The other day I was talking with a friend and the conversation turned to experiences we had with managing money. It got me thinking about all of the things people do in life, the decisions they make in handling their money…and they can be quite varied.
Sometimes it’s how we are educated.
She was telling me that when she was a little girl her dad would give her a quarter for allowance. She then had to account for how she spent that allowance. Five cents went to the church, five cents went to the poor people, five cents was saved and the she had to say how she spent the rest. When she got old enough to have a checking account, her father made her balance it every month and it had to balance to zero. If it didn’t, she had to start all over again and find the error. What she learned the most was accountability. She had to account for every penny she had.
I have to agree with her father’s insistence that she learn to balance a checkbook and wish it was a requirement that all high school students learn how to balance their own accounts. It does not matter that things are computerized, accounts need to be balanced. Errors are made all the time. Spotting errors and correcting them is a key part of growing up.
Now, my friend is a very successful realtor, dealing with sales and property management. Her father is an intriguing man from a financial perspective. He was in the lumber industry and doing quite well at it. Every year he would take his family to the coast for their vacation. Not only did they enjoy it, but their health improved as well. His wife suggested they buy land and build six units. Keep one for themselves and sell the other five to their friends. As they were making the plans they realized they had way too much land for only six units, so they changed their plan from six to sixty units with an extra unit for a manager’s apartment. They were the pioneer developers of that city. His son was the general contractor and his daughter the real estate agent. It was so successful that they built thirteen more condos, he and his family all moved to the coast permanently.
Sometimes we’re elected to do it.
I asked Ed (my friend’s father) about his own personal financial influences or lessons and I really enjoyed his story. He was twelve years old at the peak of the depression. He said things were really bad, people were jumping out of building and everything. He said his father did pretty well at making money but wasn’t the best at managing it. Even so, they did well enough to have a housekeeper.
One day the housekeeper was quite upset because she had to move suddenly, her landlord was selling the house and she didn’t know what she was going to do. Ed felt so bad for the poor lady, he asked her if she ever thought of buying it, which she hadn’t. So he took her to the bank and tried to arrange a loan for her. She didn’t get the loan and had to make other arrangements. But the story got circulated and his dad eventually found out. He was so impressed with his “grown up” attitude and keenly aware that he needed someone to manage the family money…at least better than he had been doing. Now Ed was not the oldest and actually had a couple of brothers and sisters older than him. Even so, his father had designated him the money manager…at twelve! From that point on Ed paid all the household bills and planned the budget. Ed, said he learned quickly that the most important thing to have was good credit and the way you got good credit was to pay your bills on time. That seems to have worked quite well for him.
Sometimes, what we learn comes from failures.
When I was young, we went through a rough patch after my father got laid off in a big corporate layoff. He tried his hand in several “self employed” activities and was not very successful in them. Income was inconsistent and we ended up on welfare and had to pay for our groceries with food stamps. It was an extremely embarrassing time for me. I decided right there and then that I would never be too proud to accept any job that pays the bills.
Sometimes we miscalculate.
My first husband and I decided to take a calculated risk on having him enter a field that was “self employed” as his day job had a ceiling on financial growth. We planned and save so that when we made the transition it would not hurt our finances. We estimated it would take six months to get a normal income to match our current one and then it would go up from there.
The day had come and he quit his regular paying job. Because of our planning, everything was going fine in the beginning, but getting the money from billing took a little longer than we estimated and the bills began to go past due. I scrambled to “find” money and learned that bill collectors are pretty ruthless when it comes to getting paid. Threats of suits, non stop calls. Anyone who has been there knows the scene…it’s stressful. The day a process server walked into my classroom was the last straw. I couldn’t have my personal financial problems bleed into my work arena. I made my husband call the lawyers to take care of it permanently. The ironic thing, once that happened…income started rolling in regularly. If, I’d just calculated a longer time period we would have been safe. So, I went from excellent credit to poor. Those were the hard lessons.
A few years later, we were driving around looking at houses…wishful thinking on our part considering our finances. We found a place that was cute and pretended to buy it…in the end we drove off. The next day I’d gone to work, completely forgetting about the house. Later, in the afternoon, my daughter who was ten years old at the time, calls and says, “Mommy, please don’t be mad. I called the realtor about the house and made an appointment to see it. I even cleaned up our house in case she comes here.” I wasn’t mad, in fact I was tickled that she actually went to all that trouble. So we kept that appointment and it turned out, after hearing our story, the owner was willing to carry the loan. We moved in a month later. The only reason we bought that house at that time was my ten year old took charge and looked at the possibilities…instead of the improbabilities.
And, don’t forget to save a little for pleasure.
Another friend of mine, who is now comfortably off, told me that when she was a young adult just starting out they didn’t have very much money. She and her husband lived hand to mouth, sometimes barely. She said it got so bad sometimes they had to roll up pennies for gas. But the one thing they always did was to save a little for pleasure. No matter how tight things got, they always managed to save a little for a pizza date. It was the one thing that made the hard work and hard times less stressful.
I’ve always been interested in people, their lives, their stories. Has there been anything specific that influenced you one way or another in regards to financial matters?