How To Teach Your Children About Money

Cents and Sensibility

(Photo by Nick Anthony)

Steve and Pamela Cromity possess all the trappings of upper-middle-class comfort. They own a home in Lansdowne, Pennsylvania; a time-share in Kissimmee, Florida; and employ a nanny to care for their son and daughter, Steve III, 12, and Christina, 10. For the Cromitys, the key to the good life isn’t the couple’s annual $150,000 income, although it certainly helps. The entire family avoids impulse purchases, they say. And when they do buy something, they bargain shop. What separates Steve, Pamela, and their children from most Americans of any economic level is a strict adherence to proper money management.

The Cromitys make every effort to never pay full price for anything. Last October, for instance, Steve paid $100 for a refurbished iPhone, when the retail price was $399. For Pamela’s birthday in September, he bought her a pre-owned iPhone from AT&T for only $50. And when the couple wanted to upgrade from a 32-inch to a 50-inch flat-screen television, they decided not to pay full price or use credit to buy it. It took a year and a half before they found a TV they wanted at a price they were willing to pay. In the end, they spent $750 for an $1,100 television.

“I believe in delayed gratification. You don’t get things that you want automatically, you wait until the time is right,” says Steve, 43, a staff architect and business development manager who earns $72,000 a year plus bonuses. “Everything that we get seems sweeter because we get it at a discount.”

Steve and Pamela apply the same approach to debt. “We have a substantial income but we still have to be conscious of every dollar, because we know it’s very easy to get ahead of yourself,” says Steve who pays more than the minimum payment each month on his debt. After Pamela received an M.B.A. in 1990 and Steve got an M.A. in 1993, they owed $70,000 in student loans. They have paid off all but $1,000. They plan to be rid of all debt, including their mortgage and home equity loan, in 15 years.

The Cromitys are teaching their children to enjoy the finer things in life while not paying top dollar. “We want to always have plenty, but we still want our children to know what it is to sacrifice,” says Steve. They also want the children to live graciously and give generously, says Pamela, 43, a senior pharmaceutical sales representative who brings home $67,000 plus $10,000 in bonuses.

So far, Steve III and Christina are following their parents’ lead. They each get $5 a week for allowance and bonuses of up to $20 per activity when they excel in academics or sports. Instead of spending his money on video games or clothing, Steve III saves it. Over the last year he has put away more than $300. “That is a significant amount of money for someone his age,” says his father. “He buys one thing that he really wants, but he will always reserve a considerable amount of cash.” He will even ask what chores he can do around the house to earn more money, says Steve.