“There was this Good Humor truck that would come around when I was about 6 or 7 years old. You could get a stick of gum for a dime, but ice cream or a popsicle was 85 cents. Soft-serve was $1. So I would cobble together pennies to get anything.”
Even at a young age, Sorkin, like many of us, realized that everything comes at a cost, with luxury items (like soft-serve) requiring a bit more effort or creativity to obtain.
Ultimately, the lesson here is that if you spend more than what you save, you end up with nothing at all.
April is Financial Literacy Month
Now, during Financial Literacy Month, Sorkin and others including serial investor Mark Cuban, The Muse Co-Founder and CEO Kathryn Minshew, New York Times Your Money columnist Ron Lieber, and LearnVest Founder and CEO Alexa Von Tobel, are participating in the “My Savings Tip” social media campaign, sponsored by the Council for Economic Education (CEE), in partnership with social media entrepreneur and campaign curator Natalie Zfat.
Every day in April, a single savings tip from each participant features across the CEE’s social channels, in hopes to inspire children and young adults to understand and take control of their financial lives, and to raise awareness for personal finance and economic education in our nation's schools.
“Hearing directly from experienced leaders and entrepreneurs about their personal savings tips is a powerful message—we can’t thank them enough for helping to inspire young people through their messages," says the CEE’s CEO and President, Nan J. Morrison.
First Reckoning with Money
It’s likely your earliest lessons about money and how to manage it didn’t come from school, but from what your parents (if you were lucky) and family circumstances taught you.
But how did that first reckoning with money—that it was needed in exchange for goods and services—shape the development of those who went on to become financial leaders, influencers, authors, and company founders?
When I was a child, this reckoning came for me when I saw my mother write a check and hand it over to the grocery store cashier. I thought, “Wow, that little piece of paper just got us all this food.”
Only later did my mom explain that the check was merely a substitute for the amount of cash to be withdrawn from a bank account, which in my young mind, must have resembled Scrooge McDuck’s money vault, obviously.
Of course, I quickly understood the concept and value of money when I wanted something my parents weren’t willing to buy for me, as did Alexa Von Tobel, who founded financial planning site LearnVest in 2009.
“I was in gymnastics and I had four leotards. I wanted more, but my mom said no, so I would do crazy things, like take things out of my house and try selling them to make money,” Von Tobel recalls fondly.
“My mom always joked that I was an entrepreneur very, very early. I would get together with my next-door neighbors and we would sell stickers and erasers so that we could save and get what we really wanted, and that was way before she told me I couldn’t have trendy shoes like Keds. I had to get creative about making money at 6, 7, and 8 years old,” Von Tobel says.
Financial Lessons Learned By Experience
For many, financial hardship is the factor that forces our earliest reckoning with money.
Take Ron Lieber, who at a young age experienced a sudden change in his family’s financial circumstances after his parents divorced, and also saw a parent deal with job loss and instability.
Lieber recalls getting started saving early, however. “I definitely remember having an old-fashioned passbook savings account that I’d get stamped every time I deposited money,” he says.
But it wasn’t until he understood the significance of compound interest, that kickstarted his savings habits.
Lieber says that while what happened with his family was formative, an even bigger deal for him as a young adult was the first time he saw what compound interest could do for somebody who starts saving for retirement early.
“I saw a chart that compared the results of someone starting to save for retirement at 22 years old versus 32 years old—it was in a magazine that USAA used to publish for its younger members—and it just stopped me cold. It made me realize that if I could stop and scrape a bit of savings out of each paycheck, that it was going to make an unbelievable difference in the quality of my life even through my 60s. It was just a slam dunk; it was so obvious to me that I needed to do that.”
As Lieber got older, he became obsessed with airline loyalty programs, a self-described “miles nutjob,” which ultimately led to his becoming a personal finance writer.
The Key to Savings Success: Getting Started, and Keeping at It
Of course, for many reading this, the savings tips featured are not new concepts.
But for others, maybe your parents weren’t the right ones to be dispensing financial advice, or you weren’t fortunate enough to have a financial reckoning early on.
Maybe you once had a lot of money, abused it, and you’re just now getting back on track. Or maybe you haven’t started saving, but you know you need to start doing something.
“Don’t beat yourself up, it’s not your fault. Today is better to start than tomorrow. Automate that something, because inertia works in your favor,” says Lieber.
Rest assured there’s plenty of advice and support out there, as long as you make the effort to save in the first place. Lieber sought advice when he and his mother applied for his college financial aid, and his book, “The Opposite of Spoiled,” offers practical advice for parents.
Of her tip, Von Tobel says, “Savings is a muscle, because the more you do it, the stronger it gets, and it will become second nature.”
As a way to resist spending temptation, Von Tobel also practices strategic shopping. She keeps a list of what she needs clothing-wise in her phone, so that if she walks into a store, she shops only for those items on the list.
Saving Money is Always in Fashion
Fighting spending temptations instead of savings can be truly difficult, especially if it’s a seasonal must-have item, or style that may be sold out long before the sales.
You could apply a zen, “if it’s meant to be, I’ll buy it” attitude, but a more practical approach could also be Sorkin’s savings tip to save double what the item costs before you can buy it.
(Of course, the advice only applies to every day, smaller items; Sorkin says it obviously makes sense when there’s a benefit to financing for larger purchases, such as a mortgage for a home).
For those who find themselves tempted into spending on the latest, greatest, and newest items, Sorkin says, “I think if you follow my spending philosophy, you’ll always be in fashion.” Can’t argue with that.