The most important financial life lesson to my Children.

Many years ago, when I arrived at United States as an immigrant, one of the first things I needed to learn, even before the language, was the importance of having a Credit.

I was told many times that "A bad credit is better than no credit".

But, what was a credit? Two continents and two languages behind me, I knew how to do a Root Canal Therapy or how to Extract a tooth or how to negotiate with my landlord in Romanian. But I had no clue what a "Credit "was. What an "Interest "was and not to mention an "Investment".

Completely clueless.

Back then, when and where I grew up, Credit Cards were not in style. ( Yeah. I am THAT old). Nobody knew about them and loans were not as normal. People saved to buy a car or a house. The population was a lot smaller and everything looked and felt and WAS a lot simpler.

Now fast forward many years and I can't stop thinking about how little I knew about what proved to be one of the most important aspect of living a life here in US. Financials. Back, at my childhood days, financials were Taboo to talk about.

Now when I see how many days and hours my 12 years old daughter is wasting to learn the old Greek gods and goddess's names, not knowing anything about the real life, it breaks my heart and it infuriates me. I feel frustrated too see that when our children go to college, Credit Card Companies have tables and booths set up waiting for them at the door. To me, those booths look like traps and they should be illegal. It is sad to see that it's crucial for our children to have good grades at tons of useless and outdated materials. But nobody has took the time to teach them anything about their financial decisions and it's effect on their future.

When my 12 years old daughter was complaining about me asking her to save %50 of her money, Inspired by This post by Jim Collins (One of my all times favorite bloggers and a nice guy), I started to explain to her about the fundamentals of financial success as much as and as simple as I could. How much she got out of it? Not sure. But When she chose to be Sara in the example I gave her, I was happy and proud of her.

Here it goes:

I know that this is an extreme example. But I hoped it would shake my daughter up and will help her understand some basics about her decisions and their long term effects on her future.

This is what I explained to her:

So, Tom is a spender. He never thinks about saving. He feels like he is entitled to receiving what ever he wants. He likes to wear a certain brand of clothing and own a certain brand of electronics. He likes to be popular at school. He grows up getting a good job and makes decent money. He thinks that he is always going to earn money and live a spender's life. He borrows lots of money believing that "Of course I can pay them off. I am the big shot that has always spent good and lived an expensive life" One day, when his job is unstable, he wakes up deeply in debt. His stress level is high and he borrows more "Expensive" ( Interest) money to be able to keep buying all the things he likes to buy. Because he does not want to change his artificially high standard of living.

Now Sara, makes the exact same amount of money as Tom. But she does not need all the expensive stuff to feel good. She knows who she is and does not need to look like she is rich. All her life, she saves half of her money and once she reaches $3000 when still very young, she starts to invest it in an investment fund. By the time she is 30, she has more than $1,000,000 in investments. ( I didn't even talk about compounding and it's magical power. Trying to keep it as simple as possible).

Now, this numbers are just "Guesstimated" and have no solid calculations involved. They all might be wrong :) But the concept is what matters.

Then I went ahead and explained what borrowing money and interests are. I call them "Borrowing expensive money". Then in my paper, I showed her where Tom borrows his money from and how Sara can be the one that is providing that money and receives her monthly interest checks which she earned not working and only with investing.

And finally, I explained to my daughter that Sara can stop working any time she chooses to if she keeps her expenses the same or lower than her monthly income check she is receiving from her investments. But if she chooses to work which is a good idea, she can invest even more money or spend or donate it as her little heart desires.
She is financially independent AKA Financially Free.

If I had the power, I would make this simple page mandatory in middle schools.

How about you? Are you Sara or Tom? Which one do you WANT to be? Think about it!

Feel free to copy and paste this page and show it to your children if you like.


  1. Hi Paris,

    I landed here looking for a toothpaste recipe. Definitely want to try yours! I looked around some more, because I really enjoy your writing style. Also, it is very interesting to read your perspective which incorporates different cultures. Keep it up!

    This particular post speaks to my heart, too. As a vocational adviser and coach, I see so many people lost in "the money mill". Earning to spend, spending to earn. Having forgotten what brings their heart true joy.

    How children being taught in school about how money works in real life, having to learn too many abstract things instead, is one of the recurring thoughts in my line of work. I am happy to see, that there are national efforts here in The Netherlands to teach children about money (for example in a "money week"). I have to wonder though, looking at the behavior of parents: how much can a school do (when parents behave like your Tom)?

    Also, there is the issue of real poverty. Which, in cases, is passed on from generation to generation. Recently, an overview article on this issue was written by a Dutch journalist. Maybe something like this interests you too?

    Warm regards from grey, rainy Amsterdam : )


    1. Wow. Tess, I am really enjoying your comments. So proud of the line of work you do. People need help sometimes. You are absolutely right. Parents act like my Tom. And children follow. I am trying to create an after school program/ club for children to learn life lessons. It is a lot of work , but doable. Also thank you for the link and the magazine recommendation. I am very curious.
      By the way, I love Amsterdam. My wonderful step father and my lovely sweet sister in law are Dutch,
      Keep warm and thanks for wonderful comments.