Begin with the mustard jar.
That’s the easiest to fill because it’s usually the smallest. Next comes the pickle jar, which is a bit bigger. Then go on to the biggest, the mayonnaise jar.
That’s how Steven L. Sanders did it when he was just 14 years old, filling the empty jars he took out of the refrigerator with the quarters, nickels and dimes he saved from a part-time newspaper route.
When the jars were full–he actually filled three of each–Sanders rolled all the loose change into coin wrappers, took them to the bank and opened a savings account.
Then he kept doing it, adding to his account.
“By the time I went to college, I had saved at least $1,000,” said Sanders, who graduated from Howard University in Washington, D.C., in 1982 and is now chief executive officer of Sanders Investment Advisors in Philadelphia.
He is still saving his spare change today–“although I just use a big water jug”–and more importantly, Sanders is spreading his message of savings to young people across the country.
As a representative of Citibank’s Money Matters for Young Adults financial education program, Sanders has spoken to more than 50,000 high school students in a couple of dozen cities, primarily in the Northeast.
“Basically, I want them to walk away with a greater understanding of how to manage their personal finances,” Sanders said. “They just need the habit of saving.”
The “mustard jar” technique is a staple of Sanders’ presentation. So is a discussion of the difference between wants and needs.
“I tell them they are actually going to earn a fortune through their working lifetimes,” Sanders said. For example, a salary of just $25,000 a year for 40 years will add up to $1 million. “But they need to know they can’t spend their whole paychecks.”
For starters, they don’t get to keep the whole paycheck because of the money taken out for income taxes, Social Security and Medicare.
“I like them to understand the difference between their gross and net income,” Sanders said. “Their favorite uncle, Uncle Sam, gets to take some of the money before they see it.”
For young people about to embark on their own, Sanders uses an exercise I advocate for everyone. First make a list of all your sources of income, before and after taxes. Then make a list of all your expenses, and add it all up.
Rather than a “budget,” which few people will do anyway, Sanders advises young people to set up a “spending plan” that lists how they will use their money.
“Very few people enjoy budgeting, but everybody enjoys a spending plan,” Sanders said. A key provision of a good spending plan is to “pay yourself first,” he said, by setting money aside for savings and identifying a goal for the money saved.
“If you can identify a savings objective, such as to have $500 by summer’s end or to save $1,000 toward college, it is much easier to find ways to save,” Sanders said.
Does this sound familiar? It should, because I’ve been saying the same thing in this column for years. No magic formulas, no “secrets,” just plain common sense.
Many fundamentals of personal finance, aimed specifically at 16- to 24-year-olds, are included in a free 24-page booklet put out by Citibank, “Money Matters for Young Adults.” To order a copy, call 800-669-2635.
The Citibank booklet is among the best I’ve seen. I suggest young people send for it, read it carefully and keep it for reference. I suggest parents send for it, too, and discuss the information with their children.
And I suggest again that the leaders in our public school systems realize the urgent need to include some basic money management education in our schools so that ultimately we don’t have to depend on profit-motivated companies to teach us the basics of personal finance.
“It’s really a shame some of these things are not mandatory in high school,” Sanders said. “I just don’t understand why the schools don’t do it.” Frankly, neither do I.
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If you’d like to learn more about Humberto Cruz’s savings tips, the new newsletter, “Winning at the Savings Game with Humberto Cruz,” is now available. Mail $19.95 to Tribune Media Services, P.O. Box 4410, Chicago, Ill. 60680-4410 or call 800-788-1225.
