How to Save For a Car - Or a Soda Pop Hooptie
Save Money For Your 'Soda Pop Hooptie'
When I was teaching in higher education, I taught a lot of students who didn’t come from much. What I learned from them was invaluable. Being a young, new college grad, this experience taught me life can be really hard sometimes and I also learned the difference in mindset that set one student apart from another. I learned that managing your money well is partially about being taught, but mostly about motivation to change. Poor money management is a systemic problem and isn’t taught to our youth - it’s mostly learned from our families and friends. What happens if you don't have a good example?
Most of my students didn’t have a good model of how to manage their money. Although upon graduation, they'll be able to make more money, I quickly learned that if they don’t know how to manage it, their education won’t take them very far. Therefore, it was important to me to always make an effort to talk to students about money. I quickly came to the realization that altough helping students obtain a degree was important, teaching them about money was actually the best way to get them out of poverty.
What in the world is a soda pop hooptie? Well, one of my favorite stories from teaching was when I was talking to one of our students about her life. I was responsible for student retention and this particular individual was habitually late. I asked her why she couldn't make it school on time and she mentioned it basically came down to the fact that she didn’t have reliable transportation. I asked, why not? She said she couldn’t afford it. I couldn't help but wonder, how can we solve that problem and is their no way for her to improve her life? I also noticed she was always drinking Pepsi. So I asked some questions.
I asked her how much she drank and how she bought her Pepsi. She told me she bought 3 or 4 soda’s a day at school. In our vending machines, each one cost her $1.50. She also continued to drink some at home before and after school. I asked if she knew how much she spends on soda in a year. Her best guess was a few hundred bucks. So we did the math. At a conservative daily average, she agreed she probably spent $7 a day on soda. It didn’t seem like much to her. So I took that number and multiplied it by 365 days in a year and informed her she was, in fact, spending $2,555 a year on Pepsi. On top of that, if she was able to earn a 6% annual return on that money by investing it instead of buying soda, she'd have $2,640 at the end of the year. She was astounded. She said, “Shoot, I could buy a hooptie with that!” And the ‘Soda Pop Hooptie’ was born.
In talking through this she was amazed but also not fully convinced she could change her behavior, she ‘needed’ her Pepsi. But what if she just cut back a little, or instead of paying a premium at the vending machine, she made sure to bring her own from home which was much cheaper. We calculated that she could probably reduce her costs to $2 dollars a day if she just drank what she can buy at Walmart, where a case only runs $3.50. Just avoiding the vending machine alone would save her $1,825 a year.
This was an eye opening moment for both of us. For someone who didn't think she could afford to buy a new car, it was baffling to realize she just found enough money to buy a car in a year. The real problem was daily habits and building a system that would change her behavior.
Aside from saving the money, she’d need to find a way not to spend it. So we discussed that instead of carrying that money around in her purse, open a savings account and start putting the money into savings. At the end of the next school year, she came up to me, with tears in her eyes and told me how much that experience meant to her and how I changed her life. She was able to finally buy her first car with the money she had saved. Most importantly, she learned how to manage her money better and she can use that knowledge for all of her future financial goals.
"Don't make money the excuse. Actions drive our outcomes."
I gained a lot out of that conversation and we both walked away with a plan on how to change our financial lives. I cut off all my subscriptions and she quit buying vending machine Pepsi. It’s often the little actions each day that can change our lives the most.
We can all apply this lesson. It may not be Pepsi, maybe it’s alcohol, it’s cigarettes or Starbucks coffee in the morning. Most of us have a frivolous expense that we continuously partake in. A subscription is another common recurring expense that seems small each month until you add it all up.
So, what's your Soda Pop Hooptie? How can you change your spending today to save for things you really need in the future? Crack open a Pepsi (or don't) and think about it.