As a child, your only expenses are things you want. If I'm 10 years old and I get $5 a week in allowance for doing specific household chores, then each week I have $5 to blow or to save to blow on something bigger later. I don't have to make that $5 pay for my meals for the week. My mom isn't charging me rent (because I'm 10). My $5 allowance isn't being stretched to pay for electricity, water, gas, phone service, cable or Internet. Those things just exist in my world. If I get sick, mom gets me over-the-counter medicine or takes me to a doctor. I'm not worried about how much money I'm going to lose by missing a day of school; I just spend the day in bed and my only concern is how quickly I can get back to not throwing up.
Ergo, the concept of saving money is an act of responsibility needs to be understood more clearly by both child and adult. The child must be made to see that he is only able to spend his allowance on things he wants because someone else has taken care to pay for all the other things that make his life possible. And the adult must realize that it's entirely possible the only lesson being taught to the child is that money is spent on things we want; that things we need are just kind of taken care of in the background.
Will a five year old understand mortgages? No, but he will understand that we have to pay for our home just as we have to pay for our Lego X-Wing. So maybe what you do when you introduce the concept of allowance is double the figure you intend to actually give him, and then account for where the other half went.
"You get $10 in allowance. $2 goes toward this month's rent, $1 for water and electricity, $1 to pay for your food this week and $1 to pay for the gas we spent going to school and practice. That leaves you with $5."
|Lego X-Wing = Status. Also, about as expensive as a mortgage.|
For a younger child, of course, you may not break it down so specifically, but you convey the idea that you were going to get more money except it had to be spent on things you had to have. Maybe even give the child the whole $10, and then make him give you $5 back. That sounds a bit absurd and petty, but we need to remember that children connect with the abstract through the practical. He will understand where money has come and gone better if it physically goes into and out of his hand.
That's enough of my unsolicited parenting advice for now, though. Back to the grown-ups who caused the 2008 economic collapse. The problem with the "live within your means" admonishment is that our entire economy of the last several decades has been built on enticing consumers not to do this. See, if we only bought what we really needed, we would never have produced the majority of the crap that has cluttered our stores, our homes and our landfills. If we only bought what we could afford with the money we currently hold, most people would be in their late 30s before they ever saved enough money to have much more in their lives than the absolute essentials--and that's provided they stayed healthy and didn't have any major setbacks along the way. Without loans, most Americans would never have access to college. See, as a child you're not having to spend any of your allowance to pay to go to school--and the idea of having to pay to go to school would probably blow your mind.
My generation and the one coming up behind us are often accused of having skewed priorities, believing ourselves "entitled" to own an X-Box. I don't deny that we could benefit from taking a second look at our priorities, but that's true of everyone. Did my mom really need to buy a swimming pool 16 years ago that wasn't even opened in most of the last decade because it turned out to be too much hassle? No, but it was her tax refund and she didn't have to listen to anyone else about what to do with it.
Moreover, let's go with the X-Box. If my generation doesn't make buying an X-Box a priority, then the companies that make the X-Box (Microsoft) and its accessories and games (like Activision and EA Games) make a whole lot less money. In fact, without my generation there probably isn't even a video game industry right now--certainly not the lucrative business it is today. Just as "The Greatest Generation" found nickels and dimes to go see movies during the Great Depression, my generation has weathered the last decade by playing Halo and Guitar Hero. So before you go bad-mouthing the buyers, remember they're the ones who have made possible the fortunes of those who now laud themselves for being "successful." So don't stand there all high and mighty about how you've been successful by being responsible. You've become rich by preying on the irresponsibility that you now want to demonize.
|A parking lot full of Ferraris. Photo by Dan Smith, from Wikipedia Commons.|
Lastly, as much as I know it's wrong to want to keep up with the Joneses, we all know why we still try to do it. In a capitalist economic system, ownership is how we measure our status and status informs our sense of self. You may be tempted to say that's nothing more than nonsense, that it's some kind of cop-out to avoid responsibility. That's easy to say when you're happy with your status. In every hierarchical society--and nearly every society in humanity's past has been one--status has been the objective. Whether this was defined by land ownership, number of crops planted and harvested or how many animal skins you collected in the trapping season, there were clear winners and losers within the society and everyone has always wanted to be a winner. Wisdom tells us that being content is more valuable than being happy and there is truth to that, but we need to quit acting as if somehow we're above an innate element of human nature just because we know how silly it all is.
Like it or not, every advertising campaign is built on one simple idea: exploiting our insecurities as individuals. At some point we all fall prey to the taunt of snobbery. We feel embarrassed to wear clothes from Target around coworkers dressed from the mall. We hope no one sees our '96 Taurus near the parking lot of Ferraris. We consider it a night out if we stop at Taco Bell on the way home from a movie, and then feel lame when our friends regale us with how fabulous the newly opened Lithuanian restaurant was, complete with grilled borscht and "amazing" wine list. These things themselves are not important to us, but they do speak to status and in a capitalist society we buy our status.
Is it a weakness? Perhaps, but I think it's most accurately described as an inherent element of the human psyche. You think Swims Like a Goat didn't lie in his tee pee at night wondering if he would ever have as many feathers in his headdress as Chief Smokes a Lot, or if he would ever catch the eye of Dances with Poles? Every person in every society has always had these insecurities. We just make a ton more money exploiting them today. A hundred years from now, our descendants will laugh at our iPods the way we wonder how anyone ever thought eagle feathers were anything exciting.
|She looks bored. You don't have enough feathers!|
"Lovers (Indian Love Song" by Eanger Irving Course, 1905
There was a time when an American could go to work and be well paid for his time on the job. He could put food on his family's table all by himself; if his wife wanted to work it was more because it fulfilled her than because they would starve if she didn't. He could work his way up through the company because his hard work was recognized and rewarded, and he retired with a gold watch and a pension. He didn't need credit. None of this is still true today and it is disingenuous for business owners and investors whose fortunes are made peddling status symbols and undermining their own employees to now chastise Americans for buying their products and for not being better paid. We keep hearing that the American worker demands to be paid too much money to do a job, and the truth is the reverse: we're not paid enough, certainly not in this society.