One day after dinner, my parents were talking about someone who had stored thousands of dollars in their sock drawer without telling anyone. I can’t remember why they were talking about it; I was young after all. However, I remember thinking, “I have money that I’m not sure where to put it. If sock drawers are a place other people keep money, perhaps that’s the place I should keep mine.”
The funny thing about keeping your money in your sock drawer is that you tend to forget how much you actually have. You can’t see it very well, because of all the socks, and the money tends to slide around the bottom, so trying to find it all you will likely miss some unless you empty the drawer. In order to counteract this effect, I asked for a wallet and was given my dad’s old one. I kept enough money in there in order to buy two toys. The rest of my money as well as my weekly allowance for doing chores around the house was dutifully put into my sock drawer.
This was my first experience at a system of saving money.
When it came time for our weekly Toys ‘R’ Us trip, I would bring my wallet with me, which now only had a reduced version of how much money I actually owned. If I spent that money, I’d have to go into my sock drawer and find more money to replace it, which, for me, was a bit of a deterrent to spending money.
After a year or more of this, my parents realized that that I had been saving for quite a long time. They came to me in the evening and asked how much money I had. I was pleased to get to show them my stores and took my dad up to my room where I proceeded to remove all of my socks and uncover a large collection of five and one dollar bills.
With great surprise, my dad and I counted the money and to find that I had accumulated three-hundred dollars in my sock drawer.
My instinct was right. Lessons on opportunity costs and experience with the value of money had taught me that saving money meant I would be able to have more flexibility in my purchases in the future. However, my execution was wrong.
My dad explained to me that sock drawers are not safe places for money.
Although drawers and other hidden places around the house might be able to protect wealth from physical thieves, inflation is the dastardly villain who will raid it. As a child, I did not know of such economic forces let alone that they had an influence on my humble stash.
I’m glad that my parents encouraged me to begin real savings when I was young and my expenses were low. After finding my sock drawer stash, my parents opened a checking account for my benefit. They told me that the interest on my money would help combat inflation and that, one day if I kept saving, I would have enough that I could give some of my money to dad to invest in the stock market so I not only keep up with inflation but also beat it.
Teach children early to save and where money should be kept.