Your DNA can say a lot about who you are. DNA dictates how you look – what color your eyes are, whether your hair is curly or straight, and if it will fall out at some point in your life. It can also impact your personality – if you are extroverted, what kind of movies you enjoy, and the types of jokes you think are funny. Your genes can also make you predisposed to different cancers, addictions, and other habits. One genetic predisposition I have been increasingly interested in is the savings gene.
What is the “Savings Gene”
The savings gene is the part of our DNA that predisposes individuals to want to save their money instead of spend it. In one study, they found that maternal (identical) twins saved money at similar rates to each other than did fraternal twins. It helps explain why, even though my brother and I were raised in the same house with, relatively, the same upbringing (albeit a few years apart) we have very different habits with money.
Growing up, my brother would always try to order the most expensive item on a menu when we went out to eat. I, on the other hand, would typically pick something out that I liked and never something too expensive. When it came to clothes, I don’t remember caring about the brand name on my tags, while my brother was all about Tommy Hilfiger and Aeropostale. We each started our Roth IRAs when we were 16, I added a little to my account the first few years. While, after 18 years, my brother has not contributed a single additional dollar to his account (last I checked). These differences we had as kids, and how they manifested themselves as adults scares me a little bit for my own children.
What about my kids?
It worries me that I may have less of an impact on my children making sound financial decisions than I would like. Will they grow up stashing away their quarters in their piggy banks? Or, will they spend their allowance as fast as they receive it? Will they grow up and struggle with money, living paycheck to paycheck under constant fear that they are one money emergency away from losing everything? Or will they create an emergency savings account? Maybe use their dad’s advice and implement the 3 bucket emergency savings system. Maybe, no matter what I do, they just won’t have the savings gene and will struggle with finances their whole lives. Long after I am gone, they will continue to work at a job they can’t leave because they never saved for retirement.
Do I have the savings gene?
I think I have the savings gene, with some spending tendencies. For as long as I can remember, I have saved my money (usually only to spend it on a big purchase). From 7th-9th grade, I skipped lunch and kept that lunch money in my underwear drawer. For my first job, I bagged groceries at the local grocery store for cash tips. I kept that cash in an old shoe box under my bed and saved up until I had enough money to build my own computer. After my spouse and I were married, we saved $500/week for months until we could spend it all on an extravagant vacation. I am a saver, I just need to have long term goals for that money in order to keep my grubby paws off of the money once it piles up.
Do you have the savings gene?
Do you think you have the savings gene? Here are some questions to ask yourself:
- Did the money in your piggy bank always grow when you were a kid
- When you were younger, could you reliably save your money for a big purchase?
- Did you always do all of your chores to earn every last nickel of allowance?
- Did you start your own lemonade stand/car wash/etc. to earn some extra money?
- When you went out to eat as a kid, did you notice how expensive some things were compared to others? Did it influence your decision on what to order?
- Would you not wear certain clothes because they were not a particular name brand?
- Was money a factor when deciding what to do after high school?
- When you come into some unexpected money, is your very first thought about what you have wanted to buy but couldn’t afford?
If you’re a saver – congratulations! You will have a much easier time making smart money decisions. If you think you’re a spender – fear not! Just because your temptation to spend money is stronger than a savers, doesn’t mean you are doomed to never save enough to retire. It’s important to know your tendencies with money so you can better prepare yourself to avoid making poor money decisions. If you are a sucker for a sweet Groupon deal, unsubscribe from their emails! If you can’t help but spend any money left over after payday, set up automatic deductions to a savings account that you don’t check regularly. You won’t spend it if you don’t know you have it.
Now you know. What are you gonna do about it?
If you know what your tendencies are with money, you can put yourself in positions to succeed. If money “burns a hole in your pocket”, don’t keep it there. Learn how to hide money from yourself.
I am weak when it comes to the Target clearance rack. Even though I don’t need any clothes, I can easily walk out of the store with 10 new things. Because of that tendency, I limit my Target runs, and actively avoid the clearance section when I’m there. In order to become a more effective saver, I take steps to limit the tempting money spending situations I can find myself in – it helps. That’s how I plan on addressing money with my children. Help them discover what their tendencies are, and teach them tricks to succeed when opportunities to save money present themselves.
Whether you have the saving gene or a spending gene, you are still in control of the choices that you make. I’m thankful for that fact. Over the next 4,086 days we are going to have a lot of opportunities to make good choices with our money. Hopefully those choices lead us to our $1,000,000 retirement account goal.