I am a mother, my son is almost nineteen years old and for some time I have wanted to accomplish two things: to make him save money, and to teach him how to how to get the best value for money in life.
By all means he is astute for his age, and I started teaching him some time ago that money doesn’t grow on trees. I read books about it myself and I thought it was a good idea to try to make him responsible, even as a child, with pocket money.
My main rule was to ensure that he understood that when pocket money ends, it ends, period. There are no extras! After a few false starts - and a period of adjustment - he soon learnt that in order to get to the end of the month without being completely broke he had to budget his money and spend it little by little. As he grew up it came naturally to him to try and earn more by doing small jobs for me or for the neighbors.
So far so good. What I was not prepared for, however, was that the most difficult times were actually yet to come. In fact, now he is at university it seems that everyone is accustomed to spending much more than he does. So, I started to do some reading myself to try and understand what was going on.
More consumption than saving
As it turns out, my son is definitely not telling me lies. From the data I found it appears that the propensity of Italians to save has dropped dramatically in recent years. Just to illustrate, we went from 19.1% of the population saving money in 1996 to just 7.8% of us in 2017.
This has led to the appearance of "young adults" who have "one thing in common, the disconnect between their perceived income, often low or very low and often the result of precarious work, and consumption and frequency of consumption ". In a nutshell, we have young people who earn little, but all they earn they spend, instead of putting savings aside.
I won’t lie, this information scared me, but I didn’t give up. I searched for solutions online, and I came across an app, Oval, which I decided to use when I approached my son about his new financial habits. I firmly believe that a situation like this should be faced head-on and as soon as possible.
A mother-child dialogue on the value of savings
"Marco, do you remember that conversation we had about the importance of savings?"
"Yes mum, but I already told you, I grew up! Now I am starting to earn my own money I think I have the right to do what I want with it. And right now I want to go out with others rather than stay at home doing nothing".
"I know, and I also know that you are getting less and less comfortable with cash. You have your electronic payments, which I understand to a certain extent, but going out with your friends doesn’t have to mean spending everything! "
"Yes, but right now I have a thousand things to think about and I just can't keep up with budgeting all the time, not between trying to balance studying and everything."
"I know, and that's why I want you to take a look at this app. The nice thing about it is that it creates a digital wallet. You can connect it to your current account and then set up these really easy savings Steps that automatically transfer money out of your bank account into your digital wallet on a weekly basis. Once you’ve set the Steps you want, the app does the rest automatically, you don’t need to do anything else."
"This automation thing interests me, give me some examples!"
"Well, given how often you’ve gone out for dinner with your friends this week alone, you could have a look at the round up Step. If you spend 6.40€ on a pizza, then the app rounds up the money to the nearest euro, so 0.60 cents in this case, and puts the spare change in your digital wallet. Don’t even get me started on the fitness Step! Seeing as how looking good has become your obsession lately…. I wonder why?”
"Ok ok, I was joking! But honestly think about how good this particular step is for you. You can reward yourself for taking a certain number of steps or covering a certain distance per week! Alternatively, you can “punish” yourself by saving money each time you don’t reach your target. There’s also another…”
“Hmmm. I like it! I think I’ll take a look and then maybe download it and try it out.”
"You know that all I want is to give you the tools you need to save, and to help you realise that it is never impossible. You have to educate yourself to do it now so that it becomes a habit and....”
"Mum! Stop it, come on, it was all going so well. Don’t start with the sermons now!"
... and why not slowly start investing too?
"Ok, I promise no sermons, but I just want to tell you one last thing! This app also lets you invest a certain percentage of your savings recurrently, automatically allocating them to one or more financial products. Start by reading up on this section thoroughly, and think about how once you have some money saved, what investments might be good for you.
What I would like you to remember is that speech I gave you when I explained to you what inflation is. Now, step by step, I would like you to make good choices for your future. "
"All right, I promise you I'll think about it and take a look. Are you happy now?"
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