Veronica Dagher is standing in a grocery checkout line. Her 5-year-old wants a stuffie. It's a Paw Patrol pup, about $7, and he's collecting the set. She has covered personal finance for years and interviewed hundreds of planners. Right now she can't get a yes or a no out of her mouth.
She knows the math the planners would run, so she runs it herself. Seven dollars a week adds up to $364 a year. Keep it up for three years and you've spent about $1,100. Put that $7 a week into an investment earning 7% a year instead, and three years later it's worth more than $1,200. That's compound interest, money earning money on itself. Then comes the line we'll keep. “A 5-year-old can't cuddle a compound-interest chart,” she writes in Wednesday's Journal.
The advice keeps playing in her head. The kids' money experts say use three jars, Save, Spend and Give. Or snap a photo of the toy for a birthday wish list. The parenting gurus say you can say no and still leave a child feeling loved. Some influencers say the opposite. Kids are only young once, so buy the stuffie. She's tried a lot of it. Her son records thank-you videos for relatives. He signs thank-you notes and draws a picture on them. He rides along when toys go to the donation bin, which is where many of these stuffies end up.
Why she said yes
Two things seem to tip her. Croup, a childhood breathing illness, hit her son again and again for most of his first four years. Many of those nights ended in the emergency room at 3 a.m. He missed birthday parties and holidays. A toy bought on an ordinary day now feels like a small party for his health. The other thing is her own childhood. Her mom almost always said no. Her dad almost always said yes, on Saturday errand runs to the card-and-gift store. He died suddenly when she was a child. She still has a stuffed dog named Bou that he bought her. Her son plays with Bou now, and the head is barely hanging on. So at the front of the line she mumbles “I guess” and buys the toy.
Our read
This is Behavioral, and it's the honest version of a money lesson. The planner math is right. Small weekly spending adds up, and $364 a year is real money. But the math only tells you the price. It can't tell you the value. A $7 toy that marks a healthy kid, or a stuffed dog that links a boy to a grandfather he never met, isn't a budgeting mistake. The trick is knowing which purchases are which. Dagher does. That's why she isn't stammering about a vacation or a car. She's stammering about $7.
For the grandparents reading this, the plan item is the gift line. Many retirement budgets have one for the grandkids, and it's usually a guess. This week, add up what you spent on them over the last three months, toys and treats included. If the number surprises you, don't cut it on reflex. Write it in, so each yes is a choice you planned for. A good plan has room for a stuffie. Bring the number to your next review, and we'll put it on the page before the checkout line decides for you.