“The road to success is dotted with many tempting parking spaces.”
― Will Rogers

I happened to read this article from CNBC, and following a link there, I got to this original article. According to that, over 57% of Americans have less than 1000 dollars saved up. They also have the distribution with age, which was quite eye opening. I tabulated the results for you, and here it is:

I will include the original plots at the end of this post just in case you do not want to go to the original article.

Now, about GBoy. He is a typical 9 year old – He loves soccer, reading and video games, not necessarily in that order. If he were a typical American, you can see that the odds are stacked against him. More people seem to save up $1000 as they grow older.

When he was around 5 or 6 years old, I introduced the concept of getting paid for chores. To be honest, that didn’t go very far. He preferred not doing the chores even though that meant that he didn’t get paid. Part of that could be our fault too – We were typical the overworked, time-strapped, guilty parents. He did get whatever he wanted even though he had no money.

We had to revise our tactics. Since neither BusyDad or I was getting paid for doing the household chores, GBoy wouldn’t get paid. The chores had to be done, that was just part of the daily routine. There were no consequences, no incentives. That was just part of life. It took a bit of nagging initially, but it went smoother than I expected.

Once that was in place, we introduced allowances. We told him that we were going to stop buying all toys, and would pay him instead. That way, he could decide what he wanted to spend the money on. He was delighted – Half the things he picked up were vetoed by us prior to that, because we thought it was not worth the money. Now there was nothing to stop him from buying anything he wanted. We told him that every week, he would be paid an amount equal to his age. He was elated – the amount was going to go up with no negotiations, and there were no strings attached.

By then, he was already aware that college costs a lot, and that he would have to work if he was going to go to one. We told him that he could start saving already and be ahead of the game even before he started working. We all agreed that since the amount he was getting was a lot, he could save at least 50% of what he was getting.

I set up automatic transfers to a savings account (in my name, but designated for him) for half his allowance. I increase the amount transferred by 50 cents, once a year on the weekend following his birthday. The rest of the money was recorded in a “savings book” that he has – I add to it every weekend. For instance, he is 9 now. Every Sunday, I add $4.50 to that account and $4.50 to his savings book. Whenever he wants to spend something – at an arcade, to buy candy or toys etc, that amount gets deducted from that book. He is not allowed to spend any money that is already in the bank account. Once in a while, I let him be overdrawn, but that is really rare. That usually happens when he decides to move some money into the bank account, and very soon sees something he really wants. Since I want to encourage moving money to the savings account, I let him “borrow” from future allowances if that is the case.

The way we get him to move excess money to his bank account is by making that more attractive. Every time he decides to move money into his bank account, it is matched by me. I am still surprised by how happy this makes him.

If the tooth fairy leaves him $5, he already sees it as $10 because it is going to be matched by me if he moves it to the bank account. On the one occasion that tooth fairy left him $20 (because that was the only bill I had), he was over the moon to get $40.

This has helped us save money too. We don’t buy him toys any more. He buys them when he wants to. We buy him toys for his birthday, for Christmas and when he has done something so extraordinary that we think we should encourage it.

The clutter in our house has come down a lot because he doesn’t buy himself too many toys. He says he would rather save it for college.

The boy who never looked at a Lego set once it was made, now finds odd things to play with. His favorites are things like strings, balls, sticks, rubber bands, paper,… He is more careful with his toys now that he knows that he has to pay for it. He packs up his toys to put them away so that he will be happy to see them in a few months. He sometimes even makes “time capsules” from shoe boxes with a date marked on them so that he won’t open them earlier. Any toy that doesn’t go back to his room goes in the give-away pile, and that makes him not leave them everywhere. When he once got a bunch of toys for his birthday, he put them in the basement, and took them out one at a time over the next year.

His favorite way to pass time is to play video games. Since we don’t let him do it on week days, he spends most of his time reading. Since he would lose money if we have to pay the library fines, he is careful to return them before the due date. I take him to the library once every weekend, and he stays occupied throughout the week.

I think it is time to announce to the world how much he has already saved up.

Drumroll, please…

GBoy now has $1134.74 in the bank, and slightly less than $10 in his “savings book”.

I don’t really remember exactly when we started the allowance and saving for college. But it hasn’t been that long. Let’s say that it has been 3 years or so, and he got $8 on average. That would mean that his bank account should have $624 (3 * 52 * $4). The rest of it ($510) came from the money he saved up (and then doubled) by not buying the things he wanted, but didn’t need.

I asked him what his secret was, and what advice he would give to other kids in his position. And he said that when he looked at something he wanted like Pokemon cards, he asks himself if he would want to work hard for 3 hours to get it. I didn’t really get the math behind it, but he said that some counselor from a summer camp once told him that he was getting paid about $10 an hour, and the Pokemon card boxes that he wants cost $30 on Amazon.

Honestly, I was impressed. But that didn’t stop me from pointing it out to him that it was actually 6 hours because we were matching the $30 that he didn’t spend. But then, may be he is right – if we keep it up for a while, he could earn $30 and then we would match it then. I don’t know if how long we will keep matching the money, though.

I am glad that he seems to understand the value of money. I do not know whether he is going to look back on this time of his life and be glad that we taught him that, or whether he is going to spend more to compensate for it. Only time can tell. Right now, it looks like he is on the right track. And I am one proud mama!

Do you have any strategies that worked for you? Anything that didn’t work, so I can stay away from them? Let me know in the comments below!

Like I promised before, eye opening savings details from GoBankingRates:

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Sunday, Dec 4, 2022