Wednesday, 8 September 2010

Why don't children save?

Why didn’t I pass on to my children the savings ethic that my own parents instilled in me? Apart from the junk food I allowed, even encouraged, them to eat when they were young, this now gives me cause for reflection.
On the food issue the explanation is simple – we adults didn’t know any better at the time. The vanished savings legacy is more complicated.
The picture on the left is a moneybox similar to the ones given to me as a child. When it was full only a can opener gave access to what would have been my saved pennies and half-pennies.
I would accompany my mother to a post office where a clerk would count the coins and the cash would be paid into my savings book.
I would be given a new moneybox and the process start again. Years later when I began work my father ‘bullied’ me into opening various savings accounts, advice for which I was extremely grateful many years later.
I now see that as a child in a period of low inflation it made sense to save my pennies. This was not the case for my kids. Their savings would have always been lagging rising prices. But this is not the whole story.
I seem to belong to a generation for which saving lost its appeal to be replaced by a readiness to spend using borrowed money. Our children were infected with this dangerous habit.
Mr. Micawber’s wise advice – “Annual income twenty pounds, annual expenditure nineteen six, result happiness. Annual income twenty pounds, annual expenditure twenty pound ought and six, result misery” - is out of the window.
Writ large the nation – both its Government and its people – are borrowed up to the hilt. Our economy is linked to consumer spending. Belatedly the brakes have been slammed on as we wait to see what measures Chancellor George Osborne will take to slash the deficit.
Longer term some of the traditional merits of saving will be forced on a nation which now cannot expect a secure old age, because of the uncertainty surrounding pensions. For this to happen we need low inflation, stable house prices, and rules that prevent banks from touting easy credit when better times return.

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