Every time a child is born, celebrates his or her first communion or just a regular birthday, and particularly when Christmas comes around, we ask ourselves what gift we could give our loved ones, young or old, or what we could ask the Three Kings or Father Christmas to bring us. For most adults this is not an easy task, because almost always –whatever the family’s financial condition– the answer tends to be: “but they’ve got everything”. Well, in my opinion the answer is that there’s at least one essential thing most people don’t have.
I’ll tell you what I mean. Many of us who are a little older had a rather frugal childhood, so we didn’t have everything, and unfortunately this is still the case for a part of our society today. Most of us endured the scarcities and hardships of the long post-war period and that’s why we were brought up knowing how to save. The expression “don’t spend it all” has been seared into our brains since the first time we received our pocket money.
And at least in my case, the family slogan took effect. My first car –third-hand–, my first and very modest house, and of course my first value investment were the result of hard-won savings.
But as time has gone by, I’ve seen how that sacrifice was really worthwhile. Because 25 years later, thanks to that long-term investment, I now have a car, a house, and much more in the way of savings that allow me to live much more comfortably than if I had just frittered away all the money I earned over those years.
This is why I’ve always tried to instil in my daughters the value of saving. And to get them started on this path, when both of were 11 I asked the Three Kings to make sure that their big present was an account in a value investment fund.
Certainly a really weird present, as my elder daughter said. But now she’s fully aware of how fantastic that present was, even though she didn’t understand it at the time. And the younger one is already beginning to realise that saving is important at any time in her life.
But this type of gift doesn’t need to be just for children. Who hasn’t asked for money as a wedding present because they already had their house set up? And who doesn’t have a huge party for their 40th birthday as though they’d never had any other birthdays before that? Why not make them a present of a share in a value investment fund or a small contribution to their pension plan, and if they don’t have one, why not encourage them to set one up with our monetary gift?
The new regulation due to come into effect will make it possible to recover the money from our pension plans from 2025 if we need it for anything. It will no longer be obligatory to keep it there until our retirement except in the cases covered until now by the law.
This Christmas, don’t give a present, give a future
Only a few days ago I was horrified to read in the newspapers that this month the Social Security system will again have to dip into the Reserve Fund and the Treasury Credit to pay the 18.7 billion euros owing to pensioners in December.
When are we going to realise that our pyramid pension system is unsustainable, and that sooner or later we’re going to need to have our own savings to be able to survive during our retirement? Above all, because people who are already drawing their pension and those who will be lucky enough to draw it in the future can see –or will soon see– that with the passing years they will lose purchasing power because their pension grows more slowly than the CPI.
This means it’s essential for us to learn to save from a very young age. It’s the big issue still waiting to be tackled in our school education. The political parties should take note of that gap in our schooling. It’s not enough just to preach publicly –they must make laws to oblige schools to teach children to be financially prepared in life. This would ensure that there will never again be people who buy preferred stock en masse, or get taken in by Afinsa-type fraud, to give just a couple of examples.
For all these reasons I’d like to encourage anyone who’s already aware of the importance of savings to give a different kind of gift this festive season. This Christmas, don’t give a present, give a future with a share in a value fund or a pension plan for your children, spouse, siblings, friends and any other loved one. Time will prove you right.
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