I remember as a kid always saving up for stuff. If I saved my allowance or gifts from relatives, I could eventually get that new video game, or a poster, or some new comic books, or whatever. Saving for anything but stuff (other than, perhaps, going to see a movie) was anathema. It didn’t even occur to me there was anything else to save for. No one discussed such a possibility with me, and I didn’t put any other thought into it. The unstated background principle was: save money for stuff that takes a while to get, and get a job for 40+ years so you can have a steady supply of new stuff. Potential retirement was something to think about sometime in the distant, distant future.
It wasn’t until I actually started working full time as a professional that the lunacy of this premise really hit me. The financial crisis I observed from the relative comfort of law school (while incurring massive amounts of debt) gave me some background concerns that didn’t fully form until I entered the working world for the foreseeable future. Watching people lose their homes, cars, and most of their stuff all because they lost their job was pretty alarming.
So, I’m trying to give my kids a different perspective about the purpose of saving money. Rather than tell them savings are for getting expensive stuff, we talk about how their savings can buy them freedom—freedom from work; freedom to travel; freedom to spend time with their family. Thus, savings for us is really that—savings forever—not delayed spending. Because when “saving” really means “saving up to spend money at X date on Y thing,” that’s not really savings. That money can’t work for you. Delayed spending doesn’t become an asset. And you don’t learn how to think about the world in terms of assets and liabilities if the plan is to always spend your money.
What I keep coming back to is my own experience growing up. I have basically no memory of 99% of the toys I had. (And I had a lot.) I remember sword fighting with my Dad. Swinging from vines on a family hike. Riding the same roller coaster over and over. Making home made noodles with my Mom. Riding an elephant at the zoo. Going on long bike rides through the verdant hills of Tennessee. Those memories, and many more like them, are the ones I cherish—the experiences. I’d like to give my kids the earliest opportunity to have the freedom to choose their own. And that begins by teaching them how to save for freedom, not stuff.