Updated on 08.15.11

Why We Save

Trent Hamm

My five year old son is saving diligently to own a Nintendo DS Lite video game system. One of his cousins gave him a baggie with several games that would be playable on that system and he’s longing to play them, so he’s been saving.

That system, new, costs $100. We can find reliable used ones with a warranty for $60 (sometimes) or $70 (most of the time).

His allowance – at least, the portion he’s able to use to save for such a purpose – is $2 a week.

Here’s the amazing part. He’s already hit the $35 mark and he’s quietly putting his $2 a week away into a bag for that purchase. That’s several months of not buying anything else with his allowance, with several months yet to go.

A five year old is so focused on a savings goal that he hasn’t spent a dime of his allowance on candy or inexpensive toys in several months.

(At the same time, incidentally, his younger sister, only three, isn’t spending her tiny allowance either, though she doesn’t have an explicit goal. She has about $20 saved up for some future splurge.)

Something’s going right here.

This Sunday (since Sundays are allowance days), we had a conversation about this as allowance money was being handed out. My five year old was putting his money away into his savings pouch when I asked him how he felt the savings was going.

“It’s taking a long time,” he said.

“Have you ever thought about spending it on something else?” I asked him.

He mentioned a few things that he thought about spending his money on.

“But why haven’t you?”

“Because if I buy that stuff then I will never get my DS.”

That’s the heart of saving, right there. If you buy the inexpensive stuff now, you’ll never put the pieces together to get the big thing.

“You know, Mom and I are doing the exact same thing you are. We are saving for a new house.”

He looked at me with big eyes. “Do you guys get an allowance?”

“No, Mom has her job and I have my writing business. We both get paid every so often. We take some money out of that pay and use it to save for the house we want to build. So, what you’re doing with your allowance is pretty much the same as what Mom and Dad do with the money they make at work.”

He sat there for a little bit, then asked me a great question. “Can I do some work to make some more money?”

At this point, I’m trying to devise some tasks that my five year old can pull off that’s useful to the household in some way. I can think of a lot of things that he’s just on the cusp of being able to do (washing towels, loading the dishwasher, etc.) but he still makes little mistakes at them.

Still, the lesson is there. My five year old son understands the connections between earning money, saving, and the big things in life better than many adults that I know.

How did we reach that point? Money is never a taboo topic at our house. The benefits of saving and financial responsibility are a constant topic at our kitchen table, and we as parents try as hard as we can to show good financial responsibility to the children through our own actions.

We also make an open point of every good financial practice we can think of. When I get a new item, it’s usually via a trade or through money I’ve saved. When I read a new book, it’s usually from the library or a used copy I got from somewhere or from the “free” Kindle book selections. We spend time engaged in hobbies that are low cost, like reading or playing those used board games with our friends. We make meals at home. When we have something expensive that we want, we save for it. We plan many of our shopping trips around sales and coupons. None of these factors are hidden in any way from our children. In fact, we talk about it with them quite often.

Our children seem to be absorbing these things and we couldn’t be happier about it.

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  1. Brian Carr says:

    First off, that’s very great news about your son and congratulations to him for being able to save to get to what he wants.

    Unfortunately, because this is so rare, it underscores the importance for having personal finance taught as a part of primary education. Your son is lucky enough to have you as a father so he’ll learn this stuff. Many other kids won’t.

  2. TLS says:

    It’s sad to say, but I know many adults who still haven’t figured out the concept of saving money and delayed gratification.

  3. Des says:

    Its hard for me to find helpful chores for our just-turned-6-year-old son as well. Oddly, his 4 year old sister is conscientious enough to be trusted with things like laundry and dishes, but the boy will miss spots and call it “good enough”. I have no idea if that is a gender thing, or if it is just their personalities. We let him feed and water the pets, and fold his own laundry (even though he doesn’t do it very well). Also, he can vacuum (with guidance) and walk the dog. Just some ideas.

  4. bogart says:

    This is a nice post, but I’m puzzled by your statement that, “I can think of a lot of things that he’s just on the cusp of being able to do (washing towels, loading the dishwasher, etc.) but he still makes little mistakes at them,” especially given that you stress how much you enjoy spending time with your children and helping your children. Wouldn’t providing him a paid job (task) such as washing towels and, yes, assisting him in doing it correctly both reward his initiative and help him learn?

    When I hire employees in my workplace, I certainly expect to have to train them on some aspects of the tasks they are assigned (and to pay them while they learn). Why wouldn’t you offer your son (at least) the same sort of support?

  5. krantcents says:

    The more we expose our children to in a positive way, the more I think it helps them. Remember though, they learn more from observing what you do and how you handle issues in your life. Exposing them to good language (speaking & writing), museums, the arts, games, and everyday life is also good for them. It is also an opportunity for you to discuss these things with them.

  6. Amber says:

    :-) I can’t wait to have kids! How fun.

  7. Adam P says:

    Cute post. I enjoy your kids stories, I think they come out extra well because it shows how much you care about them.

    To #4 above, I agree that Trent could supervise and help them, they are doing the work and it is true that most jobs give lots of training in the beginning..good analogy! I have read tho that many parents don’t think paying kids for household chores beyond their allowance is a good thing (helping with dishes and laundry should just be something you do, not that you’re paid extra to do), but I guess that can be corrected as they get older? I don’t know. Kids are not my strong suit!

    The other point I would make about some electronic purchase that takes a long time, if the game is completely obsolete when he can finally buy it, and something else shiney and new catches his attention (his friend/cousin’s new PSP2 or some gizmo) then he will have a long painful period of saving up/not spending with a huge splurge on something that is already undesirable when he gets it. I’m not sure if that’s a good lesson or not, I suppose it is.

  8. Talyssa says:

    How do your kids know what things are provided by mom and dad vs what things they are expected to pay for themselves?

  9. bogart says:

    @Adam P, sure, fair enough, believe me there’s a whole parenting literature about whether allowances should be tied to chores or not and if not whether “extra” chores should be paid or unpaid. I came from a family where allowance was granted (and, @Talyssa, there was a clear list of what was (a) provided and what was (b) our responsibility though gifts — e.g. birthday, Christmas — moved many things from (b) to, as a gift, something that was given or provided) and chores were assigned but the two were unrelated. Additional/special/extra chores were sometimes available as a way to earn money.

    Trent seems to be describing a similar system as he’s consider what extra tasks his son could do to earn money, though perhaps I misunderstand his thinking. His concern seems to be with the quality of the output rather than with whether he wants to pay for (some specific) tasks or not, and I find that a weird concern with a 5-year old, as long as said 5-year old is trying.

  10. valleycat1 says:

    I agree with the others that if his son can do things with only minor mistakes, let him do them, either with some more supervision or just accept the job done in good faith with only the minor mistakes. I’d think Trent’s wife would have some good ideas on tasks the kids could handle on their own, since she’s a teacher.

    My favorite – I had a friend with a pecan tree who would pay his kids a penny a pecan to collect them once the pecans fell on the ground.

  11. LB says:

    #10- The pecan story reminds me of getting paid to pick grapes at my parents’ agrobusiness starting when I wasn’t even in kindergarten yet. I remember being so proud that I was helping out, and by the time I was in 2nd or 3rd grade I was making more money than some of the teenage kids who helped out.

    Other ideas: If you have garden weeding to do you could pay for time spent helping out. Or dusting… nearly everyone has some end tables or lamp shades that a 5 year old could dust.

    Another interesting debate is whether to pay for a completed job, pay per item (per weed pulled or lampshade dusted) or by the amount of time spent.

  12. valleycat1 says:

    I have a feeling Trent’s son is going to start identifying jobs he’ll do for pay.

    In my opinion 3 and 5 years old seems pretty young to be getting an allowance. I don’t think my parents started us until we were in grade school. I didn’t start my daughter on one until she was also getting $ from the tooth fairy, which would have been first or 2nd grade.

    I have a niece who saved essentially every cent she was given as gifts & probably most of her allowance (& miscellaneous earnings) from day one. By the time she graduated from college, she had saved enough to make a sizable downpayment on her first house.

  13. Cheryl says:

    My mom tells a story of being paid for dead flies.

  14. Chris says:

    When your son get his DS, how will you limit it? My son when he bought his could not be pried away from it. We have had to limit it to only so much so often. Some days I wish he would have never bought the thing (Pokemon…oh what a marketing ploy).

  15. Kelly says:

    I don’t know your child personally but I teach kindergarten and I am impressed with the cleaning and organizing skills of children sometimes. I bet he could wipe down the table after eating and/or organize a book shelf (maybe even dust the bookshelf) etc. Also, he may be able to do some of the harder tasks if he is provided with step by step visual directions and modeling beforehand. How about taking out the trash if you have rolling barrels? This is really great too because being able to do these “grown up” tasks will build confidence and self esteem.

    Another thing my parents used to do is have us roll coins and we’d get to keep the money we rolled- which was a LOT to us. In the days of debit cards I know I have a lot less change in my house but it’s still some. This might not be the easiest task for a 5 year old but he could at least sort the coins and that’s good practice for the learning about coins he is sure to be doing soon in school!

  16. This post is exactly what we look for in a blog. Not simply saying what to do and what not, rather how the author doing it. Trent you are doign a fantastic job at home, keep it up!

  17. This post is exactly what we look for in a blog. Not simply saying what to do and what not, rather how the author doing it. Trent you are doing a fantastic job at home, keep it up!

  18. Barbara says:

    Ill jump in with just two things. first, your kids are probably capable of many more helpful things than you think, and secondly, even if they dont do a perfect job, the point is to learn the job and do the value. If you wait until they are able to do a job “perfectly”, you will have lost both the joy of the job and the teaching moment.

    A fife year odl can..dry some dishes, set the table, feed a pet, take out small bags of garbage, help rake a loan, sweep a floor, take clothing to and from the laundry, put away his or her own clothing depending on the layout of the room, dust furniture (assuming you have a kid proofed house), tear up papers that may not need fine recycling……………this list goes on

  19. Dan W. says:

    What an amazing story. I’ve read some personal finance posts involving kids and teaching them how to save and spend wisely. I like this one better. It cuts to the chase. It tells a story and leaves the rest for perceptive readers to extrapolate.

  20. deRuiter says:

    I still don’t grasp why you are saving money for a new house, getting perhaps 1% interest, when you could be using that money to prepay on the mortgage of your existing house instead, and saving the amount of interest you are paying on the loan. You will sell this house when the time comes in order to buy the new place. Why not pay extra on this mortgage with the “new house savings? I don’t think the interest deduction is as valauable as having a paid up mortgage. I know, I know, some feel that getting back a small percentage of the interest as a tax deduction is more useful than not having to make a payment because the house is paid off, but it’s not. Prepaying on the mortgage at this time seems like more bang for the savings buck than putting it in a savings account for one percent and having the money ravaged by inflation and income taxes on the interest. I’d rather prepay on the mortgage and save the 4% or so interest which would not have to be paid. This is especially lucrative on new mortgages which Trent’s is.

  21. lurker carl says:

    I’m not so sure that a five year old should be saving to buy a video game console. This the very same marketing trap that Trent fell into during his youth that he now regrets.

  22. Johanna says:

    I like this post a lot. Your family reminds me of mine – or rather, your kids remind me of me. :) I like how you’re teaching them that using coupons and shopping for bargains on the things you need (or want) is totally normal.

    Last year, for my mother’s birthday, I bought her some things from Bed, Bath, & Beyond. When I told her and my father about how I’d made trips to two different stores (both in parts of town where I had to go anyway, so no extra travel costs involved) so I could use two coupons, my father replied, “I’m so proud of you, and I’m proud of us that we raised you right.”

    The only thing I’d caution about is that it is possible to err in the direction of being too much of a saver. It’s not necessarily wrong to spend some of your money now on small things, rather than saving it all for a big thing in the future. It all depends on what you actually want. Being afraid to spend money you have on things that you really want is just as unhealthy as spending money you don’t have on things you don’t really want. Not that I think what your children are doing now is unhealthy at all, but it’s something to watch out for in the future.

  23. Roberta says:

    I agree with the previous posters who believe that kids should do things around the house just because they are family members who benefit and have obligations in return. We expect our children to wash dishes, help with laundry, assist with meal preparation etc. The extra chores for extra money to buy things they want is an issue we’ve both struggled with though. My husband is of the belief that if they really want it and we can afford it, we should buy it for them; I’m more prone to suggest adding it to a want list ie birthday or Christmas. We’ve also matched their savings to buy bigger things. They’ve all had their share of what we consider foolish desires (yes, Pokemon cards) but the advantage to multiple children is that the younger ones do tend to learn from the older ones’ mistakes! It’s sometimes difficult to find a balance between meeting their very real needs and their sometimes fleeting desires. Another reason good parenting is difficult!

  24. kristine says:

    How does a 5 year old even know about video games, let alone a specific kind? Even if a child has the freedom to buy what they want with their own savings, as a parent I should still hold veto power. Personally, I think there is a correlation with attention span disorders/reading comprehension problems and commercial TV and vid games. But I have no proof, just anecdotal observations. 5 is just so young…

  25. Telephus44 says:

    This is something I’m still working on teaching my son. He is very impulsive, and I can tell that he doesn’t have an innate “saver” personality. Right now I’m just trying to work on general money concepts – we work to get money, we spend money on groceries and gas for the car, however it’s difficult to make the move from how money works to the importance of saving. I have thought about having him save up his money to buy a toy, but he changes his mind so often on what he “wants” that I don’t think it would be a useful exercise.

  26. Meg says:

    This is awesome! We may have another person who will grow up realizing that living on less than he earns and saving will get him far in life! Maybe not as fast, but he will be in a much better position than most!

  27. Sarah says:

    #24 kristine – many video games these days are just as educational and stimulating as reading or playing a board game. Some more so. Using a Nintendo DS actually teaches some very interesting coordination skills, attention to details, and the importance of following instructions. The games built for it are often brain-teasers, or even heavy on reading. On that system many are even social.

    We’ve come a long way from games where the player is just running around or shooting “bad guys”. Many games are actually very valid educational tools. Something tells me Trent is well aware of the difference.

  28. Georgia says:

    Thanks for bringing back some pleasant memories. When my daughter was 4 years old she started asking to dry dishes. I told her she could when she was 5. She kept bugging me. We moved 2 months before her 5th birthday and I went ahead and let her start. Two weeks later, while drying dishes, she looked up at me and said, “I started too soon, didn’t I, Mommy?”

    One of her favorite memories was also cleaning feathers off freshly killed chickens. She wanted so badly to help. I usually killed 2 at a time. So I let her clean the feathers off one while I did the other. She got all the big ones and I finished the job for her. She felt so grown up. She’s now 47 and she reminded me of this when I went to see her.

    I gave she and her brother an allowance in grade school. In high school they earned their own money. But, to make their small allowances go further, I would buy school supplies and apportion them out in smaller amounts and divided the cost, so they could afford to buy pens, paper, etc. with what they had. They loved it.

    I did read a good idea one time. All children should have to do many things unpaid as part of the family dynamic. However, if you would pick out several jobs they could do, figured an amount and paid them that amount. They actually said, for instance, if they could clean windows, put a dime or a quarter on each window and the one who cleaned it got that money. That way they could actually see that the one who worked more, earned more. Not like the allowance where everyone got the same amount.

  29. kristine says:

    Sarah, point taken.

    We had no TV or vid games for our kids till they were 10. (We had a VHS player, and handpicked programs from our library, which had NO commercials!). Books were treats. And we did this on LI, NY, consumer central, and yes, our kid attend pub school. It did not make them social pariahs- kids loved to come to our house because they got to make art, music, and play dress-up, and run around the yard in their own fantasies.

    As a result my teens are avid readers, and no interest at all in TV or video games, except for the occasional Sid Meier’s Civilization with my hubby. (My daughter leaves for college this week!) Someone gave my son a PS2 at the age of 12- he used it twice. My have interesting and well-informed opinions and an usually large cultural base of knowledge that allows them converse comfortable with people of any age. I do no think they would have if they were immersed into screen games so young.

    There are many educational games. Reader Rabbit was popular when my kids were little, but they preferred books. The thing is, the average schoolchild spends 6 hours a day in front of a screen. No matter how excellent the content, that is way too much, and I do as much as I can to minimize that time within my own home. At school, in stores, you have little choice. Criminy- even gas stations and restaurants now! I guess I am just an anti-screentime persuasion. Too passive. I have seen too many of my students addicted to handheld games that I have to confiscate. I just wonder what the hurry is, whatever happened to making mud-pies and spinning tall tales!

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