February 15, 2012 by
Money is powerful. When you’ve got enough of it, you almost don’t give it a second thought. But, when you don’t have enough it can be like the Holy Grail.
Something that was instilled in me from a young age is the power of lifestyle. Specifically, the power of money and living below your means.
The thing about living below your means is that it gives you a buffer for times when things are tight. And it also gives you a means of saving for something special or important.
When I was 15 I got my first job. Minimum wage was about $3/hr.
At 15, I didn’t really have any significant expenses. I lived at home, ate my parents’ food, and they transported me to and from work.
Before I got my job, I was making an allowance of $5 a week. That was enough to get by. A movie ticket was around $4. A new casette tape was about $8.
My mother knew the power of money and she made me an offer. One I couldn’t refuse.
She offered to continue to pay me my allowance each week on the condition that I put my paycheques in the bank (and they were actual cheques, the paper kind, that you had to take to the bank in order to deposit.) The further condition was that I didn’t spend the money. She would continue to pay me my $5 allowance each week until I reached a bank balance of $1000.
If you do the math you can see that in order to earn $1000 at $3 an hour I was going to have to work about 300 hours.
I started working at the end of summer, and by January I had $1000 in the bank.
My 2 best friends also had jobs. Both of them relished their new found spending power and had several new sweaters, cassette tapes and had seen all the latest movies in theatres. They had abandoned the bagged lunch at school opting for cafeteria lunches. And between them, they had about $100 in the bank.
This was a big lesson for me. A lesson in the power of saving money.
I decided that I would continue to give myself a weekly allowance, and I even doubled it to $10. But I continued to deposit my paycheques and to not spend money out of the bank. By the time I turned 16, and got my drivers license, I had enough money in the bank to buy myself a used car. And after that point I used some of my pocket money to buy gas.
At 17, I paid for all of my meals and shopping during a vacation to Florida – my best friend came with us, and that was part of the deal. If I didn’t bring a friend my folks would foot the bill for everything, but if I wanted to bring a friend the two of us would each have to pay our own expenses.
When I graduated from grade 12 I had saved enough money to pay for my first year of university and my books.
I continued to work (2 jobs) through university and graduated with no student loans, a car that I owned, and money in the bank. This money, I used as a down payment on a house.
You can imagine how sad it makes me to read about students graduating from university these days who have taken student loans to pay for all of their expenses during school: tuition, books, residence, food, entertainment, and transportation. They are under a huge mountain of debt and many of them have no idea of the value of money.
This is not their fault. Banks offer them the money. It’s expected.
But there is another way. It’s not easy. I didn’t say it was.
This week I’ve got money on my mind. I’ll be sure to post some of my ideas on how to help children learn about money and it’s power.