Tracking every expense
On my personal finance journey, I have come to understand that knowledge is power. Nothing demonstrated to me the wastefulness of our spending habits until I started keeping track of our finances and could read it in plain black and white. I cannot say that I have continued this habit to this day – Mrs. Stew and I have a different approach to budgeting nowadays and it works for us. However, I thought I would share two anecdotes that could help you to reinforce this principle in your children.
My first story is about my boyhood pastor. “Pastor T” is well into his 90’s now. I’m not sure that he has the mental capacity to still track his expenses to this extent, but when I knew him in his 60’s and 70’s, he tracked every cent that he spent, by hand. Pastor T could tell you to the penny what he had spent on soap in 1954. I was young, but I distinctly remember reading our church financial reports and seeing every penny of spending accounted for. I even remember an incident where he took a group of us boys into the bathroom and showed us how to keep our toilet paper usage to a minimum. Not graphically, but showing us how to count the exact number of squares that were necessary. Something like that might sound a little creepy nowadays, but he impressed upon us the importance of wise stewardship – in everything.
Pastor T is a man who never went into debt and he trained his congregation to use money wisely. The ministry that he left behind has undertaken a number of large building projects and supports a large number of missionaries even though the church itself has never really numbered more than 100 members or so. They have no debt.
Another person is a family friend who grew up in the northern Midwest. I met “Emma” about three years ago and in my conversations with her husband he shared that Emma had tracked every expense since she was four years old. Over the years she developed good money habits and when they got married, she handled all of the finances for the family. They have been married about fifteen years and in that time, they purchased and resold several houses, each time they managed the equity to the point that they were completely debt free when we met. Everything was turning out well for them until my friend lost his job suddenly and Emma was diagnosed with cancer – both events happening within six months.
They would have never survived financially if they had not been debt free with a good-sized savings to boot. Emma learned the value of a dollar at a young age and used that knowledge to protect her family during a time of great financial turmoil.
Here is what we can take from these stories – teach your children to value money properly. A great way to do it is by writing down every expense. There will be times when your children spend money wisely and times when they spend money poorly, keeping a record of financial missteps is a good way to teach them to do a cost benefit analysis when planning future purchases.
I think it is a good time to buy a notebook for my five year old and seven year old daughters.
Article by Stew
Photo by u07ch