Tracking my savings rate as a young kid

It all started with Mum…


I think about my savings rate in a different way than most people. It’s because of my Mum.


When I was a young kid, my Mum paid me and my siblings to do chores around the house. Pretty standard chores like doing the family laundry, vacuuming/mopping, dishes, yard work etc.. For each job, Mum would pay me 5 cents. Pretty rough… I’d have to bust balls each day before and after school, and all weekend just to earn maybe $1 for the week.

My friends on the other hand had a completely different story. Their parents would give them a pre-negotiated weekly allowance for doing one or two simple things, such as keep their bedroom tidy or do their homework. Easy stuff. Stuff you had to do anyway. Their allowance was like $5, or sometimes $10, per week.


“How unfair! My friends were getting 10x the money I got, yet I would work 10x harder than them.”


But the biggest difference wasn’t how much we got paid, it was how we got paid.


Savings Rate 101:


My mum had a very strict and non-negotiable method when it came to payday. She taught me a formula that has stuck with me until this very day. It’s very simple:


Saving rate per 5am joel's Mum

10% Charity, 45% Savings,  45% Spending

My mum made me keep a detailed ledger of every cent that I earned. We used a small ruled notebook with three columns to track everything. With a total earnings of $1.00, I would add 10 cents to the Charity column, 45 cents to the Savings column, and 45 cents to be Spending column. After writing it all down, my Mum would physically hand me 45 cents for Spending and I would run down to the corner shop and buy a small bag of candy.

It’s important to note: I never ‘saw’ the charity or savings money with my own eyes. They were just numbers in a book. Untouchable figures that slowly accumulated over time. (Every now and then my Mum and I would subtract a few dollars from the Charity bucket, and donate to the church, a fund raiser, or give to family-friends in less fortunate situations.)


Practice makes perfect:


My first cake business!

My first taste of chocolate cake, while probably dreaming up a business idea.

As I grew older, the jobs got harder, and my pay increased slightly. In my early teens, I started my first business. Mum taught me and my siblings how to bake chocolate cakes and we got an idea to sell them around the neighborhood. Mum charged us for the ingredients like flour, sugar, cocoa, and even electricity for the oven. We would bake a whole chocolate cake for the cost of maybe $1.50, and be able to sell it for like $8.00 (4 x large pieces for $2 each). After a long weekend we could earn up to $20 each, and we would always sit down with Mum to calculate the payout.

10/45/45. Every time. Without fail.

After our neighborhood got sick of buying my cakes, I went around door knocking and offering to do yard work for $2 an hour. Most people just shut the door on my face, but some people must have felt sorry for me and put me to work. I had a small paper route one summer, and a few other quick gigs until one day, at age 14, I landed my dream job at McDonald’s. A story for another time.


This Savings Rate It Continued Through High School:


Throughout high school I always had more money than my friends. Even though I was only spending 45% of my earnings, I was going to the movies a lot, buying my own clothes and sports gear, and paying for gas whenever we drove somewhere. Apart from food at home, my parents barely paid for any of my activities or expenses. (Actually, my Mum always paid for train tickets to get me to and from high school.) Everything else I had to buy for myself. Everything came from my Spending account. Savings were never touched. Charity was always given away.


“Savings” Really Means “Investments”


My Mum always told me the Savings bucket could never be spent. Ever. I just grew up thinking it was money that was simply not mine. At one point I believed that all adults had a large Savings account and the older the person was, the bigger your balance was. Oh, how I was so wrong… Today, over half of all Americans don’t have any savings at all. None. Zilch. Nothing for retirement at all. Check out these other fun facts: Average Savings By Age.


But then one day, my parents let me spend my Savings. All of it.


When I was in my last year at high school, my Savings account had about a $7k balance. I was 17 years old and all my friends were buying cars, most with money gifted from their parents. I begged my Mum to let me buy a car with my Savings money, but she refused. (If you don’t know by now, cars are an absolute money suck!)

I was smart enough to work out that I would never be able to save enough money for retirement. I had to get my savings to start growing and earning money by itself. That’s when I started looking at my Savings account as an Investment account. My parents and I bought our first real estate investment property.


“Saving is a Disease” – Daniel Higgins


“Saving” Is Really A Disease


Whenever I compared stories with kids at school, they had no idea what a Savings account actually was. Most had no idea what Tithe was. Some couldn’t even calculate 45% of any given number, let alone their savings rate! Money apparently grew on trees for these kids, like a renewable resource. 

Later I realized that even though some people “save money”, they have no idea what to do with it! They had never done the math around how long it will take to save up XXX money for retirement. Hence, my friends and I grew further and further apart financially. Technically, I’m a “Millennial”, and here’s the current financial landscape of kids I grew up with. Ouch.


So, What is the “Ideal” Savings Rate?


Back in the day, most people would just answer this by saying “Save 10 percent. Just save 10% of everything you make and magically you will accumulate enough money to live a rich and happy life.”

But I disagree. Today, I would answer this question by saying:

  • Earn as much as you can.
  • Spend as little as you can (without destroying your happiness).
  • Learn how to invest the rest.
  • Don’t save anything.


So, I’m curious, what is your savings rate? What did you do differently as a kid that help you get ahead financially today?