Permissive Parenting, Indiana Jones and Keeping More of Your Money

In order to find a solution you have to first understand the problem.

I’m a pretty permissive parent. If my son wants to do something, as long as nobody gets hurt and nothing will be damaged I let him do what he wants.

Want to cut up your own vegetables for supper? Go for it buddy, here’s your kid safe knife.

Want to empty a container of floss and turn the house into a pretend laser escape room? Go for it.

This is exactly what he did on Sunday morning. Picture floss running here there and everywhere across the furniture and appliances. I had to dive role under the floss barriers around the kitchen, do pretend jump flips over the floss “lasers” to get to the living room, all while running around the “snowball” obstacle course he also created on the floor like Indiana Jones (but far slower and without the cool hat).

The best part about playing along? The squeals of laughter and delight I get to hear when he’s caught up in our make believe world. This is what make my heart sing.

We have a lot of fun together and it makes me appreciate the time that I get to have with him because if we’re not having fun, what’s the point?

That said, we do still have rules. House rules.

• We tell the truth even especially when it’s hard.

• We clean up after ourselves. (I can’t help but gush when my boy runs to put a toy away and says “I move that so you don’t trip on it, Mommy!”)

• We help others.

• We keep our promises (hello integrity!!)

• We are kind to people and animals.

Trying to teach my child to be a kind human, take responsibility or his actions and think of others starts early. So does teaching him about money. I desperately want him to understand how money works and let him make his big money mistakes while he’s still under my roof.

As a child, we didn’t have much. I grew up with a single parent on social assistance and another parent that didn’t contribute. My money lessons in life came from watching my mom struggle. Watching her write down where every penny she spent went, along with all the receipts stapled to the pages of those old lined school notebooks.

Then I’d watch her cry. Cry because it seemed like there was never enough. Cry because she was ashamed of being on welfare. Cry because it seemed like no matter how hard she worked she couldn’t get ahead and it was utterly defeating. She didn’t know I was watching. I know it hurt her heart she couldn’t give us all the things she wanted to.

But she DID give me so much more than she thought in those years. She taught me to be aware of my money and where it goes. She taught me to work for the things I wanted. She taught me priorities, cooperation, work ethic, and saving.

Even though my son isn’t yet three, I have already started to teach him to understand money. We use the same system found in “Value Creation Kid” with money jars. We have our Share, Save and Spend jars and he gets rewarded for behaviour I appreciate - like cleaning up on his own, showing kindness, and helping around the house. He then decides which jar his money goes in. He get’s an extra quarter every time he choses his Save jar because I want to reinforce the importance of saving as a healthy financial habit.

Most places you look on the internet or when you talk to a financial professional, you’ll almost always hear the recommendation to save 10% of your income.

TRUTH-BOMB

You’d have to work for 67 years before you’d have enough money saved to retire with the same lifestyle you have now if you chose to save 10% of your money. Id that what you want to do? Work for 67 YEARS? Sickening thought, isn’t it?

The reality is we need to save far more than we think we do. But how?

R. Nelson Nash said in his book “If you know the problem, the solution becomes clear.”

In order to learn how we can start keeping more of our money, we first have to understand the problem. Here it is.

Oops….I inadvertently fibbed a bit in my first newsletter when I said I’d do ALL the math for you. You have a teeny tiny equation to figure out on your own. At least I’m giving you the formula! Knowing your own personal answer could change your life so it’s worth the effort!

Here’s the deal:

To make the numbers easy to follow, imagine you earn $100! Yay! You go home with your hard earned $100 but instead of getting to keep it all, guess what happens? You have to give $34 out of that $100 to the bank. Every time. Over and over. Forever. Doesn’t that sound unfair? You did all the work, and someone else takes a big chunk of it.

Let’s break this down so you can see it.

Why do we pay the bank?

When you buy something big (like a house or a car), most people don’t have all the money to pay for it at once. So, they borrow money from the bank and promise to pay it back bit by bit.

But here’s the catch:

The bank says, “We’ll lend you the money to buy that car or house, BUT you have to pay us back the loan amount PLUS extra money called interest, .” That’s the bank’s way of making money. They loan you money and you pay it back each month with a lil extra to pay the interest. 

Now, Let’s do some simple math!

You get a loan to buy a car:

Car payment: You agree to pay the bank $756 a month, BUT $168 of that is the extra money (interest) that the bank keeps.

You get a loan to buy a house:

House payment (mortgage): You agree to pay $2,894 a month, BUT $1,650 of that is just interest — the bank’s share.

You get a line of credit:

Credit cards: The average North American pays the bank $470 a month just in interest. -Remember, this is not money you used to purchase anything. This is the banks fee for the convenience of purchasing something on their tab—credit. 

Let’s add it all up:

$168 + $1650 + $470 = $2,888

Every month you’re handing over $2,288 to the bank just in interest!!

Now, let’s say you make $6,800 a month after taxes (your take-home pay). To see what percent of your money goes to the bank, we do this:

2,288 divided by 6,800 x 100 = 33.6 or 33.6%

That means 33.6% of your money goes straight to the bank every month. Ouch! 

That was just an example of the average North American. 

Now it’s your turn!

Grab your calculator,

1. Look at your car, house, or credit card bills and find the part called “interest.”

2. Add up all the interest you’re paying each month.

3. Divide that by your take-home pay.

4.     Then multiply that by 100

The formula looks like this:

Interest Total divided by Take-Home Pay x 100 =  % of YOUR money that goes to the bank every month.

Now you know exactly how much of your hard-earned money is leaving your family FOREVER! How much of that $100 you earned is going to the bank? Makes you feel like you work hard to give it to the bank, doesn’t it?! 

When I did this math a few years ago, I found out that 52% of my money was leaving my family to pay the banks. FIFTY. TWO. PERCENT. That’s more than half of everything I earned! No wonder it felt like I could never get ahead. 

If you can’t find the interest on your billing statement, click on this “amortization calculator” link and enter 

1. The loan amount

2. The length of time you agreed to pay the loan back 

3. The interest rate 

to get a list of your loan’s payments. Find the payment number you’re at and use that interest number provided in your calculations. 

If you rent you have two options for doing these calculations (I suggest both options here because buying a house is a really personal thing that not everyone wants.)

1. don’t include anything in the formula. Just add up the interest from car payments (if you have one of more), credit cards, lines of credit or anything else that you pay interest on

2. OR if you do want to buy one day, try including your rent as if it was a mortgage payment.

We need a different system.

Are you starting to see why it’s so hard to save money? It’s not your fault. I know you’re probably thinking I’m gong to tell you that the key to having more money and is to spend less, buy a smaller house, cut back on your lifestyle, make your life devoid of all fun…. but I’m not. Who wants a life without fun? Vacations? Eating out? NOBODY. That wouldn’t be living.

The reality is debt is a part of our lives? Most of us can’t go drop $400,000.00 on a house (we will explore if you even should if we ad the cold hard cash another day….) so loans are a necessity. What we need to start doing is making our loans work FOR us, instead of against us like they do now. That’s what building a family banking system is all about.

What if I told you I don’t pay 52% of my money to banks anymore even though I have the SAME loans? What if I told you I now get to keep $75 dollars of each $100 I make instead of $48? And every year I get to keep more? What if I told you that there’s a way you can start keeping all the money you earn too? 

Would you be willing to start working on your relationship with money? Better yet… Would you be willing to start opening your mind to a new way of moving your money? Who wants to keep 100% of their hard earned money?!! 

I sure as hell did! Do you?

Just like teaching our kids takes time, so does learning whole new way to look at money. After all, we have been practically brainwashed to think there is only one “right way” to manage our finances. The indoctrination BS that makes the banks and finance companies rich is HARD to recover from. Their way of thinking is practically programmed into us. We have to start the deprogramming slowly so stick with me and get ready to learn bit by bit how you can start making money like the banks do and build your family financial stability in the process.

Until next week,

“truth-bomb dropper”

Becky