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Financially Literate

As some of you may know by now, April is Financial Literacy Awareness month and I have discussed some things over the past few weeks that point towards that end. As an aside, I think it’s great that we have this month yet it’s sad how many people are not financially literate. I used to count myself as one of the financially illiterate and thankfully have come a long, long way. I fully believe that none of us are perfect and all have something we can either learn or improve in. Towards that end, I was honored to be asked by my good friend Shannon, over at The Heavy Purse, when she asked me to take part in a special Carnival related to Financial Literacy Awareness month spotlighting our own personal situations and how it’s impacted me in terms of financial literacy.

My Story

I’ve shared numerous times about my issues with credit card debt that I amassed while in college, but I’ve not given much back story to it. I was not taught much in regards to finances when I was a child. I was always well provided for and did not go without, and my parents worked hard to provide for us. The thing is though; there was not much at the end of the month in terms of money. My parents loved to say that if they had $50 left over at the end of the month in their checking account they wondered who they forgot to pay. I knew, at some level, that my parents had bills to pay but that was the extent of it. There was never any mention of planning for the future, budgeting or watching our expenses while I was growing up. As a child the urgency of that did not always register with me as it does now, but it underlies the lack of financial wisdom present in my home. This did extend, at times, to needing to borrow money from their parents to either pay bills or to help pay down their credit cards. As a parent myself I know that if one of our children ever needed help, that we would be more than happy to help…especially in the case of lost jobs or if they needed help with rent/mortgage. That said, if it was an ongoing issue or one that showed lack of wisdom I believe the loving thing would be to step in and see how we could address the larger issue at hand in a wise way. Ultimately, I know what I saw as a child translated into the framework I viewed money through and thus was not financially literate.

Know What Your Money is Doing for You

As I look back now on my adolescence I see one major flaw in regards to my parents’ handling of finances – lack of concern about the future. I see this in the lack of having a workable budget to lack of concern about saving for retirement. I know some of that was going on but nowhere near the level it should have been. I remember seeing money being spent or bills being paid with little idea of where the money was going to come from. If that’s happening because there just is not enough money that’s one thing, but, ultimately, it came down to a lack of concern about what their money was doing for them and where it was going. I know that budgets are not for everyone, but without some sort of plan for your money, you realistically plan to fail. I am not trying to blame my past credit card issues on this, rather explain the financial upbringing I received and show how it led to my making incredibly foolish decisions because of my financial illiteracy. I have since come to see that it is vital to know where your money is, how you plan on spending it and ultimately how you plan on saving it. If you do not know what your money is doing for you, then ultimately you have no control over it and will sacrifice your future, as well as that of those around you.

Am I the Only One?

Sadly, I know that I am not unique in the situation I grew up with. I look at numbers daily and see the shocking amount of consumer debt that we hold as a nation. According to the sponsors of Financial Literacy Awareness month, we carry more than $2 Trillion in consumer debt and that over 30% of Americans have no cash left over at the end of the month. Those numbers are staggering and I think that it can be argued that carrying that much consumer debt could potentially be a moral issue with the possibility of that debt impacting current and, more importantly, future generations. Not to bash on those with consumer debt, as I have most definitely been there, but changes must occur. In my previous line of work I dealt with people and their money/investments each and every day. One of the prevailing things I learned is that many simply do not know what they’re doing. There is not anything necessarily wrong with that as we all have different life experiences, but it tells me that there are many out there that can benefit from learning many of the basics I have learned over the years since my overcoming massive credit card debt. It is these basics that Mrs. Frugal Rules and I plan on raising our children with so they can enter their adult lives with the confidence that they’re financially literate and able to make wise choices for their respective futures. Not only that, but it’s our hope that they’ll be able to help others as they grow older to also make wise financial decisions that will ultimate help change our current course for generations after them.

What kind of financial upbringing did you receive and how did that impact the way you handle finances?



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John is the founder of Frugal Rules, a dad, husband and veteran of the financial services industry whose writing has been featured in Forbes, CNBC, Yahoo Finance and more.

Passionate about helping people learn from his mistakes, John shares financial tools and tips to help you enjoy the freedom that comes from living frugally. One of his favorite tools is Personal Capital , which he used to plan for retirement and keep track of his finances in less than 15 minutes each month.

Another one of John's passions is helping people save $80 per month by axing their expensive cable subscriptions and replacing them with more affordable ones, like Hulu with Live TV.

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  • Laurie @thefrugalfarmer says:

    John, thanks so much for sharing your story. The one thing that gets me really excited for the future is that our kids will have so much financial literacy pounded into them that their chances of screwing up with money has got to be pretty darn small. 🙂

    • John says:

      Not a problem Laurie! That’s exactly the way to look at it, in my opinion, Laurie. You’re able to turn it into a positive and that shows true change and one that your children will benefit greatly from.

  • Jon @ MoneySmartGuides says:

    I was raised with a good money background. But that didn’t stop me from getting into credit card debt after college. Even today, I have to remind myself before buying something to stop and think. The advertisers are so good to get you to buy things that even the best of us give in. By forcing myself to stop, I am able to think about what my financial plan is, i.e. early retirement, and determine if the item in question is worth it or not.

    • Shannon @ The Heavy Purse says:

      That’s the key, Jon – “By forcing myself to stop, I am able to think about what my financial plan is, i.e. early retirement, and determine if the item in question is worth it or not.” That simple step can make the difference between financial independence or financial debt. Love that you take the time to think things through before you buy.

    • John says:

      Great thoughts here Jon! We have to stop ourselves at times as well, and I am glad we do. Often times it results in us not making that purchase. I work in the advertising industry…heck…we even write a lot of advertising campaigns and I know how hard they work to separate you from your hard earned dollar.

  • DC @ Young Adult Money says:

    My parents made (and continue to make) a “good” middle-class income. It did seem like they were overly stressed about finances, though, despite having good jobs. It’s really motivated me to learn about money, side income, small biz, etc. to see how I can leverage my resources and have more of a cash inflow and in turn, hopefully a bit more security.

    • John says:

      I was raised in a similar fashion DC, and it has caused me to see that I do not want that for our children. It really is simple math, but it also has to be lived out…which is not always the easiest thing to do.

  • Greg@ClubThrifty says:

    My parents also made a good middle class income. We struggled when my mom went back to school, but they gave me pretty good tools to handle money. I didn’t always listen, but now I have a fairly solid foundation to fall back on.

  • pauline says:

    My parents were much more dramatic than yours when my dad didn’t have a job, they were rationing everything like war time, so as a student I was always cautious and living lean. Now I have learned to relax but it took some time to take away the fear of not having enough.

    • John says:

      I have a family member that can be like that and can understand where you’re coming from. I have learned to find that balance you need as I would ration as well because of my debt.

  • Ashley Park says:

    I think the earlier children are given their own money the more responsible they will be in later life. Giving your kids pocket money and encouraging them to save for things they want will really help them in the future.

    • John says:

      I would generally agree Ashley. I would add to give direction on that money and having them split it up between saving, giving, investing and fun to help them to start to think in that way.

  • Glen @ Monster Piggy Bank says:

    I was really fortunate with my financial upbringing. Both of my parents practiced good financial sense and they shared that wisdom with my brothers and I.

    I only hope I am able to pass on that same knowledge to my son.

    • John says:

      That’s awesome Glen and puts you on better ground than most. Our desire is to pass the same thing on to our little ones.

  • Kurt @ Money Counselor says:

    We were poor during my childhood, so I learned to be happy with few material possessions and to appreciate small luxuries–a good lesson! We never had a family budget–things were pretty much hand to mouth I think.

    Today, I think a budget is integral to long-term success. But I know some argue against budgets and seem to do fine without one, so I’m coming around to the view of doing whatever works for you–but do something! 🙂

    • Shannon @ The Heavy Purse says:

      I am a huge proponent of budgets! For me, it gives me peace of mind and the freedom to do what I want with my “fun” money without an ounce of guilt! I know some people do well without a budget but what I find is that they still have some sort of method to keep them on track, but just not a more traditional budget on an excel spreadsheet. Whatever keeps you on track and prepared, works for me too! Just don’t take away my spreadsheet!

    • John says:

      I agree, learning to appreciate those small luxuries is a huge lesson to learn. We did not have a budget either and it showed.

      I agree that a budget is key to long term success. I know for some they do not like the idea of a budget. I understand that, but you do need to have something that keeps you accountable to keeping those finances in check and to know what your money is doing. I, though, am like Shannon…keep your fingers off my spreadsheet. 🙂

  • Grayson @ Debt RoundUp says:

    Great story John. My parents taught me about money, but I just didn’t listen. I decided I needed to learn about it the hard way and that is what I did. Now I have a greater respect for finances and I want to be a good statistic.

    • John says:

      Thanks Grayson! I learned the hard way as well, and I tend to “like” to learn that way. I too want to be a good statistic and help change the future for our younger generations.

  • femmefrugality says:

    I think we learn so much from our parents, and a lot of times the most lasting lessons are the areas they didn’t perform so well in. I know that’s the way it was for me when it came to finances. It’s really sad, but ultimately true. I swear there’s a lot of good things I learned from their good examples, too!

    • John says:

      I agree, we do learn a lot from our parents…both good and bad. The key is seeing it as that and using it as a motivation to grow ourselves.

  • William @ Bite the Bullet says:

    I grew up with extreme frugality as the norm. You’d think that[‘s a good way to grow up, wouldn’t you? Not for me. When I was a teenager, I vowed never to live the skinflint life. I was gonna make money and blow it.

    It’s amazing how our parents somehow manage to become smarter and smarter as we grow up. 🙂 A good education is great, but it also takes a kid who’s not too full of himself to pay attention. 🙂

    • John says:

      Lol! I find ways how I see how wise my parents were almost everyday. It does take a kid who’ll listen as well. Otherwise, the parents might as well not speak in the first place.

  • AverageJoe says:

    Not to be political (I try hard not to be), but it’s interesting that our government gives us a ton of carrots to spend money and take on debt, yet gives us little in the way of incentives to save. It seems that whenever there’s a savings incentive idea, it’s shot down as “helping the rich” while ideas to help people get into more debt are seen as “helping the poor.”

  • My Financial Independence Journey says:

    My parents were pretty good about teaching me to save money and pay my bills. This and working my tail off in school to get full scholarships allowed me to join the work force debt free and remain that way. What my parents didn’t teach me was what to do with all the money that I saved. I had to learn all of that on my own.

    • John says:

      That’s awesome MFIJ! I would think that would put you ahead of many. At least you can be thankful that you were able to graduate debt free and be able to take on things like learning about investing.

  • Sicorra @TacklingOurDebt says:

    My parents were very good about working hard long hours to make good money and were very good with handling their finances, paying bills the day that arrived and investing for their retirement. My father now lives quite comfortably and he is in his 80’s. The problem in our house is that each person’s finances were considered private personal business and were not discussed, esp amongst us kids. We had no idea how they made things work, they just did. In essence, we didn’t learn good money management skills.

    • John says:

      I think we see that all too often Sicorra. It’s a shame too because it leaves the child to figure things out on their own which can possibly lead to bad situations. We desire to be as open as appropriate with our children so they can learn the practicalities behind managing money.

  • Budget and the Beach says:

    My dad was really good with money and my mom was terrible. He worked as a dentist and she didn’t work until I went to college because they were divorced and she had to. I was never taught anything about money…well, I what I witnessed is that my mom asked for it and my dad gave it to her. We did not have financial difficulty, but I was never taught how to be responsible with my finances. It seemed there there would be a never ending flow, which of course I had to learn the hard way. I think I was almost too spoiled!

    • John says:

      I had to learn the hard way too that money is not a never ending flow. However negative that is, I am thankful for the lessons I learned through my situation and will stick with me for the rest of my life.

  • Erin (aka BrokeMillennial) says:

    It’s inspiring you’re changing the cycle of financial illiteracy to make sure your children are ready for the future. With $2 trillion dollars of consumer debt it’s clear that isn’t the norm. Much like the stats on Shannon’s post, these truly worry me. 30% of Americans have no cash left over at the end of the month? Not sure the best way to change people’s attitudes, but sharing stories certainly is a start. Thanks for sharing yours!

    • John says:

      Not a problem Erin, that is my hope…to be able to inspire others. The numbers are crazy and do need to change. Like I wrote on Monday, it requires a paradigm shift and many either do not want to change or are blind to it. We owe it to ourselves, but more importantly, to the younger generations to make changes.

  • Mackenzie says:

    “Over 30% of Americans have no cash left over at the end of the month.” Umm, wow…that’s just crazy! So many of us were not taught about money as a kid, myself included. Somehow we really need to break the cycle!

    • John says:

      I agree Mackenzie, that number is sad and just makes me shake my head. You’re right, that cycle does need to be broken for the sake of those who’ll come after us.

  • Shannon @ The Heavy Purse says:

    Thank you for participating and sharing your story, John. It always amazes how much kids learn from watching their parents, even when their parents didn’t realize they were teaching their children anything. Parents do so much for their kids and want them to have a life better than what they have, but in order for that to happen – they have to be financial literate. Not knowing how to handle their money and how to think through their decisions hurts them long-term and hurts future generations too. I’m so glad we connected, John and I know your kids will go out into this world as financially literate adults who will share their knowledge with their own future kids and those around them. This is what keeps me going in the face of all these scary statistics.

    • John says:

      Not a problem Shannon, thanks for asking me to participate. I agree that children learn so much from their parents…both good AND bad. It’s my desire to prepare our children for their futures and the future they’ll be going into. I believe that teaching your children to be financially literate is one of the most loving things you can do for your children and it starts with us. Thanks for the kind words Shannon, I really appreciate it!

  • Canadian Budget Binder says:

    Thanks for sharing this story John. I don’t think my parents used an actual budget like we use today but I do know that they budgeted for their business. My parents always taught me the meaning of money and how hard it was to earn it and how fast I could spend it. I started hanging on to my money from a young age and thought it was cool to watch it grow in my bank account. Up was always better than down so I made sure I worked earning money wherever I could while going to school. It was something that I will never forget and why I am the man I am today. I’m thankful to my parents for the way they taught me and I know they are proud of me. Cheers mate

    • John says:

      That’s awesome Mr. CBB! That’s our desire to teach our children…to show them about making money, saving/investing it and giving back.

  • Money Bulldog says:

    I have to hand it to my Mum and say that she did a pretty good job in showing us how to handle money. There was a period in my life when I chose to ignore all of that wisdom but I can’t blame my Mum for that. As I came from a single parent family she didn’t have much choice but to manage the money well or we wouldn’t have had anything. I didn’t always have the things I wanted but I always got what I needed, anything on top of that I had to pay for with my early morning/weekend jobs.

    • John says:

      That’s great Adam. I bet it taught you to have an appreciation for what you had as well as the importance of working hard for what you wanted. We desire to pass that mentality on to our children as well.

  • Jacob@CashCowCouple says:

    John, I know you saw Vanessa’s post on our site this morning. You guys had a few similarities I think. Now you both kick butt while saving a ton of money. Individuals like you have so much to share with those people who are drowning in debt because you know what it was like!

    Have a great day!

    • John says:

      I would agree Jacob, I saw some similarities myself. I am of the opinion that it’s on me to help share the lessons from the stupid decisions I made because how else can we help break the cycle? It sucked and was difficult (to say the least) but it is possible to overcome and change.

      You have a good one as well sir!

  • Cat says:

    I received a pretty sound one – my parents never bought thing they couldn’t afford, and when I got my first real part time job I got a talking to about spending all my money! I think it’s definitely giving me a good grounding for being fiscally responsible.

    • John says:

      That’s awesome Cat! That’s much the same of what we plan on doing with our kids as they start earning money and even before that to help build that foundation.

  • John @ Fearless Men says:

    John, you financially illiterate?! I never would’ve guessed. 🙂 Like your parents mine never talked about retirement or planning financially for the future. I really wish they did because it worries me and my siblings; thinking about what they’re going to do now. I know they both came from families that had extra at the end of the month so maybe because of that they didn’t plan it out.

    • John says:

      Lol! Yep, sad but true John. 😉 I can understand that concern as we have parents in that same situation. Time will only tell I guess.

  • Girl Meets Debt says:

    Thank you for sharing a bit about your finanacial upbringing John. I’m sure your parents did the best they could with the knowledge they had just like my parents did…I have no doubt your young ones will grow up to be very financial literate adults and one of them may even take over Frugal Rules 😉

    • John says:

      Not a problem GMD. I agree, they did the best with what they knew and my hope I to use that as an example of things not to do. I hope they grew up knowing how to handle their finances, though I don’t know about taking over Frugal Rules. 😉

  • Thrifty Dad says:

    Nice post! Looking back, my parents fared pretty well on fairly low incomes, but you would’ve never known. They didn’t have a budget, but they came from a generation where everything was paid in cash, so they could only spend what they had. It’s completely different today, but the values that my parents lived by, had a big affect on me. Today, no matter how many financial tools are at our disposal or govt programs such as RRSPs/401Ks, RESP/529 plans, very few take advantage of them. We need to change people attitudes about money, and I think a lot of that can start at home. We owe it to ourselves, we owe it to the next generation.

    • John says:

      Thank you sir! I agree it’s completely different today and it’s interesting to remember that my grandparents did not use credit cards and paid for their cars in cash. It was a different mindset, but they were content with what they had. Attitudes do need to change yet many are so blinded to that need. We do owe it to ourselves, and more importantly, to the future generations to make these changes now. Thanks for stopping by!

  • Jake Erickson says:

    My parents were great at teaching us about finances. They would make it through a certain hardship and then tell my siblings and I about it because they didn’t want us to ever have the same problems they did. They don’t know a ton about finances, but they taught us everything they had learned which has been incredibly beneficial to me. I’m thankful that they instilled enough financial literacy in me so that I was (and will be able to) avoid many of the common problems people have with their personal finances.

    • John says:

      That’s awesome Jake! I know that for many that would be a taboo topic to cover, but just look at what it taught you and how it helped you grow in terms of finances.

  • Kim@Eyesonthedollar says:

    My parents were pretty good with not having debt and living within their means. They didn’t buy lots of unnecessary crap, but they never really talked about money or spending other than to want my sister and to get good jobs. I wish they had been more open. My Dad still does all the money and my mom doesn’t know how to do much as far as I know. I don’t blame them, but I am going to make sure and be more open about finances, not in a bad way but just to make it second nature.

    • John says:

      I think a lot of people come from a very similar background Kim. We want to have that same openness as well in hope to help breed strong financial confidence.

  • Edward Antrobus says:

    My parents were similar to yours. Extra money at the end of the month was not very common and their average daily balance was under $100. But they haven’t had any debt since 92 when my dad declared bankruptcy from a failed business venture. Instead, it was just incredibly tough to raise a family of 5 on the irregular income of a truck driver, especially when one of those people has very limited options for eating meals.

  • Catherine says:

    My mom was super frugal and never had debt but at the same time never taught us about money. I knew nothing when I left the nest…made mistakes and now paying for it, quite literally 🙂 Great post John.

    • John says:

      Sounds like you had both good and bad Catherine. I can relate to paying for the mistakes. Keep up the great work! 🙂

  • Mike says:

    Hi John,
    Your story is truly motivating. The bottom line is to become financially aware and literate. The upbringing we go through is something that will turn out to be handy in the future.

  • Justin says:

    My parents never really got into saving for the future. I think that it was my own initiative that had my siblings and me open a savings account.
    Basically, I was taught that it was important to make money but never taught what to do with it once I earned it. This can lead to some self-destructive behavior.

  • @debtblag says:

    Great story! My own might be the opposite: being frugal always looked so easy to my parents. Maybe that’s why it took me so long to get it through my head that saving money and staying out of debt are really hard work

  • Jefferson @SeeDebtRun says:

    My parents are fairly frugal people, and generally decent with money. Since they don’t spend very much, they never really seemed to struggle throughout my childhood.

    Where they errored IMO, is in taking the time to teach us kids about what they were doing and why. I inherited their frugality to some degree, but didn’t really come out of it with a healthy understanding of the way that money works.

  • cashrebel says:

    My parents just kept telling me that I needed to eventually buy a nice house in a good school district so id make it into the middle class. Its not bad advice, but its a little simplistic for my tastes.

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