The Bubble Gum Test

The easy part of financial planning is the investments.  The aim is to keep your investments simple, diversified and low cost.  The hard part for most people is simply living below there means and saving money for later.  I find some people are born savers and others are not.  Some people inherit poor money habits from their parents and then spend a lifetime reinforcing those bad habits.

How can you tell which category your kids will fall in to?  Give them the bubble gum test.

Every week I buy my kids (ages 10 and 8) a pack of bubble gum at the grocery store.  The gum is theirs to eat immediately or to save for later.  I never gave them any guidance or rules regarding the gum.  It just started out as a way to bribe them to help me unload the groceries.  But something interesting happened.  My son would save the majority of his gum for later.  I know this because I found his secret stash of gum buried in his underwear drawer.  My daughter on the other hand, would eat her entire pack of gum in a single day.

The “gum test” got me thinking ahead.  My son seems to have pretty good impulse control.  He will probably be good with his money someday.  My daughter will likely have a harder time with finances so she may need a little more coaching and guidance from me.

Understanding how we are wired financially and then taking precautions is half of the battle.  If you have a hard time saving money consider things that make it easier:  Automatic deposit of the paycheck, automatic savings plans, payroll deductions into a retirement plan.  On the spending side, I would look for ways to slow down the ability to purchase things.  Pay for things only in cash.  Give yourself a 24 hour cooling off period between seeing something you want and the actual purchase.  Make it easier to do the right thing.

How would you do on the bubble gum test?