Saving Habits- Doing it right

In an article "Parents, let your children keep their money at home" an economist opined that enforcing a child to save his allowance in a bank or a locked piggy bank may have the unintended result of the child being a spendthrift in later years. Apparently programmes that aimed at cultivating saving habits failed to have much effect.

She reckoned that children can  only cherish money in its physical form just like their toys. Hence showing them some printed numbers in a bank book or the invisible content of a piggy bank do not give them a sense of possession. Depriving them of control over their money may result in them spending recklessly once they have physical money. Instead letting the child hold the cash and discussing with them whether it is wise to part with it for some instant gratification may cultivate better saving habits.The economist did however make reservations that many researchers conclude that saving habits are not learned but more associated with personality traits and genetics.

From a personal perspective I think it is both a learnt habit and a cultural trait. Asians are more avid savers than westerners probably because they want to provide for themselves in the long run and even for their children whenever possible. From young I watched with fascination my mother pushing folded one dollar notes through a slit into a little bronze squirrel issued by a bank. When she could not push in any more notes she unlocked the door catch at its bottom and out came the money which I helped her count before banking into her account. When I was a teenager I also accompanied her to renew bank deposits and could feel her delight when the new deposit was greater than the original. In a way you could say she instilled in me the love for money. Whether it is good or bad to have a fetish for money is a different story altogether.

Just the other day over dinner my son and me were discussing about the famous delayed gratification experiment. (The Stanford marshmallow experiment was a series of studies on delayed gratification in the late 1960s and early 1970s led by psychologist Walter Mischel, then a professor at Stanford University. In these studies, a child was offered a choice between one small reward provided immediately or two small rewards (i.e., a larger later reward) if they waited for a short period, approximately 15 minutes, during which the tester left the room and then returned. (The reward was sometimes a marshmallow, but often a cookie or a pretzel.) In follow-up studies, the researchers found that children who were able to wait longer for the preferred rewards tended to have better life outcomes, as measured by SAT scores, educational attainment, body mass index (BMI), and other life measures)-wikipedia.

My son remarked jokingly that for Asian baby boomers, we not only delayed our gratification for 15 minutes. We actually delayed for a lifetime never tasting the "marshmallow"  but amassing them for our children and grand children.

Nevertheless we are trying hard to correct this excessive saving habit and amongst friends are nudging one another to spend our children's inheritance.