Hi there, Mrs. 1500 back again to ask the Monday morning question. Today, I play Freud and ask about your mother. And father. and how your upbringing affected your relationship with money. But first, let’s go back to last week, when Mr. 1500 told you about a potential investment property, and asked for creative financing ideas and creative capital gains tax solutions.
Mrs. PoP from Planting our Pennies owns a rental property and receives letters like ours regularly. She wondered if anyone ever actually sold property like that, and says she would never sell off market. I know Mrs. PoP personally, and I sent her an email asking to explain her position. (I live in an ultra super red hot market, and every house that comes up on the market is almost immediately under contract. Just about the only way to avoid a bidding war is to buy it off market. But I forgot that my market isn’t the typical market…)
Mrs. PoP did a great job of explaining that in her market, there are a lot of houses available. There are also sleazy people who think they can take advantage of uninformed sellers, and this is a more popular way of doing that, dealing directly with the unrepresented seller and giving them the shaft (my words, not hers.) Another reason she wouldn’t sell at this time is because she views the rental like a bond – a slow, steady income. The offers they are making to her aren’t close to what she considers the true value of the house, using DCF (Discounted Cash Flow).
Thanks, Mrs. PoP!
Fervent Finance believes the best option for us is for the seller to carry the note. I completely agree. We wouldn’t have to sell a bunch of stock to finance the sale, which we would otherwise have to do because Mr. 1500 just changed from an employee of an established company, to being self employed in the eyes of the lenders.
Reader AJ had an interesting suggestion, that the seller puts the property into a stand alone LLC, then sells us 95% of that LLC. We would then use the LLC to get a loan for 5% of the value of the property, thereby relieving her of her property, without triggering a tax obligation. That is an interesting thought, AJ. I don’t know if it is legal, and would have to run it by an attorney. But this is exactly the type of creative ideas we were looking for when we asked.
We will keep you posted, because when it comes to finance-related experiences, we share all.
And now on to today’s question: how did your upbringing affect your relationship with money?
Mr. 1500 grew up poor, and knew it. His dad was a union member, and was laid off frequently. There wasn’t a lot of extra money lying about. It really hit home in high school, where half the student body came from wealth, and the other half had little.
Mr. 1500 hoards money. He isn’t a tightwad – he will spend money where he finds value. He spent $900 on a road bike, which he rides frequently, and he spent $1,000 on his mountain bike, which he also enjoys often. This may sound a tad high for those of you who don’t ride regularly, but both bikes were purchased for nearly half off the MSRP. So he shopped around, but spent what some may consider quite a bit of money. (Lest you feel I was left out, my road bike cost me $1,300 – but it was brand-new yet two years old when I bought it, so I received a hefty discount. Turns out having legs like a penguin can work in your favor when buying a bike.)
Mr. 1500 is reluctant to pull the trigger and leave his well-paying job because of his experiences with money as a child – specifically not having any.
Over Thanksgiving, we met No Nonsense Landlord in person. Several things he said led me to believe he makes a fairly decent wage at his day job. On top of that, he is a landlord and seems to be able to cover his expenses and have a lot left over just with the rent he collects. I asked him about his childhood, and he said his family didn’t have a lot of money growing up. He actually gave examples from his younger days, and they didn’t make me feel warm and fuzzy. He, too is hesitant to retire, even though he would probably be just fine with zero income.
On the flip side, we know Jeremy, who grew up with enough to eat, and not much else. He is now a highly compensated employee, bringing in more than $250,000 a year. He has very little saved for retirement, but spends money like it comes out of the tap. He is the source of this amazing quote: “I do whatever I want. I will figure out how to pay for it later.” He has been to The Super Bowl, The Olympics and The World Series in addition to holding season tickets to the local MLB and NFL teams.
To make matters worse, his wife used to do the same job, so at one point they were pulling in more than $500,000 a year! At the same time, I was raking in $33,000 a year and doing just fine. Can you imagine making that much money, but living like I was? Retirement funded in 2 years. I don’t like to ask about retirement funds, because it isn’t my business and I don’t want to cry about how little they have saved, but if the have more than $50,000 in retirement accounts I would be shocked.
Matt, on the other hand, grew up rich. His dad was a very high level executive, and really brought home the bacon. He has five siblings, and all five are very well off, having reaped the rewards of their father’s hard work and gone to college to get advanced degrees. One of his brothers is the attorney for a multitude of CEOs and is regularly flown on corporate jets to meet with one or another.
Matt doesn’t pull in as much money as his siblings. He is a computer programmer, working with rather antiquated software. Some of the largest companies in the world also work with antiquated software, so his skills are still needed, but not in high demand. He doesn’t let the fact that he doesn’t make as much money as his brothers affect the fact that he spends as much as they do. One brother bought a lake cottage so he did, too. On the same lake. (Although to call his brother’s property a cottage is really stretching. It is an enormous home sitting on a large amount of lake frontage.)
I think growing up without money will give you one of two mindsets: Save like crazy so you don’t have to go through that again, or spend like crazy because you didn’t have anything when you were a kid. Since you are here, you are either a saver, or trying to be one. How did your upbringing affect your relationship with money?
My parents made good / decent money when I was growing up. They saved and invested for retirement and both have retired around 60. They instilled saving skills in me, but my sister is not quite there yet.
As kids we knew the roof over our heads wasn’t going anywhere, had food on the table, but got hand-me-down clothes from friends and family, shopped with coupons, and large purchases were saved up for. I am 100% grateful for how I was raised.
This sounds similar to the way I was raised. I didn’t know it wasn’t cool to get clothes at a garage sale until I moved to a very snotty neighborhood. I distinctly remember a girl in 8th grade saying to me, almost accusatorily, “Your sister is wearing Guess? jeans!” I was thinking to myself, “What are Guess? jeans?” but I replied, “So?”
Another girl was making fun of the bumblebees on my jeans. I told her they were covering up little holes in the jeans. I can only imagine the ridicule that was dished out behind my back. I don’t care now, but I am glad I didn’t know what those girls said about me back then…
This showed up as Mr. 1500 replying, but it is really Mrs. 1500 saying that she had bumblebees on her jeans…
Oh man – my parents raised me with a healthy attitude towards money. We were nice, solid, middle class with both my parents working. Had to save for vacations, clip coupons, tired to buy stuff on sale… but I don’t think there were ever any serious worries. When I was old enough (middle school) my parents gave me a set budget for clothes – that taught me how to shop sales and plan with money. Any entertainment money had to come from my job in high school. They did a great job, I think. I could’ve saved more in my 20s, but, oh well. My biggest lesson that prepared me for FIRE, was watching how hard my Dad worked and how he devoted himself to his job. And then his company got bought and sold and reshuffled, and in his late career he was treated like a number, eventually to be forced into early retirement… that made me realize that companies don’t care about you, they wont take care of you, so there is no need to give them your heart and soul. So, I save and plan, so that I never have to pour my whole being into a job just to keep food on the table for my kids.
Mrs SSC recently posted…January 2015: Our money went where???
I think back when your dad first started working, companies DID take care of their employees because those employees stayed in the same job forever.
I think there is more of a work/life balance now, although it is still easy to get wrapped up in your job. Mr. 1500 worked with someone whose life was so intertwined with his job that when he was let go, he cried hysterically.
And the company no longer looks out for you, they only care about their bottom line. There may be companies out there that care, but they are anomalies…
This is the whole reason for my journey. I know I have a messed up relationship with money and so much of it is from how I saw my dad use money. He liked to leverage risk. When I was born, he was making bank, living the high life. 2 years later when my parents divorced, he had $13. It took him 10 years to build another successful business and then I got to live the high life with him for several years (Awesome trips FTW!) 5 years ago, everything fell apart again. Hard.
Because of all this, I save as much as I can and paid off my student loans as fast as I could. I’m extremely risk averse. I’d rather take the safe slow route, than “go big.” Because I’ve lived the high life, I’ve been able to keep what I want and get rid of the rest. I don’t miss the outings, the shopping, the parties or the food, but I loved the trips. So now I’m working to build a solid financial foundation for me and Hubs and we splurge on trips. I have a travel problem. 🙂
Kate@GoodnightDebt recently posted…2015 Goals
Traveling is something we spend money on, too. Travel hacking can help stretch those dollars further. Talk to Brad at Richmondsavers.com about his free travel hacking consulting services. He is so nice and knowledgeable.
This is a great question. It seems our upbringings really do impact just about every area of our lives, something I realize more and more as I age (feeling especially elderly as I’ll be 31 next month 😉 ).
I was raised to be frugal, but my parents always had enough money. We never went hungry or felt a serious pinch. I remember drinking powdered milk (because its cheaper) and going camping for vacations, but I didn’t equate this with any type of poverty or lack, it was just what we did. My parents made our childhoods really fun with lots of board games, frozen pizzas, camping, and creativity. It never occurred to me as a kid that they were doing any of these things to save money; I really just thought this was how people lived. I’m deeply grateful to them because it made me naturally frugal and it gave me a healthy relationship with money.
I’m a bit more of a tightwad than Mr. FW, who did grow up rather poorer than me. Still middle-ish class, but he remembers his parents pawning things in order to pay bills. However, both of our parents made more money as time went on and are both solidly middle/upper middle class now, which I’m sure impacts our belief that we too will be fine in our later years.
That being said, Mr. FW and I are extremely conservative in all of our estimates and feel much more comfortable having a large cushion at all times (and especially in early retirement).
Mrs. Frugalwoods recently posted…Frugal Homestead Series Part 3: Why Vermont?
Like I said in an earlier response, I didn’t know it wasn’t cool to shop for clothes at garage sales until I was in 8th grade. We got up every Saturday morning, and while us kids watched TV, my parents had a map and the newspaper and scouted out that mornings route to all the garage sales they wanted to hit.
My mom was an extreme couponer before it was cool. I remember she got her picture in the newspaper with our van loaded to the hilt with all the free groceries she got. I thought everyone did that.
We had an enormous vegetable garden, my dad did all the work on the cars, and mowed his own lawn. My mom canned up anything she could get her hands on, including the neighbor’s cherries. Canned cherries look pretty gross…
I think that it doesn’t matter whether grew up poor, rich or in-between: what matters is how we were taught to look at money. Were your parents mindful and thoughtful about their spending, or not? If they were rich but spent whimsically without purpose, chances are that you learned it’ll just work out. If you were poor and your parents couldn’t manage with what they made, then you may have learned that there is no point in trying to save, it’s out of your control. Or your parents can teach you to save whether you have a lot or a little, and spend the rest wisely.
I grew up very poor in a highly-educated family, due to mental illness. There was no consideration to teaching the kids about money, just to try and survive. Sad, but true. Our Christmas presents would be one or two nice doodads mixed in with toilet seat covers and socks. It was okay, we were used to it. But the good news is that we had a lot of love so none of the rest really mattered to our mental health.
But the bad news is that we had no idea how to manage money. I went from free spending and in debt to now hoarding it and trying to find balance – to enjoy it now and later. My sibling has a huge salary and saves just enough, in my opinion. We have banded together and learned about finances ourselves. And we teach each other, constantly. It’s been a nice bonding experience.
Scooze, you said it so well, I cannot add anything to this.
I grew up poor and knew it. My mother depended on me emotionally from a very young age, so I knew all about my parents’ troubles. I would like to say my parents were both frugal and fun, but I don’t think they knew how to have fun. They were and in some way still are stuck in the grind. It taught me to be strong and independent and to take care of my stuff, although I might have matured a bit faster than others. I can sometimes be a bit conservative with money and may stress over numbers. I’m trying to be better though!
SavvyFinancialLatina recently posted…Cut the Chord
I grew up poo
Ugh, iPad issues.
Anyway…I grew up poor, and was pretty frugal all through university, but I confess that once I graduated and had more money coming in, I didn’t really hold on to any of it for a few years. I wanted to go to cafes and not shop in thrift stores, and not feel broke all the time. So that was fun for a while. 🙂 I’ve grown out of it now though.
(Ohhhh, and both my spendy post-uni period *and* my current more-sensible stance are entirely different from my parents’ horrible examples. I have always spent money on genuine needs rather than ignoring them in favour of buying toys, and I have always stayed within my budget. No consumer debt here. You could say I rebelled against my upbringing by becoming a responsible adult. Sigh.)
…On the bright side, my childhood made me super motivated to succeed in uni and never go back to poverty. I can still remember biking to the grocery store with seventy-five cents in my pocket – all my mother could scrape up, which was worse than usual, I don’t know why – and buying a green pepper so that we didn’t have to eat plain pasta and tomato sauce and could have *something* else with it…I think I was fourteen. By then I was responsible for cooking almost all our meals (oldest daughter, and yes that was a gender role thing). I did learn how to feed a big family for not much money.
When I moved out, I couldn’t understand why anyone complained about surviving on student loans. It seemed like a luxurious existence to me. 🙂
I have an uncle who started cooking for his family at an obscenely young age. The only plus side is that now he is an awesome cook.
Great question and a great point about growing up without money leading to two opposing mindsets. It’s weird but very true. Growing up as a child of immigrants, money was tight but we had all our needs met. Plus my parents were frugal and their frugality has been ingrained in my mind. I continue being frugal. My dad also loved learning and taught himself about stocks/investing which he imparted on me. I started contributing to an IRA and 401k right after I got my first job. However, I’ve also seen kids just like me (frugal immigrant parents) and they spend their money like no tomorrow to make up for the life they believe they were deprived of growing up.
Andrew@LivingRichCheaply recently posted…Stop Being Time Poor
You said it very well. I don’t know anyone who grew up without everything they ever wanted that doesn’t fall into the either save save save or spend spend spend camps.
This is something that I think about often. I grew up very poor. We were on food stamps throughout my childhood – my Mom stayed home and raised us, and my Dad worked at a local grocery store. I could be wrong, but I don’t think our family’s earned income broke $18-20k total at any point when I was a kid.
In the last couple years, I’ve started to think about how things were. I definitely knew that luxuries like expensive toys or class trips were out of the question – I wouldn’t even ask. My Mom would clip coupons, plan meals, buy in bulk when possible, etc. In talks with her recently, she mentioned a time where we had run out of stuff to make pancakes with, and had zero food in the house.
When I was a kid, this was normal. Meg and I definitely went through a period where we spent on stupid, frivolous things and drove ourselves into debt. Now that we’ve righted those wrongs, I’d say our relationship with money and wealth is still an uncomfortable one. When I say uncomfortable, I mean that it’s nice to have nice things (not fancy 😉 ), but at the same time, it feels like everything could be gone at every minute, and that building wealth seems too good to be true.
I’m sure as time goes on, these feelings will naturally fade and maybe we’ll become more comfortable with the concept, but it’s really fascinating how weird it feels.
Big Guy Money recently posted…Not-So-New Year’s Resolutions
You sound like Mr. 1500 regarding the wealth building thing not feeling real. He has a really great paying job right now, that has the potential to last for several more years. It is one of the more successful programs at the place he works. But he doesn’t want to work for the rest of his life. He knows several in-demand software programs, and has the potential to make enormous salaries for a very long time. It is hard to walk away from a cash cow…
ugh, this hits home for me – my husband grew up without money and he’s a SPENDER. Like he just fritters it away on things I imagine he was told they ‘couldn’t afford’ growing up: clothes, eating out. I have had to put the major crack down on it. Once his mom finally started earning a good salary she was spent a lot of it too – now she’s retired and remembering her frugal ways. because she has to. because she didn’t save much during high earning years. . .
Point Mr. Stephanie in the direction of Mr. Money Mustache, or any one of a number of early retirement blogs, and show him the error of his ways. Save money where you can so you can spend it where you want.
I grew up in a solidly blue collar household. Shocking, I know, when all I wear now is tuxedos. But seriously, we never talked about money that much. We always got by, but only when I got older did I realize how much was going on behind the scenes to make ends meet. My dad worked weird shifts as a firefighter. My mom worked weird shifts as a nurse. There was no 9-5 job. My grandparents would watch me after school. But my mom is very good with money, though, so I wouldn’t say I grew up “without money.” I do remember a lot of coupon-clipping!
I probably inherited my predilection for finance from her. Even though she never liked to talk about it, I knew she was careful and conservative with her dollars. It must be in the blood! I got an allowance from an early age and learned how you could buy much cooler toys if you collected more dollars. And I was delighted to learn about how interest worked the first time she explained the difference between checking and savings accounts. I was always math-oriented as a kid too, so it’s a natural fit.
Norm recently posted…Comfort, Style, Luxury – The Ultimate In Transportation
Thanks for the shout out Mrs. 1500! I think it is 100% true that upbringing affects our relationship with money. But I also believe that the results are 100% different for everyone. And here are a couple examples of what I mean:
Gen Y Finance Guy just had a post about being raised in tough, low income conditions yet using that as motivation to build a career with higher income (and save) so that money was never something he worried about. But in the same case, I’ve seen other people use the same upbringing as a crutch and say “I was born poor, and nothing I do will change this.”
Also I have friends and coworkers who had the opposite upbringings with two different outcomes. One individual was raised by a mother and father who were executives, and had nannies to raise him growing up and you can tell he feels obligated to succeed financially in business even though it comes at the expense of his happiness. At the same time, I know individuals who had the same upbringing but resented their parents for never being around and say the money wasn’t worth it so they select a career where they are home a lot more with their families at the expense of not having a high income.
Fervent Finance recently posted…From WWII Vet and Janitor to Millionaire
Dad was very successful later in life ultimately running his own company but still made good money coming out of college as an engineer. He has saved a good amount and is getting ready to retire but in my opinion not nearly enough to support his very heavy spending habits. He could have been retired 15 years ago if he just cut back a little bit.
We were definitely what i consider well off. I was the black sheep in the family being naturally frugal. It doesn’t take a lot to make me happy. Don’t get me wrong, i go all out on things that i value (such as my pimped out computer). After the spendy ex-wife dropped me i realized that saving is much more important than spending money on ridiculous things. Having a nice engineering salary helps things along but i’ve definitely become more thrifty the older i get learning that time is worth more than money.
I would be ridiculed by my other 3 brothers to “blow the dust off of my wallet”. Well, smart brother figured it out after he was laid off for a year and actually is very much like me now. Clueless brother spends what comes in and he’s a manager at some grocery store. Idiot brother is still milking my parents at the ripe age of 26. So we are all over the spectrum so to speak.
I think it comes down to individual personality and critical thinking ability. Knowing that anything can happen why WOULDN’T you want to be prepared?
Is this really Mr. 1500? He has two sisters, both of whom ridicule him for his non-spendy ways. I don’t think they will ever get it…
Ha. No.. sorry not-wife. But i do confess to picking up his use of adjective’s when describing family members.
This is a very interesting question. If I had my own blog I’d probably do a 3 part series on each one of my parents: The good…the bad…and lessons learned from each of their financial decisions. Sadly though, I am definitely not as articulate as you and Mr. 1500 🙂
Overall, unlike Mr. 1500, my parents are my personal financial heroes. There is no way I would have had the slightest interest in PF, which ultimately lead my curiosity to this wonderful FIRE community, if it wasn’t for them. Although they both had more traditional retirement ages, their mindset for the most part reminds me a lot of financial bloggers, the 1500’s included, that I read about. It’s like reading an alternate reality of my own parents’ story, and it has been wonderful!
Also, Mr. 1500 shouldn’t be reluctant to pull the trigger. My father was unexpectedly fired after working at the same place for 26 years. It took him getting fired to realize he could retire. Five years since then, and I’d argue my parents are just as happy as the MMM family (and I know that’s saying a lot).
I don’t think the FIRE people have stumbled onto something new, I think they have reanimated an old concept. Don’t spend more than you have, save money for later. They just accelerate it with their (mostly) ridiculously high IT salaries.
My parents’ attitude about money came from their parents. Both of my parents came from parents who lived through the depression, and remembered how difficult it was. My mom is one of 8 and my dad is one of 7. Times were tough for them growing up, too.
Man, did my upbringing affect how I view money. I grew up poor, and with parents that had really bad financial sense. They didn’t save, couldn’t stay on a budget, and spent money as soon as they got it. I was the “responsible one” with money and money sense. Because of that, I always saved it, had emergency money, and tried to avoid debt while in college.
However, somewhere along the way, I started falling into the same traps my parents did. When Mrs. SSC and I met, I had about $10k in credit card debt, and close to $60k in student loans. And I was still in a good financial position according to my family (eyeroll).
With Mrs. SSC’s financial savvy, and my willingness to change though, we’re now about 4-5 years from FIRE. Thank goodness! I’ve broken those habits of just buying stuff online, just to “buy something”. I’ve gotten to where I only get something if I need it, not just because I have a whim.
I will try my best to instill good money sense into my kids, and hopefully, they’ll adopt those good financial practices.
Mr. SSC recently posted…January 2015: Our money went where???
Having kids is tough. On the one hand, you want to teach them financial responsibility. On the other hand, you want to buy them everything they want, to make them happy. It takes a lot to realize that they don’t need this stuff to make them happy. Take them to the park. Take them on a bike ride. Talk to them. That is what they need.
Growing up my family dealt (heck is still dealing with) with extended periods of un(and under)employment of both my mom and dad. We always had a home and food, but values got skewed and when they did do well (by well I mean 2 $30K jobs at once, still not big bucks!) a lot of the money went out the door for big items that required additional financing even if they couldn’t afford it long term. For example, I remember the ~6 months we owned an actual new car growing up. Dad brought it home from the dealership brand new and it was the first time we had a car that wasn’t at least a decade old. It didn’t last and we were riding the city bus to school by the end of that school year. That wasn’t the only time something like that happened. =/
Honestly, the uncertainty was really stressful as a kid and that’s probably a big reason why I really hesitate before inflating my lifestyle since de-inflating due to necessity was so stressful as a kid. Much easier for me personally to not inflate the lifestyle to start with.
Mrs PoP @ Planting Our Pennies recently posted…PoP Balance Sheet – January 2015
Growing up, my dad drove a 1970 AMC Hornet. AMC is the maker of the Pacer and the Gremlin – no amazing feats of design genius going on over at AMC… I remember being embarrassed that our car was older than me. Everybody else had newer cars…
I would imagine that uncertainty would be stressful.
I think many things my family has done affects me today and has affected me in the past. My Dad moved from job to job more often than he probably needed to, I will most likely keep the same job/place of employment until I retire. I’ve heard stock stories about selling during the down time, questions about getting wealthy/rich quick, making a big move financially. I think for this and many more reasons I want to be boring, I want long term real estate, boring index funds, and to slowly become wealthy.
I honestly can’t think of one person in my immediate family that is wealthy, I see more mistakes than I care to admit, and for that reason I write a blog about personal finance and do my best to not make the same mistakes or new ones just the same, but it’s hard and I hope to better each day.
Even Steven recently posted…What’s Your Best #MoneySavingWeek
Staying in the same job, owning boring index funds, and getting rich slowly sounds like a winning combination to me.
How did your upbringing affect your relationship with money?
I can’t agree more that you upbringing has a huge influence on your relationship with money. However, I am not convinced that there is a strong correlation one way or another.
Because I have seen people go both ways. The story I recently shared on Financial Samurai, revealed that I came from a family on welfare, and had drug addict parents. In fact my father has spent at least 10 years of his life in prison.
I personally used my own upbringing as a motivator to do whatever it takes to earn and save enough money so that I don’t ever have to worry money ever again. I try to have a good balance of saving and spending. I am not overly frugal, but I would not describe myself as a big spender either.
I will say that beyond cutting expenses that no longer bringing joy to my life, that I would much rather focus on ways to earn more money to afford the things I want and still save a healthy amount that will allow me to achieve my longer term goals.
It’s easy to say that my money relationship and habits are because of my family upbringing. But my brothers came from the same family, and yet they spend every last dollar and more. They are not high earners, and they are not saving anything for the future.
So I don’t know if I can say with any level of certainty that my upbringing defined my relationship with money. Instead I saw others I admired and cherry picked their money habits and adopted them as my own.
Great Question!
Gen Y Finance Guy recently posted…Thursday Rant #1: The Office Time Keeper
This goes hand in hand with my original thought – that people who grew up without a lot of money generally take one of two paths: Spend it or save it. Your brothers spend it, and you save it.
Reader Scooze put it quite eloquently in one of the first responses above.
Hi. First time reader here. I agree with the Finance Guy, I’m not sure if how you were raised will insure your approach to finances. I’ve seen people go either way, with similar upbringing. I think maybe being raised to be responsible with money and being taught about it will raise your chances of being financially well-off, while having parents that never instilled that in you might subtract from your chances of becoming a responsible adult. I was raised by my grandparents, in a poor country, but I saw them and my mom struggle to have side businesses for different sources of income. They were also very frugal and had no debt. The money was so little to go around, that we never really talked about it and I always felt guilty to ask them for money. I think to this day, I feel guilty when I spend a lot of money. I think, overall, I took the good things out of what I saw they did, and then tried to do a lot of my own research, to see how wealthy people are doing it.
Felix Money recently posted…It’s Random Rant Time!
Welcome, Felix Money. Thanks for reading.
I think financial education is vital to being financially responsible. I wish it were more prevalent in our schools.
I wish it was taught in schools too, but there are so many books, podcasts, videos, and blogs like all of ours, where we share how we personally handle finances, that anybody interested in learning only needs a computer/smartphone with an Internet connection. When I grew up, this opportunity wasn’t around.
Felix Money recently posted…It’s Random Rant Time!
I agree there is a lot more information out there, but I also believe that you don’t know what you don’t know. How do you know you are doing something wrong, if you have never been taught how to do it in the first place?
I routinely thank my parents for the money lessons they taught me at a young age. Whenever I came across money my parents encouraged me to ‘pay myself’ by saving half. To this day I max out my 401(k), not to the match, but to the limit because of the same principal.
They also made sure I had an allowance from a young age and I think that was incredibly beneficial. It taught me the power of saving a portion of income, not just ‘windfalls’ like Christmas! It is something I plan to do with my daughter as she gets older. One helpful aspect I read about was not tying allowance to chores. Chores are expected to be done for FREE!
Sarge recently posted…Why YOU should be your own Financial Advisor
We have come up with chores for our girls, and now are trying to get them to do them. The older one almost does them without being asked. The younger one doesn’t do them no matter how hard you ask/push… Sigh.
Thanks for the mention. I watched my mother work 32 hours straight every weekend. Two full time jobs, plus a part time job. During the week, it was only 16 hours straight, every day.
And when my parents first got divorced, our refrigerator was a Coleman cooler. The kitchen table was out backyard picnic table, with a sheet.
But have no fear, I will retire no later than 7/6/2016.
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I will hold you to that!
Neither of my parents came from particularly well off backgrounds. My mom’s was fairly middle class. My dad was working class but dropped down to working poor when his father (my grandfather) died when he was 13.
I grew up in a solidly middle class family with “millionaire next door” type parents. I think we were upper middle class by the time I graduated from high school, but my parents didn’t upgrade their lifestyle. We still lived in the same ho-hum 3BR ranch house in a middle class suburb (they’ve been there since the 70s), drove the same cars that were always paid for in cash and were driven until they weren’t worth fixing, etc. They were savers, but not obsessively so. I don’t know my parents’ net worth, but it’s probably in the low million dollar range (not including the paid-for house, which was paid off early). I really had no clue that other people didn’t live this way. I thought everyone was motivated to save, pay cash for things, and pay off the mortgage early. My mom used to say stuff like “probably only 1/2 the people who live in any given neighborhood can really afford it”…and I sort of took her word for it. But what I didn’t understand was that some people are really not that motivated to get out of debt, have savings, etc. That was a real conundrum for me (and still is to some degree).
In most ways, I’ve much followed in their footsteps. I am a more obsessive saver than they were, although I definitely earn a lot less than my dad did. I think I rebelled a bit because I thought my dad was a little too intense as far as career ambition went (not quite a workaholic but borderline), and I went the opposite extreme. I’m sure my dad’s ambition came from the fact that they weren’t well off when his dad was alive and it went downhill fast after he died. My dad went to school and worked as much as he could to help support the family at age 13. My grandmother worked, too, but didn’t earn much, being a woman and only having an 8th grade education.
But as far as savings goes, ever since I was a kid, I loved saving money. I loved the idea of my money making money for me so I din’t have to work for it. If I had known about mutual funds as a teenager, I would have been investing in them. I really think at least some of this is inborn. I’m an INTJ personality type and INTJs are often natural born savers. We generally find saving pleasurable. It took me until I was in my 30s to start understanding that most other people don’t. I still find this unfathomable, but accept it as fact.
My sister, on the other hand, has never gone crazy with debt but has a net worth that’s a fraction of what mine is. This despite her being two years older than me and out-earning me. I attribute much of this to personality type differences. We grew up in the same frugal household. My sister always seemed better at getting jobs and making money. In some ways that is a disadvantage because you always think to yourself “there’s more where that came from”. People who can find work easily when they’re young often don’t consider there might come a time when that won’t be true.
I have a 60 year old friend like this. He always had decent paying employment until he lost his job at age 50. Since then, he has been in and out of decent paying employment and he’s struggled financially because savings was always an afterthought for him. He always thought he’d be able to work full time until age 70 and never considered he might have trouble finding good paying employment as he got older. I always wondered what planet he had been living on.
Oh, and I wanted to add I think the other reason I’m borderline obsessive with saving and investing is I got into a relationship with an older guy who spent everything he made. I thought I’d adopt his “everything will work out” attitude. It didn’t. I tried to convince him the error of his way for 6 years, but that was a dismal failure. I finally got out of that relationship. After declaring bankruptcy and being kicked out of several places due to non payment of rent, I finally started getting a clue. I got super motivated when I got my first real job and never looked back
Meanwhile, he’s now in his 60s in poor health, still working at his small business, drawing a skimpy social security check, and shaving a house with other people with his bedroom in the garage.
I attribute his terrible financial situation to growing up in a financially ignorant family. I also think it’s because he suffered physical and sexual abuse as a child. People who grow up this way typically don’t have stable relationships or financial lives. Stability of any kind is outside their comfort zone.
We are trying to raise our kids in a millionaire next door kind of way, too. We drive old cars that we will have until they die, we shop at thrift stores and the girls always place the caveat “if it’s on sale” before they ask for anything. The youngest one, when she sees something she wants, is content with the answer “If we can find one at the thrift store…”
My parents never saved any money and always made our family feel stressed out about the family finances. Later in life, my parents took out credit cards using me and my siblings’ social security numbers, then failed to pay the debt without telling us. Needless to say, I had no appreciation for what I was getting into when I exited college and grad school with large student loans. I proceeded to destroy my financial life through age 29. However, I flipped a switch at age 30 and have been obsessed with saving and investing ever since. I have used my parents as an example of what not to do. And I stay motivated by them even today.
Oh wow. I wonder how they got cards in your names? I tried to get a credit card in each daughter’s name when they received their first credit card solicitations. They were denied based on their ages. I was hoping to start building credit for them, not to ruin their credit.
I am surprised to be one of just a few people who learned wealthy habits (on purpose) from my parents and especially my grandparents. My dad and grandpa are both entrepreneurs, and my grandpa, though a multi-millionaire (and trying to give away lots of money to causes he believes in), is still working at age 85.
My parents didn’t particularly emphasize investing/saving, but they did emphasize hard work and generosity which are the two other pillars of personal finance (in my opinion).
I sometimes laugh about some of the ways my parents spent money (especially when the business started to take off when I was in high school), but they never made decisions that they could not afford, and that’s critical. I also remember having a party when they paid off the house when I was 9- I guess they had been living there about 10 years.
I also remember asking my dad for a shirt from Abercrombie, and he said, “If you want to get a shirt from that company that distributes pornographic material, you are going to have to get a job.” Which I did, and then realized $45 for a t-shirt was a bit too high.
I distinctly remember wanting a pair of overalls so badly, I put them on Layaway. They cost $72, and I don’t think I have ever spent so much on a pair of pants since. I had to pay for them out of my own money, and I never calculated how many hours I had to work for them. Back when minimum wage was $3.35… Now, I don’t even pay $3.35 for a pair of pants!
My family (parents) started off poor, got to “cash flow rich” but remained savings poor, and now they’re saving a ton.
My family (wife and child) have never been poor. We make a good living and save a lot. I definitely went through a spendy phase but never had debt other than student loans. I don’t buy a lot of things either, so that definitely helps.
I also got my eBay bug from my dad who has a much more successful online business than I do!
Chris @ Flipping A Dollar recently posted…Vintage Mille Bornes Card Game
My family always acted like we didn’t have much money. I guess that is why my parents are comfortably retired and don’t have to work anymore. They are the embodiment of The Millionaire Next Door.
I don’t know at what age I learned my fathers income but I can safely say he pulled in around 60-90k a year.
Yet I would agree with the statement that how much he made was irrelevant to whether we were poor or rich.
How he handled the money is what gave me my perceptions. I always use to say we were poor. Clearly by earning that is not entirely true but I know there were times when money was tight because it ” came in one ear and out the other”
However I think my money habit were cemented later in life during college when multiple things happened and I was keenly aware I had to family to fall back on
I guess I’ll know how I feel when I finally have to pull the plug and “retire”
The Roamer recently posted…Weekend Wanderings #3: Breaking Down Barriers
I grew up in a solidly middle class household that was somewhat frugal but certainly enjoyed vacations. I had new clothes for school, etc… But I watched my parents go through bankruptcy in high school and I was on my own for college. It’s always made me a saver (and bit of a worrier) when it comes to money.
Adam @ AdamChudy.com recently posted…This is why you save
My parents were a mixed bag about money. My mom has always been frugal, she just called it ecological before being green was trendy. While my dad has always been a spender. My parents went through bankruptcy when I was in middle school which caused a lot of financial stress. I’ve always been a saver even from lit bits of money I earned as a kid. I never wanted to have to worry about money. I was fortunate to learn about investing from my mom and Grandpa. When I was about 13 my Grandpa put money in a brokerage account in my name and taught me how to use the call in line to see how things were doing (before the internet). I used to tell my mom very seriously that “I was calling my stocks”.
I love this question! I think about it sometimes, as I come from very little money and today live with roommates who come from a LOT of money. I’m the only one in a house of 4 with student loans (we’re all under 26) and have never received help from my mom. Growing up, we were very poor for a few years after my parents divorce and things stabilized as I grew up. But we never had a ton of money and my mother nice discussed money with my brothers and I. I had no financial education in my home. I am totally a saver now, and determinedly digging myself out of student loan debt ($11,300 to go!) I never want to be poor as an adult.
Kara recently posted…Gazelle Intensity: My ‘Ah-Ha’ Moment on Becoming Debt Free
It’s fascinating to see how childhood experiences with money shape our adult financial attitudes. Many either become savers, determined not to face scarcity again, or indulgent spenders compensating for past deprivation. Our upbringing indeed molds our financial mindsets, influencing whether we hoard, spend, or strive for a balanced approach to money.