In my family, we try to stick to a daily routine. That daily routine usually consists of “wind down” time right after dinner.
Wind down time is an attempt to get our 20 month old son to relax and ease into bedtime. While our attempts are grand, our results are usually mixed.
The other night, while flipping through this classic book, I realized there are subtle financial lessons hidden within its pages.
For those of us with children and/or grandchildren, the story of Corduroy is probably familiar.
It is a classic picture book originally published in 1968. It is the story of a teddy bear who lives in a large department store and is waiting for a new home..
One day, a young girl named Lisa is shopping with her mom and she falls in love with Corduroy. She begs her mom to purchase him, but her mom refuses.
She had already “spent too much” shopping and besides, Corduroy was missing a button on his overalls.
Corduroy vows to find his button and Lisa vows to bring Corduroy home.
The next day, Lisa returns to the store and using money she had saved in her piggy bank, purchases Corduroy. In addition, upon bringing Corduroy home, Lisa sews a new button on his damaged overalls.
I would argue that children should be exposed to basic personal finance principles as soon as they can understand. There are lessons to be learned from the Corduroy and Lisa.
First, Lisa’s mom exercises impulse control by not jumping to purchase Corduroy for her Daughter.
We are constantly bombarded with high pressure marketing from external sources and even higher pressure prodding from our Children. Controlling and separating our emotions helps us to control and limit impulse purchases.
Second, Lisa teaches us the importance of saving, planning and the exchange of value.
Lisa uses her piggy bank money to purchase Corduroy. She had saved her money for a future need and because of her financial savvy, was able to fill it.
In addition, by using her own money to purchase Corduroy, she experienced the exchange of value where you are forced to turn over your own money (a loss) for something you want (a gain)..
Finally, Lisa displays her frugal nature when she decides to fix Corduroy’s overalls on her own. She sews a new button on for him, and avoids having to pay a tailor.
Many of us are quick to discard broken items or hire “professionals” to fix things that with a little effort, we could handle on our own.
I respect and admire Lisa. She was able to purchase her bear without using credit supplied by her mother with no emotional lien placed on her happiness.
While the principle is simple and may seem silly, the piggy bank is possibly the most important financial tool available. It is the very first step in the long walk of our financial lives. It could help ensure a healthy journey.