This article originally published in The Northern Daily Leader on 26 November 2011.

Being a parent and having total responsibility for another (small) person’s life is a daunting proposition. We all want the best for our children and it can be intimidating to realise that much of their journey through life will depend on the job you do when they are young. Raise a little monster and you might be having a future family Christmas at Long Bay jail; do it right and your little darling may let you join them aboard their private jet on the way over to Tahiti. Inspired by this thought, I recently sat down with my son Jack for his first lesson in basic principles of finance. They say you’re never too young to start learning and I was pretty sure Jack was ready. Unfortunately our first session was a disaster – Jack seems to have a very short attention span and was more interested in the TV. He also ate part of my notepad and had a little vomit on my HP business calculator. As far as productive learning experiences go, it probably ranked zero out of ten. Still, I shouldn’t be too hard on him, he’s only eleven months old and perhaps wasn’t quite ready for a discussion on the various interest rate hedging strategies used by banks.

Starting early is important not only in education, but also in saving and investing. The earlier you start saving up for something, be it a new car, a nice pair of shoes or your retirement, the more chance you have of reaching your goal. Now we all already know this, so why is it so hard to do? It’s simply a trade-off between immediate and delayed consumption. We all want it now! Having to wait a week, six months or forty years before we get to spend our savings is no good, we want it all now. Researchers have of course considered this problem, and found that our willingness to delay consumption depends on the nature of whatever it is we are saving (or paying) for. It turns out that we’re more likely to happily delay buying something if it is fleeting in nature (they strangely used a kiss from your favourite movie star as an example), but less happy to delay it if it’s more permanent (new shoes or a shiny red sports car for example). The message is that we can increase our chances of achieving our savings goals if we’re more aware of the nature of what we’re saving for. The other message that I got is that vomit and calculators really don’t mix.