Kids, Money Personality, and a Tooth Fairy Savings Plan
Cashing teeth in immediately or saving up for big bucks from the tooth fairy – some kids show their financial mindset at a young age, and can even provide a lesson for adults.
Too much of a good thing is still too much. This can be as true for our attempts at a financial gain as it can in any other area. As a financial advisor, I saw many people trying to oversave.
Oversaving is taking a shot at trying to achieve more than what’s realistically possible. For example, a person who has never saved is unlikely to be able to save 25 percent of his or her income right from the start. Often when they try, it ends in revolt. A few weeks or months of high-stress living in somesuper meager fashion, followed by a crash.
The crash would be inevitable in this situation. Savings would end. A new car, an expensive vacation, or some other sort of wild expense not tied to any of their carefully articulated long-term goals would appear.
My Daughter’s Tooth Fairy Savings Plan
I am a father of three children, all young adults now. My youngest, Rachel, is my only daughter. She’s a typical daddy’s girl — the apple of my eye. And she has gone through normal events involved in growing up, such as losing her baby teeth somewhere around five years old.
When she was little, she liked to be prepared for things. She even had a book about losing teeth or the tooth fairy — something along those lines. The book also came with a little, velvety purple bag with a gold drawstring. This was a bag for her to place her teeth in when they fell out. That way they didn’t get lost or misplaced before she was able to collect from the tooth fairy.
Rachel, however, took a different tack. She didn’t want to turn her teeth over to the tooth fairy. She did not, she would not.
Rachel accumulated her baby teeth in that little, purple velvety bag with a gold drawstring, because she was saving. Not saving to keep the teeth, but saving in case she needed the money from a few teeth at once — then she could cash them in! The little bag was effectively a bank from which she could make a withdrawal on any given night, having the cash at her disposal the following morning. The Bank of the Tooth Fairy.
What’s Your Money Personality?
For some people, an inclination to save is a natural thing. This tends to be paired with a future-minded orientation, a willingness to forgo in the present for something better in the future. A future orientation is not something that everyone either has or doesn’t have — it is more of a spectrum.
Somebody can be very future-oriented or very not future-oriented. Most people are more toward the middle.
Those who are not future-oriented tend to have the most trouble saving. It’s difficult for them to see how a present sacrifice can lead to something more at a later date.
The primary difference between the future-oriented and the not-future-oriented is a difference in awareness.
If you’re future-oriented, you naturally consider the future impact of present decisions, the nonfuture-oriented generally do not.
But those who lack a natural future orientation can develop one.
Developing Habits, Regardless of Money Personality
Habits are like muscles — they develop with exercise. I have had clients try several tricks to increase their awareness of their impulse spending. One idea is to keep a rubber band around your wallet. This can serve as a reminder to consider the options before opening the wallet.
Another simple step is to put credit cards in a plastic container, fill it with water, and place it in the freezer. The credit cards are still there for an emergency — their real purpose — but impulse spending will likely be checked by the work required to access the cards.
Rachel’s Money Personality
Rachel had a natural future orientation that drove her to forgo the instant cash that the tooth fairy would surely provide. Somewhere in her stuff from her early childhood, there is the small, velvety purple bag with a gold drawstring. It still contains those baby teeth. She never did cash them in. I bet the comfort of knowing that she could do so on any given night was somehow worth a lot more than what she would’ve gotten if she had cashed them in in a hurry.