Learning Financial Discipline Through … a Smartphone?!

Before you jump to the conclusion that I’m about to announce or promote some amazing new app that will set your financial house forever in order with the greatest of ease, allow me to clarify.

First, although this post contains financial lessons that can apply to any person, is it mainly for parents who have kids that are starting to beg, plead, or otherwise annoy the heck out of them for their first smartphone.  I’ll be telling the story of how my wife and I have handled this issue.

Second, what I’m about to share is VERY difficult for the average parent or adult to do because it involves tough love and the possibility of watching your child struggle financially.

A few years ago when my son was around age ten, he first mentioned the idea of getting his own smartphone someday.  That statement triggered something in me that had been bothering me about what I had noticed about other parents, namely 1) allowing their children to have a phone before the age of 15 or 16, 2) buying a phone for them, and 3) paying their child’s phone bill.

Fortunately, these observations had caused me to put some thought into this matter and so I already had a ready reply to my son’s statement.  I told him that he would not only not be allowed to have his own smartphone until high school, but he would have to buy it himself AND pay his own bill, even if he got stupid and went over on his data or phone minutes!

Talk about draconian!  In this day and age, it seems as though most children rule the parents – or at least dictate the terms of how they are raised.  And if their kid screws up financially or otherwise, parents almost always jump in to bail them out instead of having them learn valuable life lessons through the best means possible, namely the School of Hard Knocks.  It’s as though parents are afraid that taking a hard line means their kids won’t love them any more or that it will start World War III under their own roof.  The reality is that kids eventually lose respect for the weak or wishy-washy parent.  Once that respect is lost, so is any attempt at parental authority.

Being old-school and watching financial disasters unfold in people and families all around me, I knew that if my son could ever muster the will to even afford his own phone, he would have accomplished a feat of financial discipline that probably 95 percent of his generation will not accomplish by the age of eighteen.

Fast-forward to a couple of months ago when my son announced that, due to a rather good amount of money earned the previous summer (and not blown, by the way), he wanted to buy his first smartphone.  After being tempted by all manner of things that a fifteen-year-old would want to buy, he held off for several months and decided that this would be his reward for hard work and financial discipline.

I knew that if my son could ever muster the will to even afford his own phone, he would have accomplished a feat of financial discipline that probably 95 percent of his generation will not accomplish by the age of eighteen.

It was at that point that I reminded him of the two other conditions I had set years earlier.  He said he was willing to oblige, even when I told him that his mom and I would by NO means bail him out if he went over his limits.  Again, he said he was willing.

So, he and I looked over monthly plans from the provider that I use and he decided upon one, then found the phone he wanted to buy and ordered it online.  Prior to its arrival, I went to get things set up and learned that because he’s a minor, he would have to have his account under mine.  I was also told that, as basically the account administrator, I could arrange to allow no overage of data or minutes, meaning that he would be stuck hunting around for wi-fi if he ran out before month’s end, the advantage being him not being charged for extra data or minutes without my approval, which I was obviously not willing to give.

So the money was due in advance for the first month and my son paid up.  By the fifteenth of that month, partly due to letting some buddies mess around with his phone, he had already run out of his 4GB of data.

Here came what is called the “teachable moment,” whereby I reminded him that he wouldn’t be getting any more data that month (and thereby not getting charged extra fees beyond what he was learning to budget for).  It was also a moment when he realized that he had to be more careful about his data usage, including more protective about letting other people using his phone.

We’ve just gone through month number two and he’s already learned how to manage his phone usage a lot better than he did the first month.  Most notably, he didn’t blow his data limit this time around!

Here are some things to ponder:

  1. Do you think that this experience has thus far taught him a good degree of not just financial responsibility, but responsibility and discipline in other areas?
  2. Do you think that if he can be responsible for the little things like saving and paying for his own smartphone, then he will be better equipped to handle the bigger things (car, college, house, etc.)?
  3. Do you think that this same sort of responsibility and discipline can be achieved in your own life and/or that of your children?

Some of you might be wondering why I’m addressing a topic like this in a blog about stock investing.  Here’s the connection:  in other posts, I’ve mentioned how you can’t possibly be a successful stock investor if you can’t save up enough money to invest.  Financial success in all of its forms – paying bills, staying out of debt, getting out of debt, saving money, investing money – takes discipline.  That means setting limits and not allowing yourself to cross them, then using the money you save to be put to better use than wasting it on more stuff that you quite frankly don’t need.

Discipline like this not only takes care of today’s needs, but allows you to start building a foundation for the needs that you’ll have in the future, especially once you get old.

The person whining or complaining about their lot in life needs to first of all stop blaming their job or their boss or other circumstances and people and instead look at the person in the mirror to see what he/she might have done to create this mess.

Most people blame their level of income, but more often than not they make enough to pay the bills plus start saving and investing even a little amount – they just don’t manage it properly.  Will a pay raise really help you, or will you end up finding ways to blow the extra money like you did after your last pay raise?

Financial discipline not only takes care of today’s needs, but allows you to start building a foundation for the needs that you’ll have in the future.

Maybe you’ve read this and realized that you need to start building discipline with the small things – like setting a limit on your own smartphone usage – so that you can be more responsible with the bigger things.  How can you be an example to others, especially if you have children, unless you can learn and live these things yourself?

One last thing:  be sure to click the Follow button near the top of this page.  Also, if you’re a brand-new stock investor – or still thinking about it – then I highly recommend starting with my 5-part Stock Starter Series.  To new beginnings!

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