What My Parents Taught Me About Money

Many of the bloggers and podcasters in the FI and FIRE community have shared that they got into financial trouble early in their own adult lives in part because their parents were not good at handling money. As the proverb goes, “the apple doesn’t fall far from the tree”. Maybe it takes coming back from a money disaster to build the kind of passion that inspires a great blog, too. If so I’m in trouble because my financial journey was plain vanilla with hardly a misstep along the way. This post is about why my path to financial independence was so smooth, with the credit going to my parents.

Mom and Dad taught me to work. This was more than a few years ago and in those ancient times there were no child labor laws being enforced. My first job was working as an indentured servant to my crafty brother as a newspaper delivery boy. Yes, believe it or not, snowflakes, parents let kids get up at 5:30 AM and ride their bicycles in the dark throwing newspapers in complete stranger’s yards before school. And in my case it was elementary school. Don’t try this at home now, child protective services will come confiscate your kids and probably your dogs as well. Allowances did not exist, hand outs from parents did not exist, only jobs existed. I learned that earning money was hard work when it was 5 deg F outside or when it was pouring rain or when huge playful dogs decided to drag me and my bicycle around their yards like a giant squeaky toy! As a side benefit I learned to manage and budget my spending to fit the miniscule amount my parsimonious brother paid me.

As I grew older I kept throwing newspapers for my miserly brother but eventually moved up to much better paid minimum wage jobs assembling bicycles and lawnmowers at a retail store, sacking groceries, general help at a pharmacy and then hit the big time with factory assembly line jobs. I learned about overtime and got a first hand look at adults who were supporting families on paychecks that barely covered my college pizza bill. I came to realize my parents did not just make me work to earn spending money but because it offered a first-hand comparison of manual labor (me) and the management and engineers who supported the operations. It was pretty easy to see that the variety of work and presumably the pay for the engineers was considerably better than what was going to those of us on the assembly line. It taught me that there was no way I would survive doing the same repetitive tasks over and over 40 hours a week. It was all I could do to make it through the summer. That incentive to stay in school and avoid manual labor probably had as much to do with me becoming an engineer as anything else.

Dad and Mom met in college. He was there after the war on the GI bill. Both of them had better incomes than their parents due to the education they received and they were big believers in its value. There was never a question of whether my brother and I would attend college, it was a given. We were both extremely intelligent nerd kids so it was in the cards for us anyway but the fact that our parents paid our way without the need for any school loans, because they had saved up the cash to do so, was another great example. My wife and I did not have to borrow any money and our three millennial kids received their four year degrees without a single dollar of debt. Well, actually, our three kids all got completely free rides since they were brainiacs but we had the money set aside had we needed it. We ended up just giving it to them when they graduated. All three paid their own way for their advanced degrees.

My mom first planted the seed of chemical engineering in my mind. She was a school teacher and she knew that the son of my favorite math teacher was a chemical engineer. She casually mentioned that it was apparently a very well-paid profession and since I was a chemistry and math nerd I thought it sounded perfect for me. My dad did not specifically weigh in on a major but he was very supportive of anything that sounded complicated based on the idea that it probably paid better the harder it was to achieve. He had also managed to advance from basic seaman duty on an aircraft carrier during WWII to operating the ship’s radar and I think that gave him a healthy appreciation for how technical skills could improve your work experience. Engineering became my chosen major and it turned into a great career. My parents, as usual had been right again! Two of my three kids also became engineers, the third refused to be brainwashed and earned a business degree although she was summa cum laude in doing it.

There were many money lessons my folks taught in the home by example. For instance, they paid cash for everything. Appliances, furniture and even their cars were bought with cash. My dad sold insurance and my mom taught in the public schools so we were by no means wealthy yet they used the envelope system to save money for large purchases. I thought that was normal, I had no idea that most people took out car loans! It was kind of a shock to find that out later. They also used credit cards but made a point to explain that they paid off the balance every month.

Dad became a little bit more successful over time but he did not succumb to lifestyle inflation. The modest house my brother and I were raised in was never traded in for a larger home. With the help of a carpenter he did eventually add one room on to the house so my brother and I could be separated. Apparently, the deprivation of working for him for slave wages had instilled in my mind the desire to kill him in his sleep, but I’m mostly over that…mostly. Similarly my wife and I have lived in our first and only house for over thirty years, and have no plans to move. We also added on but the house remains very modest for our net worth. My wife’s parents also lived their entire married lives in the same small house so it was a family tradition on both sides.

My parents, greatest generation members, did not job hop around much. I do know my dad had three jobs over a 45 year career but he stayed at his last job for over thirty of those years and my mom never changed jobs. That was far less common in my generation but not unheard of. Like my parents I stayed at one company my entire career and my wife primarily worked the same job until she early retired. This is not advice I would give to a millennial now, times have changed and the chance of working in one or two jobs is very small and probably a bad idea. My dad also chose to keep working part time until his seventies. I early retired three years ago but immediately started part time side gigs because that seemed to make sense to keep me relevant and challenged. My plan is to keep my part time work for the foreseeable future like my dad did.

Dad kept a detailed spreadsheet of his investments and net worth. He was pretty proud of the fact that he was that guy, the Millionaire Next Door. We keep ours on Personal Capital which is a heck of a lot less work! While he never made six figures, usually less than half of that, Dad amassed an estate of nearly two million dollars by saving aggressively and by having every penny invested in a well diversified portfolio. He had invested so well that even though he and my mom spent their last years in assisted living and nursing homes at the cost of almost nine thousand dollars a month, his net worth continued to grow. By the time my parents passed away my brother and I were already millionaires on our own due to our having saved and invested well over our careers. Of course, my brother had the advantage of skimming most of the wages he should have paid me as a child laborer but really, I’m fine about that now.

While this is specific to people of Jewish or Christian faith my dad also taught me to tithe. He gave 10% of his gross income to the local church and my wife and I have done that as well. We also give generously to charities and to individuals in need. Regardless of religious beliefs I believe giving to help those in need is a key part of prospering financially. Dad was convinced that by giving to others the money would be returned to in even greater amounts. While I do not believe that is literally the case in monetary terms I do believe that learning to give makes you generous and that generous people do far better in their careers than stingy people. Strangely my brother is very generous now, probably as penance for my mistreatment.

My parents modeled joint decision making and kindness to each other. I am sure this contributed to their 63 year marriage. I never heard either of them speak harshly or disrespectfully to the other. Divorce is extremely expensive and although staying married is not primarily a financial decision I believe statistics support that a happy marriage correlates with financial health. Both my brother and I have been married for over thirty years to much better halves than we deserve which has definitely helped our financial success. I believe having someone who loves you and who has got your back helps work stress seem much less stressful and leads to greater productivity and less burn out.

Looking back now that both my parents are gone it is easy to recognize the many ways they helped shape the better parts of my nature. Most of it was not by lecture but by example. We all recoil a little as we grow older and we find ourselves, oh no, turning into our parents! But while I am not crazy about inheriting my dad’s hair loss I’m pretty good with the fact I inherited some solid financial life skills. Thanks, Mom and Dad!