In our “mistakes and setbacks” episode several months ago, Sarah and I talked about my money book, All the Money in the World. I mentioned that this book did not sell particularly well. Then I heard from many readers that they had enjoyed the book, and several suggested we do an episode on money.
So…we went for it. But not an episode talking about “this is how you budget” or on saving money, or investing, or anything along those lines. Instead, we decided to share our money stories. What shaped our thoughts on money? What do we like most about how we approach money now, and what do we like least? What we learned:
Both of us grew up in frugal families. But we had different reactions to it. I still find spending money painful (hence the example of my handbag being held together with dental floss). Sarah somewhat rebelled against the idea of rationing Suave conditioner. So she likes to spend money! But…
Budgeting can be about freedom. Just as I have tracked every half hour of my life for almost four years now, Sarah and her husband have tracked their spending in the You Need a Budget App. The point is not to spend less on conditioner; the point is that both have allowances that they can spend however they wish without either thinking there is a problem. If both people in a couple are a bit more spend-y, this can ensure that neither feels too constrained and that household expenditures don’t go out of control.
Being able to pay in full feels good. These are Sarah’s proudest money moments. She talked about winding up in some credit card debt after college; she now likes having set aside the money for large bills (e.g. property tax payments) and knowing the money is there and ready.
Turning down work is hard…but necessary. I’ve been self-employed since age 23. So there’s been a lot of hustling over the years, and since I like earning money, I’m not naturally given to turning things down. But, I have learned that saying “yes” to one thing is going to mean saying “no” to something else. So I better be sure that I say yes only to things that are going to be worthwhile enough that they will compensate for saying no to other things.
Teaching kids about money is great, but no lesson guarantees anything. As I learned in writing All the Money in the World, there are various schools of thought on whether kids should get an allowance or not. There are various schools of thought on what kids “should” learn about money. But I can tell you that there’s enough split in how children react to the exact same upbringing that no one approach is going to guarantee a certain outcome. Sarah gives her kids an allowance. We don’t, partly because my husband had a very negative reaction to the idea. I don’t know how this will all play out!
Anyway, please give the episode a listen, and let me know in the comments what you like to spend money on and don’t like to spend money on.
Thanks for pointing out that there are many high-paying jobs which can actually be fairly family-friendly, and made more so with the use of outsourcing help. I think there’s this idea out there that there’s always a conflict between family-friendly and high-pay and this is an idea that particularly adversely impacts women. I frankly just haven’t found it to be so – companies that respect your skills and show it by paying you well often offer flexible policies as another way of attracting talent. And as you point out, as you become more senior it becomes easier to use some of the career capital you’ve built up to be more flexible.
@Anu – one of the reasons I wrote I Know How She Does It was to show that “big” jobs can be quite family-friendly. Autonomy over your time is a key component of making the pieces of work and life fit together, and you may be more likely to get that with seniority and specialized skills. And cash helps a lot too.
You could not be more on point about how children will react to the money education they receive from parents/adults in their lives. We have three sons, including a set of twins. All are college age or just graduated college. Their approach to money management covers the gamut. None are particularly bad with money, i.e. none have debt they can’t pay, however their associated thought processes are very, very different.
One saves a LOT and works a LOT. Then he occasionally spends it on big toys he buys frugally.
One works and saves some, but like to buy things when he wants to do so.
One works a LOT, saves some, and keeps some hidden from his parents. 🙂
Keep on teaching them and setting a good money example is our mind set!
@Connie – yep, kids are their own people. We can see this in ourselves; I bet none of us think we are entirely who we are because of our parents. And yet for some reason we think each individual parenting choice we make will have a huge effect on our kids.
Money can be such a fraught topic and I really appreciated this episode! It was especially great that you foregrounded your early experiences with money–not because the past is prologue, but because personal finance can be so influenced by personal/family history.
@Robin – the past does influence us, but as you noted, not necessarily as prologue. We can go many directions with the same backgrounds.
This is a tough topic and I think you handled it gracefully. Income and money philosophy are going to vary widely among listeners, but this episode got me thinking about my own “money story” and what kind of values I want to show my children. Great timing for 2019 goal setting as well.
Also, I totally agree with Laura’s Costco comments. I get stressed out every time I go there for the same reasons!
@Jeanna – So glad you enjoyed the episode. And Costco…I’ve been pondering why it’s so stressful. Maybe because of the competing impulses. I know we’re saving $$ on the things we do need in bulk, and yet we never get out of there spending less than $400, which I also find appalling. It takes a lot of time (since it’s about 20 minutes from our house – there’s no such thing as a quick trip) and it’s easy to wind up with a lot of stuff in the house, which then must be dealt with.
I agree. Warehouse stores are too overwhelming for me. I am a terrible underbuyer, while my husband is an overbuyer. I struggle to buy anything in there (I’m sure it’s a good deal, but it costs so much!) and my husband wants to buy everything (We need one so lets buy a 5pack because it’s such a great deal!) We joined under an inexpensive trial period years ago and have never gone back after that year. Besides, I feel I can get most of my groceries cheaper at Aldi. I did enjoy the FREE samples though :o)
I’m a frugal underbuyer but also hate the costco experience. It’s crowded, inefficiently organized and always a line at the end. I don’t feel like it saves that much overall bc I can’t always get exactly what I want and find that it takes a long time btwn organization and lines. Though I don’t like paying for things I don’t mind paying for experiences and I prefer to pay a little more to avoid the costco experience.
Finances are something my husband and I definitely struggle with. We come from very different financial backgrounds (though perhaps that has less to do with it?) I want to stick to a budget and he sees a positive balance in the checking account so that means he can buy something. I want to save for retirement and he sees no one else saving this much so why should we? We recently met with a financial planner who was able to map out what our future would look like at different spending and saving levels and that has helped a lot. I have agreed to save a little less long term and he has agreed to sit down each month and talk about expenses so I’m not blindsided. We did a little bit of financial discussion as part of our pre-marital counseling and I think it should be required for all couples! Maybe even ongoing!
Just wanted to point out that if you have the current subscription based YNAB, it does automatically update with your transactions from your accounts, credit cards etc. I’ve been using it for about a year, but I can’t imagine entering everything manually! It would definitely keep you on your toes though!
@Kristin – I think if couples are not aligned money can be a huge source of stress. That’s great that you guys discussed finances in pre-marital counseling and have done so since with a financial planner.
I agree with other commenters that you handled a sensitive topic with grace. I wanted to chime in on the listener question – which usually you include in the write up. Regarding family who live far away – my family lives 2,000 miles away and while agree with your advice regarding frequency vs. duration for a family of four when it takes almost a day to travel to your destination it is not financially feasible to make more frequent trips (when it costs us about $1200 for the tickets). What has worked for us is to go for the duration but to incorporate a side trip. I was tired of every vacation being “going home” so we would go home for 4 days and then go somewhere – my parents are in the pacific northwest so we’ve gone to the coast, seattle, etc. Also, now that my children are in school – my parents have been able to come to visit us more frequently. This year due to losing both my grandparents in a six month period I made more frequent trips and agree that the frequency does help you stay more connected. Anyway, just wanted to chime in on the frequency vs. duration debate. I also liked the advice about picking an annual time to meet up.
This is a great idea! I am the same (family lives 2,000 miles away and we just can’t travel like we used to with little kids ie. there is no getting in at 11PM the night before and jumping back into normal life the next day). I haven’t thought about separate side trips, but for spring break this year we are planning to do a 2 or 3 night trip WITH my family! My parents live in Phoenix so there is lots to see out there! My children will get some stamps in their National Park Passports AND we will spend time with family. Win-win!
@Alissa- yes, travel with many people can get expensive fast. Tacking on a more vacation oriented side trip to a family visit can be a great compromise. Unfortunately, my extended family (both sides) has chosen not to live somewhere particularly close to exciting tourist destinations…
Another option we’ve done, because we have our two sets of parents 800 miles away and 3000 miles away, is to meet somewhere for a vacation together. We like to have a bit of time on our own first, then have the rest of the extended family join us, if possible.
The newer YNAB subscription model will import transactions from your bank account and credit card. While i do understand the conciencousness gained from manual entry I find I don’t actually DO it. For me the automatic import keeps me from forgetting things and then I go through and balance out the budget or pay attention to the bills from there.
Yes! We do the auto-import, but it usually lags by a few days, so we do manually enter the transactions in the mobile app which is quick and easy, and then just use the auto-import feature to make sure they “match”. This makes the reconciliation process *really* easy and I find I’m not messing around with YNAB that much, which makes me happy.
Like the other commenters, I really enjoyed this podcast and think that you handled this subject with such grace! My husband and I are both underspenders, and we have BOBW to thank for the fact that we now outsource our lawn care and house cleaning, and that our lives are so much happier as a result. We can easily afford these things (in fact, when you look at our opportunity costs, we really can’t afford not to outsource them…), but you and Sarah convinced us to finally take the plunge. So thank you for finding two ways in which money did buy our family happiness/time!
@Courtney- yay! So glad BOBW was helpful for your family!
Thanks for BOBW. I was wondering if you could link to the purse Sarah was recommending to you. Thanks!
@Sandra- I think it’s Latoff?
I appreciate your willingness to do this episode given that talking about money can be so dicey. I used to read frugal blogs like frugalwoods and mr. money mustache, and although there’s something in it that is appealing, I realized that I despise frugality for frugality’s sake. I grew up poor with seven siblings, and mother who was a teacher and a father who was a disabled vet and was forced to “retire” early because of his health. My parents were frugal because they had to be. So the idea that my lifestyle growing up is someone’s goal is kinda repugnant to me. (Of course, their lifestyles also look nothing like my childhood lifestyle – even if they’re frugal, they live in nice, well-decorated homes, dress well, send their kids to good schools, have nice cars, and don’t look like they’re dealing with the stress of not having enough money…so their version of “frugality” has always rung false to me….)
My basic financial m.o. is to take care of essentials first (bills, retirement, emergency savings, etc), then feel free to spend my money on whatever I whatever I want guilt free knowing that the essentials are taken care of. It goes without saying that managing my money is so much easier with a high salary than it was when I was making 24K. Back then, I was unable to save money until I started tracking every single penny I spent. After that, I was able to save 150-200 out of the $1500 I brought home after taxes. Now, even with permitting myself to buy what I want, it turns out that I don’t really want a ton of stuff, and there’s routinely money left over at the end of the month (in addition to the savings that were taken off the top). But the real difference there is simply having a high income and earning more money than I need and want.
What I’m most proud of financially is being able to cover unexpected and expensive emergency expenses without stress such as:
– our first tax bill after getting married and having a high income
– huge car repairs
– being able to cover expenses during this bullshit government shutdown where I’ll have to go without a paycheck for who knows how long….
Really enjoyed this episode too. Was really looking forward to such an episode for quite a while. And insights of Sarah and Laura’s money stories were really helpful.
One part I was hoping that you’d dive deep into is that how ‘financial aspect of parenting’ plays important role in children’s upbringing and what effect it has on their money believes and how parents shapes children’s perspective about money which most of them carry for the rest of their lives.
My question is will BoBW have a guest in the future to discuss the point mentioned above? Perhaps someone like Money coach – Tammy Lally.