A Penny Saved
By Rob Wrubel, CFP®, AIF®
A few weeks ago, I took a look in my pantry to see what had been sitting on the shelf too long. A jar of flavored mustard someone gave me years ago. Olive oil in a decorative glass jar that somehow had not been used. A big jug of wine that should have gone into sangria for a party that never made it.
The jug of wine was something I could really use.
I had been thinking about a better way to help my children understand saving. My nine year old has a pretty good understanding as he is starting to earn money with lemonade stands and allowances that he can spend some of for himself (some has to go to savings as well). My eight year old daughter with Down syndrome knows the coins but as yet does not see how the coins and bills add up to anything. My four year old loves to carry her purse with her; most of the time it is filled with small stuffed animals, toys and bracelets. She knows we use money but has not learned the difference between a penny and nickel.
The jug gave me a way to help the three of them understand money and savings.
The wine went down the drain (cheap wine does not last five or more years). The bottle got washed. A few pennies and nickels came out of my pocket.
I discussed briefly with the three that the jug would be used to save money and we agreed that we could all put in change as we got it and wanted to. We talked about filling the whole jug and what we could do after it was filled.
Some money would go into savings for each of them.
The rest would be money we could use to find a special gift they could all use together.
The most important part for me is that they see the jug in our kitchen and can keep track of how high the level gets and how close we will be to using the money.
My oldest wanted to raid the jug when our neighborhood had a garage sale recently. He wanted part of the money to spend and part to use as change for his lemonade stand. Not quite what I had in mind.
The other two like seeing it every day and putting money into it.
There is something extremely satisfying for all of us when we hear the change going in and seeing the level increase.
As adults, we do not see most of our income, savings and investments. They exist on paper or in the cloud as income and assets grow and transfer automatically. It is easy to spend money when we take out our plastic and hand it over at the counter, not thinking too much about whether or not we are increasing or decreasing the overall level of our money.
Think how hard this is for people with special needs. Some of this group lacks the ability to read—making it difficult to open and email and understand a monthly statement. Others may see numbers on a page but do not have the context to know if $10,000 is a lot of money or not. My children feel rich is they have $5 in their pockets and do not understand how little this really is in a world where a movie costs more than that.
We often recommend trusts for several reasons. The most important is the ability to protect government benefits and pay for a higher quality of life with a special needs trust.
Another important reason is that so often people with developmental disabilities do not know how to handle money.
So how do we teach our special needs family members about money (and learn something ourselves in the process)?
My plan is to keep the issue as tangible as possible right now. My new glass jar, courtesy of Carlo Rossi, is my first step.
Over time, I will work with all of my children to help them make spending decisions. One family I know gives each child a budget for school supplies then lets each child purchase what they want. The school provides a list and each item must be bought. The child then gets to decide where to spend the money—buying a more expensive backpack might mean cutting back on fancier pens and pencils than is desired.
At some point soon, we will take money out of the jug and count it. We will stack the pennies, nickels, dimes and quarters and use our math skills. We will see how the large piles of pennies do not add up to as much as the small piles of quarters.
Through the process, I hope they will see how the simple process of putting pocket change and found money away adds up to a significant amount in a short period of time.
They will also learn a lesson in spending and making decisions when we head out for the big purchase. Right now, I am not sure if they will have to agree on one item between them or if I will split the money into three to let each make a decision about how to spend money.
I will also take them to the bank to make a deposit of half of the money and help them track their dividends and savings over time.
My daughter with special needs will also have an account, even though it will be in my name only. I want her to begin to learn to look at the paper version of her savings and see how that works.
Frankly, I am getting excited about counting out the change even though we have just started. This is a great way to remind me of how easy it can be to save and how hard it can be to wait to spend the money.
Rob Wrubel, CFP,® AIF® is a Senior Investment Consultant with Cascade Investment Group, member FINRA & SIPC. Cascade Investment Group is not a tax or legal advisor. You should always consult with your tax advisor or attorney before taking any actions that may have tax consequences.