From time to time I write about money. Saving, spending, splurging, and thinking about the future. My childhood and lack of having many things as a child has created a passion inside of me that forces me to make sure that we never have a moment in our life where we have to wonder if there will be food on the table. Chris and I always try to have a back up plan. A Plan A, B, C…Part of the passion I have for living within our means, and saving for the future means that I stay interested in current personal finance trends and different ways of thinking about what you might need to do now to prepare for retirement.
This recent article from LearnVest shows an interesting infographic depicting what giving up a few things can mean for someone thirty years from now. If you scroll down to the middle of the page you will see an image of a pack of gum, with the description that if you cut back on a $2 pack of gum a week you would have $16,652 more for retirement. A $10 glass of wine on the weekend would be to the tune of $83,260 at retirement. The last one is mind-blowing (Chris are you reading this)? If you cut back $100 of your cable bill per month it would be $832,597 at retirement. It makes you think, right?
Thinking about retirement at 20, 25, 30, 35 and up is a very real and crucial aspect of our life. Often though we are barely paying our bills or student loans in our 20’s to 30’s and so retirement is the last thing on our list. I can imagine that many of us could cut back on paying $100 on cable each month, or get rid of it entirely. There are so many online options for entertainment. Regardless of what “thing” you could cut back (or eliminate) from a material consumption standpoint, the key is really to make a focused effort to think about what and how you are preparing for retirement. Have you thought about it? Will you be able to support yourself when you retire? Long gone are the days when your company supported you after you retire. These days a 401(k), IRA, and other options are the basic ways we kickstart our path towards retirement.
While retirement, saving money, and cutting back is not the most glamorous of topics, in 10, 20, or 30 years you may just realize how much you will need to put away each year for retirement and how much time you have lost. A good reminder that pertaining to money: this shit gets real… fast.
Allowances. I cannot remember for the life of me if we got an allowance. Somehow what I remember most is that my dad sometimes paid us in candy bars. Not your normal candy bar, the kind you sell for school fundraisers. He would buy a case (or maybe we had some left over). I distinctly remember the ones that had caramel in the inside. If we ever did get paid (even with candy bars) it was for chores we did around the house. Did doing chores and my parents never following through with an allowance teach me good ideals about working, money management, or spending money? Not really.
I started working when I was nine years old. I babysat, cleaned a neighbor’s house, polished their silver, and had a paper route. Yes, crazy to think I did that at the age of nine. I guess I worked just as hard then as I do now. My parents would have me put my earnings in a savings account, so I guess you could assume that they taught me about saving. The problem? My dad usually “borrowed” from my savings account never paying me back. I did not have the best money role models. Kids should be taught about money early on, and not be graced with everything with no knowledge or conversation that money does not grow on trees. Which is why I especially love this article from Slate.com titled: “You’re Doing Allowance Wrong.”
“Spending is about modesty, thrift, and the prudence to shell out (and even splurge) for things that bring kids the most joy while avoiding mindless outlays for plastic junk they will quickly break or forget. Saving instills patience in a world that increasingly conspires against waiting, delivering television without commercials and movies without Blockbuster. And giving is about generosity as well as gratitude for how lucky you are to be able to help others.”
The article goes into depth about giving an allowance, a budget, and a list of things they want or need and let them make the decisions on what to purchase. It means letting them fail. As the article states: “Better now then at age 24…” It teaches critical thinking skills, how to rationalize why one purchase makes more sense than another one. Many adults today do not have these skills. What if we started early on learning these life skills? We have gone away from being a saving culture, instead we spend, and rarely give. If you have kids what are your thoughts on this article + topic?