Teaching the Value of a Dollar

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I had a great conversation the other day with a friend who is still struggling with the student loans he took on at the turn of the millennium. He’s been knocking on those loans for twelve years and still has several years to go.

One thing my friend said that really stuck with me was this.

“When I was in college, I didn’t really get the value of a dollar at all. I was having a lot of fun making $10 an hour at my job but numbers like $30,000 or $50,000 were completely beyond my understanding. You’d think they wouldn’t let dumb kids sign papers that form a dead weight around their neck for the next two decades.”

I actually wrote this down in my pocket journal when he said it, telling him that he’d probably inspired a post for The Simple Dollar.

When I hear him say this, I immediately think of two things: my own collegiate experiences as well as my own children and their burgeoning financial learning.

When I was in college, my experience was much like his. I lived dirt cheap because I had to and the money I made from my part-time job seemed like a mint. I’d get a $100 paycheck and it seemed like an enormous amount of money at the time. With that money, I’d find ways to go out on dates, buy bulk amounts of ramen noodles, and eke out enough for rent.

Just like the amounts associated with my student loans seemed unreal, the salaries people earned after they graduated seemed unreal, too.

The only context I had for all of it was my meager pocket money. I envisioned that my expenses would continue to be bargain basement. I mean, why not live on ramen after graduation, right? Thus, if my expenses were low, I’d have tons of money to spend on student loan repayment. A $40,000 salary? A $40,000 student loan? It would all work out, right?

Of course, reality doesn’t work that way. When I started earning more money after college, the expenses started coming in. I started inflating my lifestyle. After all, I was making more money in a month than I was in a year beforehand … I didn’t need to live on ramen any more, right?

The problem was this: after scrambling for every dollar for years, suddenly a lot of dollars were dumped on my lap. You might think that by living frugally, I would know how to handle it, but the truth was I wasn’t living frugally by choice – I was doing it because of necessity.

You can live paycheck to paycheck whether you’re making $400 a month or $4,000 a month.

Looking back on what’s changed in my life since then, I’d have to say that the person who is frugal by choice is the person who understands the value of a dollar. Every single dollar is a little representation of the work you’ve put into life and what you choose to use it for determines the kind of life you’re going to have.

The question really becomes how do you ingrain that idea into your children as they’re growing up?

Again and again, I keep coming back to the same idea. I try to show my children that we conserve money not because we have to, but because we want to.

If we do a certain thing with our money right now, it directly means that we can’t do something else later on.

That, in turn, means that if I’m going to spend my money on something right now, it better be worthwhile.

It also means that if I’m going to spend my money right now, I’m going to want to find a bargain for it.

Day in and day out, this is the set of values I try to impress on my children. This is the core of it. Whenever any of us spends a dollar, we’re giving up other opportunities for it, so if we’re actually going to spend that dollar, we want to be absolutely sure it’s for a sensible reason and we want to be pretty sure it’s the best deal we can find for it.

I hope every single day that this lesson is taking hold.

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