What A Financially Painful Childhood Can Teach You about Money

by golbguru on October 19, 2007

This is a guest post by Dough Roller - a happily married, father of two, on a path to achieving financial independence. Want to know how people fight their way out of $55,000 in debt? … head over to his inspiring blog to read all about it.

Earlier this month, this blog published a reader comment that sparked some controversy - it seemed to imply that most personal finance bloggers were rich and didn’t have any major financial obstacles in their life. [Editor's note: the comment author wanted me to remove the quoted part of the comment - so that's gone now.]

I read this and thought the reader was describing me. My wife and I have gone from a negative net worth 15 years ago to substantial savings today. Although none of what we have was inherited or handed to us, a high salary has allowed us to max out our 401(k) and save a little extra. Add in real estate appreciation and no major financial setbacks, and you have two “middle-class millionaires.”

But if life were only that simple. While many experience financial hardship as adults, I traveled through the winter of my financial discontent as a child. It was painful, but it taught me a lot about money, business and people, and shaped my attitudes about personal finance. Here’s what happened and what I learned from the experience.

Money is a Terrible Thing to Waste

My parents divorced and both remarried before I can remember. I lived with my mom and stepfather, visiting my dad and stepmother on the weekends. When I was about 10, my stepfather opened a store that sold fishing and hunting gear. Was the store near where people fish or hunt? Nope—it was smack dap in the middle of the city and 40 minutes from our home. Go figure. Because my stepfather had to keep his day job to make ends meet, I ran the store by myself during the summers. I was about 13. To make a long story short, the business was a financial disaster.

As the bills mounted, my parents paid them with a second mortgage on our home. (Do you see where this is going?) I can remember our family literally having no money. My stepfather got paid once a month, and on payday (the happiest day of the month) my mom and I would put two or three dollars of gas in the car. Then we would head over to the grocery store to buy food because by the end of the month there was virtually no food in the house.

As finances worsened, my parents told me that they would be filing for bankruptcy and that we would need to move out of the house. The stress on our family was immeasurable. The bitter irony of the situation is that what ultimately saved us was a tragic loss. My father (not my stepfather) died in a car accident.

His death resulted in my receiving social security benefits until I graduated from high school. Those benefits went to pay my stepfather’s bills from his failing business. Was this fair? Maybe not, but it kept my parents from bankruptcy and from losing our home. Money was still extremely scarce and my stepfather continued making bad financial decisions–like the time he cancelled the car insurance to save a few bucks just weeks before a massive hail storm. There is nothing like driving a car around that resembles a golf ball with 120,000 miles on it, but at least we had a car.

Childhood Lessons about Money and Life

Here is what these childhood experiences taught me about money and life:

  • Living paycheck to paycheck is miserable. Saving money isn’t easy, and some situations may make it impossible. My childhood experiences motivated me to do everything I possibly could to save money.
  • Turning a hobby into a business can be a really bad idea. There is something to be said about doing what you love. But running a successful business requires a lot more than just passion.
  • My choices about money affect those I love. We don’t live in a vacuum. Our choices about how we make, spend, save and give money can have a major impact on our families.
  • Life can really suck sometimes. As my mom would tell me, life isn’t fair. Indeed, we all have our joys and our tragedies. I was blessed by having a loving mom, yet experienced the tragedy of having a Dad leave so soon.
  • We are the sum of our circumstances multiplied by our choices. Each of our circumstances differs but they almost always involve struggles. From those struggles, we can learn and we can choose. Indeed, the financial hardships I experienced as a child have resulted, I believe, in the financial freedoms I enjoy today.

I have tried to draw on the difficulties in my life to make good choices, such as in my education and in financial planning in my adult life. When I write, I try to share what I learned (and continue learning) in the hopes of benefiting a reader facing their own challenges, financial or otherwise. For example, I recently shared My Best and Worst Financial Decisions.

So now it’s your turn. How did your childhood experiences shape your attitudes about money?

Here is a link to The Dough Roller’s feed if you would like to add his blog to your daily reading list.

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{ 21 comments… read them below or add one }

1 Minimum Wage 10.19.07 at 5:44 am

Living paycheck to paycheck is miserable.

Thank you. It’s nice to see someone acknowledge that.

2 Tim 10.19.07 at 9:16 am

you can live paycheck to paycheck no matter how much you earn.

to answer the reader’s comment, one just needs to read about Earl Crawley, who has become somewhat of an icon in how you can succeed and save earning very little.

I also think that the more you earn, the more pressure there is to live a standard of living commensurate with your earnings. Doesn’t mean that you have to. It comes down to choices and your values. If you racked up credit card bills, you have to seriously consider the reasons behind your choices for doing so.

My father worked three jobs when my parents were starting out. Not many people are willing to work more than one job in order to improve their situation these days. We all have choices.

3 Laura 10.19.07 at 9:34 am

Before I started to improve my financial situation my thoughts on money were:

Living paycheck to paycheck is inevitable. I saw my parents do that every month.

Money slips quickly, so spend/enjoy it while you can.

Saving for retirment and paying the bills is next to impossible.

Here’s how I feel now, looking back.

Living paycheck to paycheck is horrible and only addss stress to your life.

Money should be respected (not worshipped or feared). Saving and growing your money will help you.

Saving for retirment and paying your bills is possible and a responsibility. I don’t want to be a burden to others.

I’m still working on how I feel and deal with money.

4 plonkee 10.19.07 at 10:42 am

Things I learned:

Big businesses don’t care about staff.

Children are expensive. Especially if you have lots of them. They are worth it if you like children - you will always love your own anyway, but they are like a millstone.

Don’t live near your family. No one in my parents families lived near each other. We used to go and stay pretty often. I don’t live near my family, although more by accident than design.

Always pay your credit card in full each month. Only piece of money advice my mother has ever given me.

5 Minimum Wage 10.20.07 at 5:33 am

Tim -

I read that story and noted that he has been earning a few dollars an hour above minimum wage. I assume he has benefits including employer-subsidized health insurance. He also lives in a city where the cost of living is lower than the area in which I live (I looked it up).

As far as I am aware, he also didn’t start out with any student loan debt, and he was not sidelined by an extended uninsured illness.

Do you think someone can save if they start out with student loan debt, earn minimum wage for years, and have an extended uninsured illness during which they cannot work?

6 Thrifty Penny 10.20.07 at 9:48 am

I also had a financially poor childhood when my parents divorced. I could relate to your post. It was tough, and I rebelled in college buying everything on credit. Now I’m trying to find the middle ground-not being too extreme in consumption or being too cheap. I am learning from my childhood and college financial experiences. Right now, I aim to be financially wealthy or secure.

7 Dawn 10.20.07 at 5:26 pm

I grew up in the 1960’s and early 70’s. My dad was the financial provider in our home. He had a job at the John Deere Tractor Works factory that during that time paid a really decent wage … multiplied by the opportunities for overtime … he did well. But that opportunity of bringing in a decent amount of money wasn’t used wisely. Mom and Dad still lived paycheck to paycheck. They acquired debt consistently … in fact yesterday I had the chance to chat about mortgages with Dad and he will be 80 years old before he has a house that he paid $8000.00 for in 1960 paid off. I remember the worse times were when contract negotiations were approaching. They would always go on strike. Now Mom and Dad always new when contract time was coming yet they never thought to have any sort of emergency fund. One time I can home from school and my clarinet was gone. They pawned it. I don’t want to paint them as bad people because they weren’t. They were wonderful loving parents … they just didn’t have a clue about personal finance. Long story short … my siblings and I learned very early the importance of handling money correctly. My sister and brother are both self made millionaires and I am slowly getting there.

8 PinoyTech 10.22.07 at 12:24 am

You had a very difficult childhood. Very inspiring true story.

9 thisisbeth 10.22.07 at 11:09 am

My childhood story is that my dad apparently made very good money, but I didn’t know it. My mom paid the household bills of food/clothing/etc. and my dad paid utilities/mortgage/etc. If we’d be out shopping and she’d spend a little more than she planned (say, extra clothes for us), she’d tell us “Well, we’ll have to live on pancakes for the rest of the month, because that’s all the money I had for the month.” Of course, we never did, because Dad would just transfer more money into her account. She was never outrageous in her spending, so it always worked (she’d tell Dad why she spent more–school shopping, etc., and he’d say, “okay”).

Of course, all this taught me was that there was always more money. It’s amazing I am not in major debt.

10 Hat 10.23.07 at 2:48 pm

I grew up in a poor family, my Dad lost everything in the “Great Depression” and never really came back , he would never buy on credit,”If you can’t pay for it,you don’t need it” and I suppose the most money he ever made was $1.25 per hour ,things were a little tight growing up but we always eat but I also knew other kids had things we didn’t have, to his credit when he died he and Mom had their little house paid for, but it made me work very hard that my family would have things and a nice home, after many years of hard work my wife and I are in good shape, but I have never cared for “stuff”, just having a nice home and no worry about money is enough for me,,I am 65 and my dad passed away in 1974, more important than money he did teach me values that have stayed with me until this day [don't lie,don't steal,don't cheat etc]

11 Brandon 11.28.07 at 5:54 am

I didn’t read all the comments, but someone is definitely making a mistake if they have a lot of student debt and still can only find a minimum wage job for years. People in this position really should be looking harder because there are a lot of jobs out there than pay decently (at least $10 an hour) that just want you to have a degree in something to prove you went to college.

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Turning a hobby into a business can be a really bad idea do you write and I say I can be the best way to starting a company, you know more than other about it and can see what is the best.

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