Outside the Box

When my son came home from his first day of school this week, I asked him how it went with regard to using his AmEx PASS card to purchase lunch, since this was one of the things he was wary about when switching from cash to card to receive his allowance.
“The place we went to wouldn’t take my card,” he said.
“Oh. How did you handle that?” I asked.
“I just borrowed money from a friend,” he replied.

Ok, but how are you going to pay your friend back, I wondered. Presumably, his friend doesn’t take AmEx either! But I bit my tongue and didn’t ask. I wanted to, I really wanted to! But I didn’t.

On the second day of school, I noticed that he had used his card for a purchase. Although I had promised myself not to look at every single item he used his card for, I was curious so, yes, I admit it, I peeked. $11 for lunch? Wow, I thought, that’s a pretty expensive lunch. He won’t be able to keep that up on his allowance. However, I didn’t mention it.

This morning I was wondering aloud about what to write about in my post this week.
“Oh, you mean for AmEx?” my son inquired.
“Why don’t you write that I paid my friend back for buying me lunch by buying him lunch the next day using my card?”
I grinned. “Thanks, Dan. That’s a great idea.”

For the past eight weeks I’ve writing about how to create a financially literate teenager. I’ve given examples of how to teach our kids the skills they need to develop that literacy. But in thinking about the resourcefulness that my son showed in handling his cash-flow problem, I had to wonder whether or not “skill” with money is all we want to impart to our children or if there’s something more.

An obsolete definition of the word “skill” in the dictionary says that it used to mean “understanding; discernment.” While our more modern thinking dictates that we view skills as comprised of “knowledge, practice and aptitude,” I think the more old-fashioned definition of the noun is a bit closer to what I mean when I talk about financial literacy.

Teens (actually maybe people in general) need a broader understanding of money that encompasses more than just the skills of budgeting. I think one can be knowledgeable about and even very careful with their money without necessarily being resourceful or discerning. Take the idiom “Penny-wise and pound foolish.” An example of someone who is “penny-wise and pound foolish” would be a person who spends $25 dollars every time his old toaster breaks down. Over the period of a year, it breaks six times. While each of the $25 spent on the toaster may have seemed “sensible” and fit into the person’s budget, in the long run it would have been wiser to purchase a new toaster for $80.

My father was an example of a man who was often “penny-wise and pound foolish.” In a previous post, I talked about him eating cereal that had bugs in it rather than purchasing a new box of cereal. A man who was extremely intelligent about and careful with his budget, he did not, at times, show discernment where money was concerned.

Perhaps part of financial literacy means also being able to think in a resourceful, problem-solving manner, not just in a literal one. My son, for example, could have left the pizza place where his friends were eating and found someplace else (using up part of his precious lunch time in the process.) Instead, he discerned that, while spending time with friends and having a leisurely lunch did not have dollar values attached to them, they did in fact have their own worth.

Some of the things I want my son to know about money follow:

1) Sometimes your time is worth more than your money.
2) Sometimes buying someone a gift that you know they’ll really love is worth the strain on your pocketbook.
3) Generosity deepens the soul and broadens the mind.
4) Giving to charities should never only be done for the tax write-off – where your money is, there will your heart be also.
5) Think outside the box because an open box allows money to flow in and a closed box does not.

I’ll leave you with this final thought: discernment and a deeper understanding of money (or any other of your values) is not taught in the way you would teach math in a classroom. It’s taught by being in a dialogue with your teen and by being a good role model and explaining your financial decisions. Children learn understanding and discernment by being in an understanding and discerning relationship with their parents. Talk to them, but not at them. Good communication is, ultimately, what it’s all about.

Please note that Julie Ross is being compensated by American Express for these blog posts and that any opinions expressed are entirely her own. Also, remember to take advantage of the upcoming “National Money Talk Night http://www.moneynighttalk.com on September 16, 2010!