Divorce, Debt, and Finances

Tips, Struggles and Successes navigating Divorce, Debt and Finances

Financial Discipline for You & Your Kids

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As a divorced, single mom discipline for my son falls on me 99% of the time. Sometimes that means punishment; taking away TV and video games, or having him complete tasks he does not enjoy, such as writing sentences.  Discipline by definition is:

The practice of training people to obey rules or a code of behavior, using punishment to correct disobedience.  Discipline 

So I am teaching him to follow the rules by using punishment as a consequence for not following the rules. Teaching your children right from wrong is tough; and usually involves a fair amount of tears, door slamming, and "I hate you mom!" However discipline is a necessary part of parenting, training your children that rules exist to keep them safe.

So what does discipline have to do with finances? Being financially responsible is a skill all children need as they make their journey to adulthood. Unfortunately, many parents struggle themselves when it comes to applying discipline to their finances.

Back to basics

In raising our children to become responsible adults, part of the process is teaching them to be financially responsible and much of that is learned by example. Kids today are modeling the behavior they see their parents exhibiting and unfortunately those behaviors include poor work ethic, lack of savings, and masses of debt.  They have learned from us that it's "ok" to spend money you don't have, because you can just charge it.

  • Hard work = rewards. Give your child a few daily tasks and chores that are to be performed without being asked. In return they receive a paycheck in the form of an allowance.
  • Financial independence. Give your child the freedom to choose how to use their "paycheck"; by allowing them to make the decision to spend or save they gain insight into the value of money. Think of all the valuable lessons you have learned when you've lost money, blew money on something frivolous, or saved up for something you really wanted.
  • Saving for a rainy day. Have your child open a savings account. Many adults live for the moment and neglect to put aside money for emergencies, goals, and retirement. Change your child's I want it and I want it now mentality by practicing what you preach and regularly contributing to savings and encourage them to do so as well.
  • Budgeting works. One of the most important things to teach a child is budgeting skills. Teaching the value of budgeting includes emphasizing spending less than you earn. For a young child who receives a $5 "paycheck" have them place funds into 3 different piggy banks: spend, save, and goal. Responsible spending is an important life lesson. Don't give in to requests for an "advance" that's just like using a credit card to purchase things you don't have the money for.

Stop the Cycle

There are a number of obstacles that stand in our way when it comes to financial discipline. For starters, many of us didn't get much of an education on personal finance while in school or from our parents. Over time we haven't practiced the basics and unfortunately that has led to millions of Americans being in debt, unprepared for retirement, with little to no emergency fund.

Many of us aren't even aware of what our debt really costs us. We look at the balances on our credit card statements and figure out how much we owe. But we don't take the interest or number of payments it will take to pay off the credit card into account. So we don't really know what our debt looks like, or think about how it affects our future.

Another obstacle that stands in our way is not looking at our debt as part of our retirement plan. What I mean by that is the money that you spend on debt, the interest and fees that you pay on it, are taking away from the money that you could be putting away for retirement. So doesn't it make sense to spend more money on your future than on your credit card bills? Sure it does, but most of us don't have a picture of where we are with our debt, or how to fix the problem.

If you are struggling with debt it's time to develop a plan to get out. Start with getting back to the basics of personal finance. Yes the same ones you should be teaching your children. Discipline yourself to pay down your debt, create an emergency fund and start saving for retirement. If you take action your kids will take notice-they model your behavior, so make good choices!

What financial discipline do you follow religiously and teach your kids?

Photo Credit

Suzanne CramerSuzanne Cramer  

Suzanne is a certified credit counselor and a Social Media Specialist for CareOne Debt Relief Services. Suzanne writes for Divorce, Debt and Finances and A Straight Talk on Debt. Follow Suzanne on Twitter @SuzanneCramer1  and @AskCareOne where she shares her insights on divorce and managing your finances.

  • Suzanne I absolutely love this post. I think you did such a great job breaking down financial responsibility from a parenting perspective. Often times people do not even consider the impact their debt will have on their families. They're thinking in the now and all they look at is the balance and minimum payment and never see past "this month". My wife and I did that for the first 4 years of our marriage, a year and a half of which we had Isaac to think about.

    One of the things that brought us around to understanding why GETTING OUT OF DEBT was our ONLY real option was knowing that we were potentially harming our future family. It was either get out of debt or continue to put our family in financial danger by ignoring our poor habits with money. Now we have 3 at home with us and couldn't imagine being in debt.

    My oldest (Isaac - 5) knows more than some adults when it comes to money but I try not to get too deep into it at his age. I constantly tell him that his life is as good as it is because we do not have any debt. He also gets paid for doing a few chores each day if he does them and has bought himself some apps for his iPod using his own money.

    Great post! Got another one of these in ya for EOD? This topic is GREAT! Are you doing the financial literacy video think in April? I did it last year and it was fun. I know Steve from MoneyPlanSOS needs more people too. :D

  • I can't even fathom how much money Vonnie and I have lost from a retirement perspective due to our financial irresponsibility. Over the course of our 5 year DMP, our payments will total around $140,000 (to pay off about $109,000 in debt).  Imagine if instead of having to repay that amount of money in our mid to late 30's we would have invested it starting in our early 20's...how much would it have grown by the time we retire.

    I'm also disappointed in myself as a parent to have chosen financial irresponsibility over saving for my kids' college education.

    All we can do is take our present situation, and do the best we can from this point forward.  We WILL get through this, and we WILL be a stronger family because of it.  But man, oh man...what could have been....

  • @Enemyof debt Thank you for the love :)  I am definitely passionate about this topic and as luck would have it today's #TeamEOD post is similiar...Yes, I am actually planning to do the video thing @MoneyPlanSOS-->I I think it is an excellent opportunity to share my feelings on this topic.

  • @Travis Don't beat yourself up...we all make mistakes even big financial ones. The good news is that you and Vonnie are kicking butt on your debt and will be free before you know it!

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