What’s the Point of Having Money if You Can’t Spend It?

I was talking to my daughter the other day about the importance of saving money.  She’s a spender by nature and I’m trying to instill the importance of saving money.  I point out “saving money” lessons every chance I get.  I don’t even remember this particular day’s lesson but she turns to me and says:

“What’s the point of having money if  you can’t spend it?”

It’s a valid question, no doubt, especially when you are 10 years old.  It’s hard to imagine the concept of a financial emergency when the light have always turned on, the roof over your head is always there, and food magically appears on the table each night.  A financial emergency to my daughter is not having $3 on smoothie day at school.

I honestly didn’t really have an answer for her at the time.  I used the analogy of an apple.  I said pretend you have an apple and it’s all the food you have in the whole world.  It’s the last bit of food.  You could either eat the apple or you could plant the apple and grow an apple tree.  If you eat the apple, it’s gone and you have no more food.  But if you plant the apple you could have food for the rest of your life, but you have to wait for the tree to grow.  If you take some of the apples from the apple tree and plant them you will grow more and more apple trees and eventually have enough to feed others.

It’s not the perfect explanation for a 10 year old but I answered the question.

A few weeks later I got the opportunity to point out a real life situation.  Her father and I are not together.  Her dad and his wife do not save money.  As a result they have not purchased a house because they have never saved up for a down payment.  My daughter was talking to me about their rent.  They live in a small two bedroom apartment with 3 kids.  It’s tight!  I took this opportunity to point out the value of saving money.

We own a rental property and I used that house to explain the value of saving money. The rental property is my own personal apple tree.  I told her how much money we put down on that house and what the payment is, which is about 2/3 of what her dad is paying for rent.  Our rental property is a 3 bedroom 1,9200 sqft single family home.  Their apartment is a 900 sqft 2 bedroom apartment.

I illustrated how they could be living in a much larger, much nicer home for LESS money every month if they had saved just a couple of hundred dollars per month over the past 10 years.  They could have used that saved money to purchase a house and pay even less today than they pay in rent and have more space for their family.  THAT’S the reason we save money.  So that we can have choices.  We save money to make our lives better.

Did she get it?  I don’t know.  I’ll just keep pointing out the benefits of saving and hopefully when the time comes she will choose to save money.  Fingers crossed.

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5 thoughts on “What’s the Point of Having Money if You Can’t Spend It?”

  1. With you to teach her (by your examples) I’m sure she will eventually get it. You may not know it until she is out on her own and you can see the decisions she’s making though so that kinda sucks. I loved the apple tree analogy by the way. I’ll be saving that one up for 9 years from now when I get the “Why save money” question from my daughter.

  2. Children learn a lot more from how you handle things. The observe and may not even say anything, but they are learning. You will probably find out when they are adults. Use the opportunities to involve them in these things.

  3. Travis @Debtchronicles

    We save money to have choices – what a great explanation. I honestly feel like I should pay you for that bit of wisdom, seriously awesome!

  4. I love your explanation about her father’s apartment versus saving up for a down payment — the real-life example of something that actually affects her in a small way will certainly be a clincher. I think that will make sense to her soon if it didn’t click already.

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