Saving where saving is difficult

[haapai]

I'm not from the third world but I spent some time there as a kid. In a few of those places, saving and investing was difficult at best and sometimes counter-productive. Returns were far from guaranteed and you most definitely could lose over 100% of your savings. In places where property rights are not strong, even small amounts of cash or goods can attract thieves who can be quite violent and destructive.

I was pretty unaware of these disincentives to savings when I was a child. As an adult, they horrify me.

Have any of you encountered similar disincentives to saving and how did you get past them? Was moving away from a tough neighborhood the primary strategy or did you come up with creative work-arounds? Did you get into the habit of immediately converting cash into something that could not be stolen or did you merely conceal your saving?

[8 Bit WWBG]

I can second this, having lived in a 3rd world country for a few years. There was a HUGE divide between the classes, and it was very hard to move up the ladder. I'm talking about a country where the wealthiest people colluded and divided up the most lucrative industries. One family controlled coconuts, another controlled sugar, and so on. I lived in a safe community, but saw many "shanty towns" -- not exactly the kind of place you can park a 50" plasma TV.

I think the mindset is one of the biggest deterrents. They believe they will never move up in life. Some parents actively discourage their kids because they can't stand the thought of the kids doing better than the parents did.

Of course even in our wonderful 1st world country, there are incentives not to save. There is always something new to consume, and savings/investments haven't exactly performed well enough to make them worth it to some people.

[haapai]

I don't remember people being discouraged by others, especially parents, although I do remember a lot of discouraged people. "It's not what you know, but who you know", was a constant refrain in one place. Generally speaking, people were education fanatics, but that might have been because there was little else to invest in.

Some of the work-arounds that people employed were amazing. I routinely heard the gardener ask my dad to hold onto a small amount of his pay for a couple of days or at least give it to him in small bills. I also found out, years later, that many of the shopkeepers were both money lenders and money holders. People could visit them on payday under the guise of paying off a loan and give them money to hold onto. They may not have made any interest on the money in their accounts, but it was safer with the shopkeepers than in their own homes. (The shopkeepers were already shouldering some pretty heavy security costs, so this was a form of specialization.) Wealthy relatives might have been used in a similar manner.

An amazing amount of foreign currency was quietly being circulated in places that did not allow foreign denominated accounts. Coins were often coveted because they could be buried.

It was pretty common to see someone buy cigarettes and immediately remove the wrapper and several cigarettes. Those cigarettes would be hidden somewhere and then the package would be carried into a social situation and offered to everyone. The obligation to share good fortune was strong but people still found ways to hold onto a portion of their income.

But it was a shockingly small portion.

[cronewitch]

I haven't been to a poor place but even on this board people say don't tell about your income and savings or your own family and friends will try to take it.

I don't tell my boyfriend what I have saved or he would think I should maybe spend more.

[❤ mollymouser ❤]

You know, the ONLY place I ever hear people discuss SAVINGS is boards + forums like these. It just doesn't seem to be generally discussed among my peers, my friends, my (former) co-workers.... except for passing comments when the stock market is tanking. I guess my assumption has always been that while they aren't talking about saving ... most/all of them ARE saving. (But maybe they're not?)

[so1970]

i grew up in a family like this and they still believe this way. they would say well if you had money like so and so you could get ahead or well yeah if a person made such amount they could save to retire, live better etc.

[Urban Chicago]

It was pretty common to see someone buy cigarettes and immediately remove the wrapper and several cigarettes. Those cigarettes would be hidden somewhere and then the package would be carried into a social situation and offered to everyone. The obligation to share good fortune was strong but people still found ways to hold onto a portion of their income.

LOL, this happened a lot in my high school! If you (well not me, naughty kids) were fortunate enough to get cigarettes, you were expected to share them. Therefore, one would have to "reserve" some for personal consumption.

[celticqueen]

There's a really great book by Ruby Payne called "Bridges out of Poverty" that discusses some of this. She talks about the different socieconomic class and how they relate to money, among other things. In the lower socioeconomic classes people are expected to pool their resources for the good of everyone. So if I have an extra $10 and you need that money to pay your light bill, I'm expected to share it with you. Whereas in the middle socioeconomic classes people are expected to keep their money separately and aren't expected to share in the same way. She says that this difference in dealing with money is similar in the same socioeconomic classes around the world. It's a fascinating book.

[Anne_in_VA]

I've learned a lot about saving and money in general on these boards and forums. My family never discussed money at all and my siblings and I were never taught anything about handling money or how to save at all. My mom, dad, step-dad, all lived hand-to-mouth and everything they earned went out the door, sometimes very foolishly.

I wish I had learned about money at an earlier age, but better late than never.

[Havoc]

I would agree that mindset is a big hurdle here in the States.

We moved from a large HCOL city to a very rural, LCOL area a little over a year ago. There are, of course, a lot of differences between the two, but the financial landscape is starkly different. There are a significant number of people here who rent, many have their entire lives. Pick-up trucks are both a social status symbol and, frequently, a necessary vehicle to have in these parts, and a lot of people seem to use their truck as the repository of their expendable cash… en route to town I drive by a number of homes (small houses, singlewides, etc) with newer model pick-ups that have a retail value close to or greater than the value of the home itself (one rental has a tricked out Eddie Bauer edition that is prolly twice the value of the beat-up singlewide), which is probably more of a statement re: the lenient lending terms of car dealers vs. mortgage requirements.

The most common definition of “financial planning” here is the low-to-no interest Christmas Club accounts offered by the banks. Banks don’t offer much help – maybe some periodic saving “specials” but otherwise not much incentive to save. There are credit unions available here, but they are much smaller and limited in scope than the metro CUs. The CU we belong to from our city days offer everything that a bank does, at much more favorable terms. The CUs here tend to offer a little better terms on loans (lower fees) than the banks, but don’t offer the same things and tend to have limited hours/accesibility. There is, of course, internet here, but not as wide-spread, and their doesn’t seem to be a comfort level for internet banking with ING or the like. We have an account with the largest local bank – they are “online”, but the only thing we can do with our account is check the ledger transactions (can’t see copies of checks, etc.) and transfer money b/w checking and savings. Houses that we have visited (we have small kids, go to parties and play dates) seem to be more likely to have a Wii or a game station of some sort than a home computer, which may be part of that equation. And on the other side of the coin, there are a disproportionate number of check cashing and payday/title loan outfits, which all appear to be staying in business just fine.

There is usually a financial planner in the larger towns – generally from one specific regional brokerage, although there is some variety in the “city” (pop 60k) an hour or so away from us. I have spoken to several of them and they have the same basic strategy – steer incoming money into one of several featured mutual funds that have large (and I mean large:5%!) front end loads and sizeable yearly expenses or, depending on your life stage, into an annuity, which also is very fee heavy. So, if someone local breaks out of the rut and decides to invest, unless they have enough personal knowledge to get through the broker’s blow-sunshine-up-you-_ss presentations, they will end up parking their money in a mediocre investment that is making someone else rich.

I think that unless if you are in a family that already has money, it is/would be hard to get ahead if this is the environment you grow up in….

[Havoc]

And I agree with Molly - finance is so personal/taboo that we don't seem to have too many conversations about money outside of immediate family and via the anonymity of internet chat boards... My parents didn’t really discuss it, other than “we can afford this/we can’t afford that”, although I learned a lot just from their example. Closest thing I had with peer conversations was with an investment club that I belonged to years ago – I suppose because we were already talking about investments, but our social time after the meetings frequently had discussions re: real estate, debt payment strategies and the like… but that was very much the exception to the rule.

Of course, one of the cardinal rules of the old MSN “Your Money” board is to never let your family know what you make/how you are doing financially, so maybe we are part of the problem…

[ysi]

My parents were always a double income family...in better times. They can't seem to grasp why a single income child today has less. My young coworkers, in debt and not managing money well-and neither did I at that age, have shown a surprising amount of resentment for employees who make more than them. Raises here are split between COL and longevity, no rewards, so everyone knows what everyone makes, so they too will one day make more than the next guy. I don't covet, but I definitely feel a sense of protecting what is mine, because these last 10yrs in America have changed us for the worse. I have been experiencing an interesting phenomenon in stores recently and never before-the checkout clerk makes sure each customer in line knows they work harder than us and make less. Happened to me at Walmart couple days ago, and at a Dollar General last week. Funny to me because with the exception of health insurance/pension, I am day to day no better off than they. There is a rising resentment in America. War in America unthinkable? Not!

[suzwantstobefree]

You know, my parents never talked about money with us "kids" either, but I knew they had it tough. There were a lot of times that we worried if we would have food and other "signs" that things were not great. I guess me and my brother have done better than our parents because we saw how much they struggled because they didn't have any savings and/or spent money foolishly. Because of their struggles, my brother and I both live below our means and have money in both retirement and emergency funds. We are better because of our parents example.

However, I can also see how parents can hold you back. My parents never thought it was important to go to college and didn't really help me - and I don't mean in a financial sense either, they didn't help me to go to the community college, fill out the financial aid forms, etc. I think they thought the way they lived was good and that the managed without a college education.

I think it is very difficult for a parent to direct a child down a path that they weren't able to find. But alas, I think I have done better than my parents and my parents did better than their parents, etc.

[cronewitch]

My dad went to 8th grade but mom finished high school. They didn't think college was something we would do, they didn't know anything about college. I told mom I was going to college when I was 17 but she just acted like it wasn't true. I had a plan and told her but she didn't believe me.

My plan was to live at home and do bookkeeping to earn money for tuition and books at community college then join the Navy. The navy would pay a monthly amount then when you graduate give you a job as a second lieutenant. I was going to be a dietitian in a Navy hospital in my plans.

My parents moved so I couldn't live at home so I went to the city on graduation day and took a job as a housekeeper then in a factory. Didn't start college until I was married a few years. My parents didn't have any idea what I was taking or anything. I wrote saying I was on the deans list but mom wrote back asking what I did wrong. My brothers joined the Air Force and Navy after high school but later got some educational benefits, never did get degrees. One had hundreds of hours of credits just didn't bother with a degree.

Our parents never did have anything to do with our education not really interested.

[suzwantstobefree]

My parents really weren't interested in my education either. I remember in High School I wanted to take a higher level Algebra class and my mom said to me - why bother with that when you can take an easier class and get an A. (I would have probably made an A in Algebra too, but couldn't take it without parental approval). I ended up starting in a community college and working my way through it and now have an MBA. YOu don't have to have parental support, but I probably would have achieved more, education wise, if my parents allowed me to push myself and accept something less than an A.

[Nazgul Girl]

Good heavens. Some of the above stories would make the angels weep. My parents were both from classic pull-yourself-up-by-your-bootstraps families with an emphasis on getting a skill, a certificate, a college degree. Anything and something.

Being a product of these parents meant I had better get excellent grades in school, go to college, come out with a bachelors degree at least, try to go for an advanced degree, and get a job that would require a "college education." I'm not sure that all that is necessary in this economy, but that was how it was.

The standard for offspring to this day in my extended family is at least a bachelors degree. You're considered stupid or incompetent if you don't get one. I don't think that's very nice, but that's the way it is. As a secondary avenue, if a person is a journeyman plumber or electrician, or a first lieutenant in the armed forces, that's considered just as good as the college degree. But, if you want to be accepted, you'd better be a kid with a plan, and be working on it.

When other high school graduates in my class were getting big weddings for graduating and not getting pregnant, or new Mustangs or Barracudas, I got a charm for my charm bracelet that was of a mortarboard ( graduation cap ), a typewriter, a dictionary, a desk lamp, and paid tuition to the nearest land grant college which I qualified for. The message was clear. Graduate from college, or else. So, I graduated.

[Wisconsin Beth]

Dec 22, 2010 17:53:58 GMT -5 ❤ mollymouser ❤ said:

You know, the ONLY place I ever hear people discuss SAVINGS is boards + forums like these. It just doesn't seem to be generally discussed among my peers, my friends, my (former) co-workers.... except for passing comments when the stock market is tanking. I guess my assumption has always been that while they aren't talking about saving ... most/all of them ARE saving. (But maybe they're not?)

I put my foot in my mouth using assumptions about money around Thanksgiving. I'm part of my church's handbell choir, along with my mom and several other ladies, all of whom are 15-35 years older than me. One is a lifeling friend of my mom's. So I've known her my entire life. My assumption was that she and her H were in a similar financial situation as my parents are - modest pensions, SS for both and low 6 figures in IRAs/401Ks. They never seemed to live extravagantly.

Apparently I was wrong. And my poorly worded comment (something about assuming her car was paid off since my parents was and she's my mom's contemporary and therefore I tend to assume she's in a similar situation) set her off leaving me no wiser to what exactly she took exception to (her age, money, her car, just a bad day.)

I have discussed savings with my bff. I've discussed remodeling bills and retirement with my older sister but not actual savings.