Sunday, April 20, 2008

Saving Some Allowance

Did you figure out how much your childhood allowance would be worth in today's dollar with the calculator I posted on Monday?

I actually had to ask my sister if she remembered what we got for allowance because it wasn't a figure that has stuck with me all of these years. I did, however, remember that we got two parts of our allowance: the part we could spend and the part we had to save for college.

It's a good idea to have the savings pass through little hands. Just like I mentioned with having to save gift money, seeing that money come to me and then stuffing it into my Mickey Mouse bank probably did some good for my financial literacy during childhood. Having the college fund magically appear when I graduated from high school wouldn't have been as beneficial because I would not have felt the pain of saving over all of those years if I didn't pass through my hands. I also wouldn't have felt the victory and accomplishment of saving and reaching the goal either.

Of course, as an adult, I find directly depositing money from my paycheck into my retirement and other savings accounts to be much more efficient (and more likely to be saved) than seeing it pass through my hands or checking account. I feel less of the pain of saving that way. Considering I still vividly remember what it feels like from childhood, I don't need to revisit that lesson so intimately anymore!

It never crossed my mind as child to "steal" from Mickey -- or to even borrow from him. Of course, Mom would have known that my deposit would have been short some cash had I done that, and I would have been in hot water! However, I don't think my child mind was advanced enough to realize she would have known. I just knew it was really Mickey's money and not mine -- at least not right away. It's the same with my retirement money now. While I protect it like it is my money (because it is!), my brain understands that it's not for current if it's not my money. And I'd be in hot water with the IRS in terms of major penalties if I did pull money out of my retirement savings.

Some of life's great lessons...Happy Financial Literacy Month!

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