Friday, 11 February 2011

Pocket money, income, "rich", "poor"...

by Eilleen

Hello everyone,

I was talking to someone a few months ago and he asked me "if you don't tie pocket money to chores, then how will your kids ever learn that money needs to be earned?" (see here for my approach to pocket money) We ended up having a long rambling conversation about income and what it means to be financially "rich" or "poor".

Now on the subject of kids learning that money needs to be earned.....To be honest, I actually don't think this is an issue. I believe that its more important to impart the love of work for its personal and social benefits rather than the income it can bring. I believe that one should work because it makes one feel good and allows one to participate more effectively in their community. I think if you love to work, then you will get an income...and the level of income should not be an indicator of whether you are "rich" or "poor".

I think what defines "rich" or "poor" is not so much the level of income but the level of spending.*

Knowing how to spend money wisely is hard work! I think its actually harder work than earning money. Looking back, I've had an income for over 20 years. That income has steadily grown from casual wage to minimum wage to the level it is now....and when I look back, I have been "rich" and "poor" in those 20 years, regardless of my income level.

I have been "rich" when I had less debt and a very clear commitment to my goals. I was rich when I was still at school on a casual wage and I wanted to buy a TV, VCR and stereo. I was rich when I was on minimum wage, living realistically within my budget, whilst saving up for a deposit on a house. I am rich now as a sole income earner for my family, with very clear priorities for my spending and savings whilst resisting the urge to accept offers from the bank to borrow more so I can have things now.

I have been "poor" when I had too much debt and no idea what to spend my money on. I was poor when I earned higher than the national average income and I got two credit cards with high limits. I was poor when I was promoted to an "executive" and I got myself into debt in order to live up to what I thought was the lifestyle that was expected of me. I was poor when I wanted things "now" rather saving up for them.

So for me, rich or poor doesn't have anything to do with what I was earning but had everything to do with my commitment to spend wisely in order to achieve greater goals.

What about you? Have you experienced "rich" and "poor"?