Dear Parents, Is A Bag More Important Than Your Child's Education?

That is the question I am led to ask upon seeing this news article.

(Photo courtesy of handbag.com)

While the item is discussing a situation happening in Bangkok, I have no doubt that it is also happening on our shores. The article opens with the following paragraph:

Luxury items such as Hermes, Gucci and Louis Vuitton handbags and Blythe dolls have been sold at pawnshops nationwide as parents struggle to find money for their children's tuition fees and related expenses for the new school year this month.

The rest of the article seemed to focus more on how much money the items could fetch, and the security measures employed by different pawnshops to secure these pricey items. As a financial adviser, one of the skills I have to use repeatedly is to draw out information even from what little data is offered by the person in front of me.

Given the paragraph above, one can conclude the following.

1. Luxury items induce desire and are coveted. As a friend once pointed out, they are designed to elicit envy in those who do not have them, and pride in those who do. This may seem like a no-brainer, but it sets the next point up.

2. Not having enough money to maintain a luxury lifestyle does not stop people from buying these items. Clearly, the people who resorted to pawning or selling their LV bags or notebooks/tablets (also mentioned later in the article) had enough resources to purchase them - but at the expense of other expenses or needs that have to be addressed.

3. Being a parent does not automatically endow you with the "children come first" instinct. This is something that I thought would be natural, or even primal. I've heard of new parents who have declared that their world has changed - forever - the moment they see their newborn.

But what happens after that heart wrenching moment? I've seen some parents of my schoolmates who are absent - either physically because they would rather be at work or attend parties than spend time with their kids, or emotionally, unable to connect with their children and not having any desire to do so.

And given the paragraph above, I cannot help but wonder: how is it that any parent can afford to buy a luxury bag but forget to realize the obligation of funding a child's education? It is an entirely different situation when a parent is working already to the bone and still can't make ends meet - at least s/he is trying, given his/her circumstances. But a luxury bag - or any luxury item - automatically means you have a substantial amount of money, which leads nicely to the next point.

4. What we do with what we have is always a choice. Since we have established that these are people who are in possession of a not insignificant amount of money - being able to buy a luxury bag - it becomes apparent that they have deemed "having an Hermes bag" more imperative then "I have to save for my son's tuition next year."

If that means I'm being judgmental, I'd like to say that my "judgment" is based on the actions exhibited. It is easy to shriek and say "I love my child! How dare you judge me? You don't even have your own offspring!" but I have always believed something I have been taught: actions will always speak louder.

The moment you have a bubbly baby in your arms, parents should immediately begin mapping out a financial plan that will prepare them for the coming financial obligations. That includes constant saving, investing in vehicles that overtake the inflation rate, budgeting and cutting costs whenever possible. It must be impressed that another human being is now fully dependent on you - that to me is the simplest definition of being a parent. And that brings up my final point.

5. Make your financial priorities clear. Parents are supposed to put their children's needs before their own. I italicized the word because not every parent does that - obviously, otherwise that article about bags and pawnshops wouldn't have been written.

The best way to do that is to know where you are - how much you have, are earning - and what your goals are for the near and far(ther) future; this will lead you into actions to bridge the gap between the two. As an example: you are earning 40,000 a month currently. You have to compute what your child's tuition fees would be by the time s/he enters college, taking into account inflation and the amount of increase that laws allow schools to impose, and the actual school where you want your child to study. (Many parents are fanatical about keeping the Alma Mater tradition.)

That will help you decide how much to save every month from this point on, where to invest your money so it can earn more than what a deposit account can give you, and if needed, to take a job/s that will provide another stream of income (especially if you want your child studying in a 'prestigious' school). Having a goal can help immensely in deciding your actions as far as finances are concerned.

By all means, splurge once in a while. Get a Frappuccino as a treat. No one is advocating being a miser - and it's no surprise that the word leads nicely to being miserable. But if you find yourself rationalizing all kinds of reasons to down that frothy concoction everyday, or getting a new wardrobe every payday - all the while you don't have any savings at all or aren't building up your retirement fund - you might not be looking for a treat so much as trying to blow your paycheck at every chance you can get.

In an ideal (unrealistic) world, we would have unlimited funds to buy everything our hearts desire. But unless you belong to the top 1%, allocating our funds is a reality we face everyday. What we choose to spend on reveals what we prioritize.

One thing I know, though: I haven't heard of anyone being called a bad parent just because she didn't have a designer bag. Unless there's a new memo about parenting that I haven't received.