Teaching Our Kids to Save

Why the Correct Values are Everything

By Ilan Preskovsky

This probably isn’t entirely surprising to the average reader of this magazine, but South Africa has one of the worst savings cultures on the planet. That is to say, South Africans, on average, put away far less of their salaries or other monthly income towards their savings than the citizens of most other countries. And this is a reality that existed long before the current (but, hopefully by now, receding) pandemic wreaked havoc on the personal finances of most people worldwide.

The reasons for this are, of course, manifold.

For a start, South Africa has an exceptionally high unemployment rate. Currently, something like 43% of the labour force in South Africa is without work. Obviously, people without jobs don’t have much chance of putting aside some money every month for a rainy day. No less troubling, though, is how few people with gainful employment are either able or willing to put any sort of significant sum towards their savings. South Africa’s savings culture is so bad, in fact, that a recent study found that only 6% of South Africans would be able to maintain even a similar standard of living after retirement.

For many people, saving just isn’t an option. For more than most of us would like to admit, even living “hand to mouth” is an ideal to strive for as crippling debt mounts exponentially with each passing pay day. From punishing medical aid premiums to the cost of basic groceries that seem to go up incrementally every time you enter the supermarket, it is becoming more and more expensive to live in South Africa and all the more so when you need to buy kosher food and send your kids to expensive Jewish day schools. Add to that unexpected knocks like COVID-19, and you have an entire middle class hanging on by the thinnest of threads.

Still, one of the many lessons that COVID-19 has taught us is the value of putting aside a decent amount of money to carry us through such unforeseen circumstances. Experts, in fact, recommend ideally having six months’ worth of salary in savings to keep you afloat should you ever be unfortunate enough to lose your job. Needless to say, the people who need this the most are the ones least likely to be able to afford a proper savings plan in the first place. The very idea of putting away six, or even three, months’ salary for an uncertain future will no doubt strike many readers about as feasible as a quick car trip to the moon.

According to Darryl Bennett, a wealth advisor at Sasfin, the biggest problem is that not only is it genuinely impossible for many to put money aside every month, it’s often far too late to get people in their forties or fifties to start saving. In part, it’s because it might just be too little too late to save up enough money over a couple of decades to comfortably retire on, but it’s also because the very idea of saving is so foreign to those who have avoided it for their entire adult life.

The key, as Bennett sees it, to creating a better culture of savings in our country and in our community is teaching our kids to save as young as possible. No doubt, this would require a combination of having this sort of personal financial responsibility formally taught at school and having it practised at home. But that’s the kicker, isn’t it? How do we teach our kids to save when we can’t or don’t do the same ourselves? And, though it would be great if such a subject was part of a school curriculum, it’s something of a challenge to teach financial responsibility to teenagers, let alone younger children, when, by definition, they are financially dependent on their parents?

Teach them at home and teach them young

While there has been a more concerted effort by education boards to give children in school a more practical understanding of adult life with subjects like life orientation and a move towards more outcomes-based curricula, it does seem that it’s actually far more important for kids to be taught about money at home than in school. There’s a reason why outcomes-based education has proven to be so controversial, after all.

School is, ideally, supposed to be about teaching kids how to think rather than how to simply do things – a lofty ideal that is clearly hard to reach; teaching them things like critical thinking where the benefits extend far beyond what they end up doing for a living.

What children are taught at home, however, is practical by its very nature. We learn some things from what our parents actively teach us, but it’s clear that it is their example – the very way they live their lives – that is mostly responsible for the people we become. It’s why, when we visit a psychologist to deal with whatever issues we happen to be dealing with, the jumping off point is almost always an examination of our home lives as children.

Again, though, this comes back to the question of how are we to teach our children to save when we ourselves do nothing of the sort. The answer, of course, is that your own relationship to money can be offset by taking active and simple steps to teach your kids how to be responsible with their own money and, perhaps, most crucially, instilling basic values that are more fundamental than your particular financial reality could ever be.

A recent study done by Cambridge University showed that children will have formed their overall approach to money by the time they are seven, so these are things that need to be taught young and then expanded upon as your child grows up. Fortunately, plenty has been written on the subject by experts in educational psychology, as well as by everyday parents and teachers. There are libraries of books on the subject, there are courses you can take, and, most simply, there is an endless stream of free articles available online to peruse at your leisure.

What’s interesting, though, is that along with all the many practical steps that can be taken to teach children about savings – from having a piggy bank when they’re young to older children getting “paid” for household chores so they could save up for, say, the latest expensive video game they’ve been dying to play – it’s notable how much of these writings are dedicated to instilling the right kind of values in your children with regards to money.

This may well require a shift in your own attitudes towards money, but the good news is that it doesn’t really require a shift in your bank account. Teaching kids to save is all well and good, as it turns out, but it only works if it is built upon a healthy, moral, and balanced view of money and the things money can buy. And this clearly needs to be shown rather than just taught.

Regardless of how wealthy a person happens to be, there seems to be a general consensus – one that makes perfectly logical sense – that modelling a life of entitlement, rank materialism, stinginess, financial self-destruction, and irresponsibility won’t just make your kids horrible brats, it will make them horribly spoiled brats who are also terrible with money. This is why some fantastically rich people have decided to not leave their untold fortunes to their children: a somewhat misguided decision in that it rather ignores the fact that one’s wealth has as much (and even more) to do with Divine providence as anything else, but the sentiment behind it is laudable.

Again, though, modelling the correct behaviour is no easy ask and is especially tough if you are one of the 90% of people for whom making enough money to live is an ongoing concern. Constantly worrying about paying the bills and putting food on the table doesn’t exactly make it easy to model not being obsessed with money, while wanting to give your children the world doesn’t always sit that easily with teaching them financial restraint, delayed gratification, and the value of not getting things for free.

By every measurable study, though, and by every religious and moral framework worth its salt, it’s clear that the results are more than worth the effort.

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