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The Saving Mentality of a Child
As adults, we find it remarkably easy to identify and comprehend the thought process of a child towards money. It is simple, and it goes like this:
- Week 1: “I want to buy a remote controlled car. It costs £100. Mummy helped me with the sums and I know that if I save my £5 pocket money each week, I will be able to buy the thing that I truly desire in 20 weeks.”
- Week 5: “Ah man, Wrestlemania was just the coolest. Everyone at school has been talking about it. I MUST buy that Bret Hard wrestling figure. It only costs £20 and I have £20 saved up. Buy it. Woo-hoo”
- Week 10: “Well, I have Bret Hart, and I need his brother as well. The Owen Hart toy only costs £20 and I have £20 saved up. Buy it. Woo-hoo”
- Week 20: “Mummy, it is time to go to the store and buy the remote control car. What do you mean I can’t afford it? I’ve saved for 20 weeks. What? What wrestling figure? I haven’t played with that for weeks. I want my remote control car. ITS NOT FAIR – you should have stopped me!”
All parents will be familiar with this thought process and the rest of us will remember doing exactly the same thing. Add in a few “Oooo, bags of sweets, only £1” and “I need a pack of football stickers, only £2” and after 20 weeks, that remote control car is still a distant dream for the child.
To summarise, the saving mentality of the child is:
- Work out what I need to save to buy the thing I really, really want.
- In the meantime, I spend money on things that I don’t really need, and don’t even really want, but will make me happy in the very short term.
- Say “it’s not fair” and blame it all on other people.
Kids, hey? It’s a good job we are not like that anymore as adults…
The Saving Mentality of an Adult
No, no, no. Most adults think completely differently, don’t they?
- Week 1: I want my own house in a certain location. I have put my figures into Excel and worked out exactly what I need to save by time X.
- Week 1 -> X: Week In the meantime, item A needs fixing, party B needs attending and expenditure C keeps cropping up.
- Week X: Its time X, and I still can’t afford my own house. Is it my fault? No, of course not. It is the result of this blasted economy / housing market / government policy / country / the rich / the banks / the media / whoever else I fancy blaming this month…
The sad thing is that the majority of adults think exactly the same as children.
We get to that point that we set where we should have been able to afford what we truly want. However, when we get there, the money just isn’t there?
And where did it go? On clothes that have been worn a couple of times and are collecting dust in the cupboard. On meals out that we “deserved” for one reason or another. An extra holiday that we just absolutely “needed”…
All these things are just the metaphorical wrestling figures. They are not things that mean anything in the long-term in our lives. If you want to reach your goals and dreams, you need to stop saving like a child!
How to change our saving mentality?
Unfortunately, this is the hard part. Changing your mentality to think about the long-term is a tough challenge. In the heat of the moment, after the stressful week at work, it is so easy to convince yourself that the priority is “treating yourself” to a meal out, or maybe some retail therapy.
How can you change this? You need to take your time before every decision. Stop, breathe, think and ask yourself these three questions:
a) “What will this expenditure do to my overall savings goal?”
b) “How will I feel in X months when I still can’t afford my dream thing because I spent my money on this?”
c) “Is the expenditure something I need, or just something I want? If it is something I need, will this purchase actually address the need directly”
Examples
These may seem like two trivial examples, but it is worth considering them. I’m saving to buy a £2000 second hand car that I will need in 5 months’ time.
1) A new lovely cashmere jumper costing £100.
a) The £100 will come straight out of my savings towards the thing I really need. It doesn’t seem much, but its 5% of my savings goal and it will add another week on top of my savings timeframe.
b) It’ll be summer and the jumper will be in the loft. I probably would have worn it once, maybe twice in that time.
c) I think I need it because it is winter. However, in reality, I have other jumpers. This is just something that looks nice!
2) The pipe under the sink has burst and will cost £100 to replace.
a) The £100 will come straight out of my savings towards the thing I really need. It doesn’t seem much, but its 5% of my savings goal and it will add another week on top of my savings timeframe.
b) I will look back and be pleased that I have had running water for the last 5 months!!
c) Absolutely a need. Water is flooding everywhere in my house if the mains isn’t cut off. I need water! I have searched around for a cheaper option, but this is the best quote that I can get.
Two ridiculous examples I know. However, these three questions should help you cut out the necessary expenditure in your life – those wresting figures, football stickers and bags of sweets. That way, you can stop saving like a child and start getting that thing of your dreams.
After all, wrestling figures, footy stickers and bags of sweets are cool. But, awesome remote control cars are way cooler, aren’t they?!
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Excellent post! I think part of any winning strategy is to pay yourself first. In your example, take the 100 right off the top and treat it as you would any bill that’s due that you have to pay (water bill, electric bill, whatever). Only then will you potentially have money by which to pay for the new jumper or whatever it is, and if you can’t afford it, so be it, but at least you put the money aside for your long term goal.
Adults hate taking responsibility for their own shortcomings. In that way, we really are like children.
We all have that little child inside of us that screams sometimes when we don’t get what we want. If that child is not suppressed he/she will create a lot of financial damage.