Traverse City Record-Eagle

July 28, 2013

Harley Luplow: Character through personal finance

Special to the Record-Eagle

---- — TRAVERSE CITY — Perhaps the most powerful education we can provide our youth is to teach them how to responsibly handle their personal finances.

Imagine if our students had solid saving and spending habits. They could potentially turn this nation’s economy around in a generation and perpetuate the US legacy of world economic leadership. recently published a survey indicating that 46% of US households have less than $800 in savings for an emergency. As the survey points out, we are truly a paycheck-to-paycheck society when only 24% of US households meet the conventional standard of adequate savings to cover six months of expenses. And, with projected US household savings rates falling in 2013 to 2.4%, one of the lowest in the industrialized world, we as a nation are ready to be pushed forward by the good financial habits we can instill in our youth.

My cheeks flushed when I read how IQ scores rose when peasant farmers successfully completed their sugar harvest and knew their families would survive another year. Studies on the psychological effects of economic scarcity are eye-opening. When one faces the continual challenge of meeting basic human needs, much mental focus and energy is needed. Those without these financial concerns, only a minority of us now, have the real freedom to enjoy life and to pursue happiness.

If we can put our kids on auto-pilot to save just a little bit over time, they can create a cushion from which they can absorb challenges that may otherwise cause them to drop out of school and forgo opportunities to improve their long term prospects. How to do this? We have three teenagers: one that spends as he goes, another that saves religiously, and the occasional saver. The ability to set goals and the maturity to sacrifice for the longer term gain seems to be the correlating factor in our household.

The New American Foundation published a summary of studies last July that focused on encouraging youth from various cultures to save and spend wisely. Payal Pathak, the author, discusses some encouraging results from which we can learn and perhaps implement applicable best practices to benefit our children and society.

The studies’ key finding was that by developing savings habits, one can lead a stress free and productive life. To develop such habits requires a conscious and structured practice consisting of a stimulus, followed by a routine, that leads to a reward. As an example, a savings habit is developed when on each anniversary, birthday, or paycheck (stimulus), one deposits 10% into a college fund (routine), so they can earn an engineering degree (reward). The habit of saving puts the saver’s focus on the future, giving them purpose and the hope of self fulfillment…that “right to life, liberty and the pursuit of happiness” thing we so cherish.

To start this good habit, there are three windows of opportunity when we as parents, teachers and influencers can take some positive action. For preschoolers, setting up a college fund is a good first step. Middle childhood is a good time to introduce the habit of savings by funding a savings account and making matching deposits. As adolescents, our sons and daughters are setting up their own checking accounts and perhaps using credit cards and renting apartments where a full understanding of their financial responsibilities is critical to their success in life.

Like eating healthy and working out regularly, good saving and spending habits can be developed over time by following the direction of role models and developing personal character skills such as will power and planning for the future.

Once the habits of good personal finance are started for our youth and reinforced by parents, educators and financial institutions, don’t be surprised to see a new purpose and poise develop in our kids. Heck, after explaining the topic of this week’s column to my 12-year old son, Harrison, he promised to save $5 each week from his paper route on a consistent basis.

Atta boy!

Business consultant Harley Luplow of Harbor Springs earned a law degree from Indiana University and a master’s in business administration from Georgetown University. Luplow can be reached at (231) 709-9000 or