits and choices when it comes to money.  Looking at events from our past or childhood that have influenced us, and whether those influences were positive or negative can be good start. If they were negative, it’s good to become aware of how they affect your current decision-making process. This can lead you to re-evaluating your financial values to realign them with your long-term goals, which is an important process. We pass on to the next generation what we have learned from the previous generation.  If those lessons weren’t positive or productive, then it’s time to break the pattern.  This doesn’t only boil down to saving versus spending, but reaches a much deeper level – how are money and things (or yearning for things) connected to happiness, perceived happiness, or the lack thereof?

As my children get older, I want to teach them the importance of saving. However, it’s really hard for young children to conceptualize the idea of things like retirement savings, which is where I typically focus my savings plan.  So I decided to start a “vacation fund” – a separate account that I don’t mind sharing with them. With this set up, it’s easier to talk about making choices on saving vs spending with them.  It’s an account in which they can have full involvement, including choosing a vacation spot, evaluating the cost, planning how long it would take to save up. It also creates a conversation about making choices on day-to-day spending, like whether it’s more important to have dinner out, or to put that money towards our “vacation fund”. Whether to spend $60 on a movie night out, or put the $60 towards the vacation fund and do a Netflix movie night in.  It forces them to make choices that involve delayed gratification, which is something that is definitely hard for most people, but especially for kids.  I’m not trying to drain the fun out of life, and occasionally, I will veto a decision they made in order to eat out (especially if I don’t feel like cooking). Though as they become young adults, and start working, they will also be forced to live within a financial framework and to make choices that will either allow them to save or push them into debt.  This vacation fund is like a test run for them.

With credit so easy to come by these days, debt rates sky rocketing, and the idea of delayed gratification being swept under the rug, finding ways to teach and encourage the next generation to sacrifice ‘wants’ for ‘needs’, and ‘now’ for ‘later’, has become critical. And the fight is real.  The invisible forces that are sending the opposite messages are everywhere from advertisers and marketers, to social media and friends, and even parents.  When I hear of families who are living paycheck to paycheck but are able to somehow buy their children new iPhones, I feel there is a big problem with our society. The depression rates among young people are climbing at alarming rates. I wonder if there is any connection?

Lynn MacNeil, F.PL. Vice President, Investment Advisor, is a Financial Planner with Richardson GMP Limited in Montreal, with over 22 years of experience working with retirees and pre-retirees. For a private financial consultation, or more information on this topic or on any other investment or financial matter, please contact Lynn MacNeil at 514.981.5795 or Lynn.MacNeil@RichardsonGMP.com.

The opinions expressed in this article are the opinions of Lynn MacNeil and readers should not assume they reflect the opinions or recommendations of Richardson GMP Ltd. or its affiliates. The comments contained herein are general in nature and are not intended to be, nor should be construed to be, legal or tax advice to any particular individual. Accordingly, individuals should consult their own legal or tax advisors for advice with respect to the tax consequences to them, having regard to their own particular circumstances. Richardson GMP Limited, Member Canadian Investor Protection Fund.

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