(Guest post by William Cowie)
I had the honor of meeting J. Money at FINCON in Denver. He recently became a dad, and I was thinking about that one day when Greg, a good friend of mine, called. Not very happily, I might add.
Greg’s oldest son drove his car home one evening. He saw the temperature gauge rising, but kept driving, blowing the engine before he got home. “What were you thinking, Son?” Greg asked after the dust had settled. “I dunno, Dad. I just hoped I could make it home.” He also had no idea this was a $2,000 dunno.
As Greg talked to his son, he realized that he had never taught his son what to do when he sees the temp gauge climb. Seems pretty basic to us, but how is a 19 year old kid going to know if someone doesn’t tell him? This is not something one picks up by osmosis. His son certainly didn’t have any desire to do damage to the car but he simply didn’t know how serious (read: expensive) that temperature reading was.
It’s easy to miss things that seem obvious to us, especially when it comes to passing on wisdom to the next generation. Wouldn’t all of us like to leave the world a better place? What are we actually doing to make that happen?
The True Legacy
My parents were as middle class as middle class gets, but they were frugal to the extreme. My mom’s still alive (to the ongoing pain of every penny that passes through her hands). So I haven’t actually inherited anything yet, but I know when the time comes they will have left something for us in the material realm.
However, it’s not the material possessions they leave that define my parents’ legacy. It’s the values, the examples, the coaching in actions… Both my parents and in-laws instilled great values in my wife and I. By setting an example, but also by explicit coaching, too — with their words.
Debt Is Nothing Other Than Impatience
Both sets of parents never had credit cards, but that wasn’t all. They took great plains to explain why saving beats debt. Debt is nothing other than impatience. If you’re going to take two, three or four years to pay for something, why not save and buy it for cash? The only difference is when you get it. And waiting reduces the price by a lot.
My parents saved for years to buy new cars, each of which they then kept for at least ten years. My dad still drove his 1958 VW bug twenty years later. Never mind that the paint was faded and he had to park it with the wheels to the curb. He also didn’t care that it was murder on a teenage boy’s ego. I was on him like white on rice to get something a little cooler to salvage my reputation. A few reams of glossy brochures for cool new cars found their way onto his desk. He was unfazed. We were stuck with the bug. “It gets me where I want to be, and I need nothing more than that.”
Not Caring What Other People Think
Not caring what other people think is also a big part of smart financial living. We were taught that, and we saw our parents live it out. A few posts made the rounds recently about the awkwardness of friends extending invitations which involved non-frugal spending. Those invitations are challenging, and it’s easy to compromise our principles in the name of maintaining friendships. My dad, though, never wavered. Funnily enough, he never lacked for friends, and I had no choice but to notice that. His funeral was one of the best attended in years, because it seems everyone knew him and loved him.
My father in law was a wine farmer, an industry notorious for conspicuous consumption. He didn’t care. When we bought a really nice dining room set (we were young then, haha), his only comment was, “Why would anybody be so stupid to spend all that money for what other people think?”
Our dads didn’t give a fig what others thought of their cars, their clothes or the fact that they never ate out. My father in law once famously said if we wanted to treat him, we should tell him we’re NOT taking him out to eat! He was one of the most popular men in his neighborhood, too. Here were two men who epitomized frugal living, yet each of them was still one of the most popular people around their neighborhood.
I wish I could say I was smart enough to heed all that counsel. Sadly, I can’t say I’m the brightest bulb in the box. But in the end our parents’ words hit their mark. Looking back, I’m grateful, and I’m glad I had the opportunity to say that before my dad passed away. It was a little like in the movie The Blind Side when Sandra Bullock told Tim McGraw, “You’re right.” To which he replied, “How did THAT taste coming out of your mouth?”
Around us I see many acquaintances that were not as fortunate as we were. Their parents never told them about smart money management. All too often parents don’t leave the world a better place for their offspring by not talking the talk, even if they walk the walk.
Watching The Times and Seasons
The biggest thing I learned from my dad is to watch the times and the seasons. Even though he was a low level government bureaucrat at the time, he bought an empty lot soon after he got married. He picked a nice location with a great view, but one that was out of town a ways. He bought it in a down economy, so he got it cheap. Once they paid it off, they built a fairly modest house on the lot, in a recession, when he got great deals from the architect and contractors. Then he focused on getting it paid off. Very simple and very patient.
As it turned out, the location he picked became quite desirable as the city expanded. Nowadays, there isn’t a home under $1 million in their development. (Except for theirs, of course! :) ) But, because my dad looked ahead he was able to get a nice house in a great location for one of the bargains of the century. (Buy and hold really works in real estate, by the way.) The neat thing is he told me about every step: what he did and why.
How About You?
What do you pass on to the next generation? Are you leaving something tangible for their benefit? More importantly, are you leaving them with wisdom they can use for their benefit? Are you actually talking about these things, in addition to setting the example?
Remember Greg. He modeled good care of his cars, but his kids didn’t even notice. The reason they didn’t notice is because he takes good care of his cars and they never break down. So for his kids taking care of a car is a non-issue, much like property taxes and health insurance. It’s “just there.”
When you do things right, odds are your kids and relatives simply won’t notice it. If we assume they will simply pick it up by osmosis, well, we all know what assuming does. Needless to say, Greg has talked with his other kids about what maintaining a car means and all is not lost (other than that ouch of $2,000).
Are you inspiring the next generation to manage their money smartly? Life requires many skills, and managing money is a big one. How are you actually coaching the next generation?
William Cowie is a retired businessman spending his time coaching everyone who wants to listen about managing their money on his Drop Dead Money blog. You can pick up his free course on managing the economic cycle at www.dropdeadmoney.com.
(Photo credit: Wikimedia Commons)