As we negotiate adulthood, it’s safe to say that we can easily attribute much of what we do and how we do it to our upbringing and parents. Whether we are determined to raise our kids completely differently from how we were raised, or we know how to do a hard day’s work because our Dads taught us – our parents have a huge influence on what we go on and do in the future
I have been reflecting recently on the lessons about finance and money that I learned from my own parents. As we pursue financial independence and early retirement, Mr. PIE and I are making decisions for our future that go against the grain of standard society, and everything we were brought up to understand. We are doing things differently from our parents, and it’s interesting to consider if the money lessons I learned as a kid have any relevance to our current plans. I know for a fact that my kids will grow up with a knowledge of money and investing that I didn’t grow up with, but that doesn’t mean that I learned nothing about finance from my parents. On the contrary, I think I learned a number of valuable lessons that I have been able to apply to being a grown up.
This is a reflection of where I have come from, my financial heritage if you will. Even before I start, I know that I have a lot to thank my parents for. They brought me up to have a very level headed approach to most things, including money. But haven’t we all got some crazy (endearing?) quirks from our upbringing? Let’s lay it all out!
Frugal is a way of life.
Both of my parents were very young children when World War Two began. Yup, they’re old and I’m getting older! I remember being assigned a project at school when I was in my early teens. We were to interview our grandparents about their war experiences. I simply had to go home and ask Mum and Dad my questions. My Mum has a wonderful selection of memorabilia – rations books, gas masks and the like, that make for fascinating stories. Their perspective as children during in the war is most likely rather different from adults, but the frugality required of families during rationing truly shaped their outlook.
There’s the story of my grandmother who had the same winter coat for at least 20 years – probably a lot longer. My mum remembers asking her if she would ever get a new one and being told that the one she had was perfectly good. Clothes were a luxury and to be looked after, mended and recycled into something else with creative sewing. A pair of shoes or boots was to be cleaned and fixed and used till the last.
I spent my childhood and most of my early adult life being thoroughly dreadful at buying clothes and shoes for myself. Part of this was undoubtedly due to my upbringing, clothes were low down the list of priorities for spending – and spending money on clothes for yourself was an unnecessary luxury. It was only more recently that I proudly shook this off and embraced the all American way of shopping. Cheap, easily accessible fashion meant that buying an item in two or three colors was perfectly reasonable. An expanding income could negate the guilt of buying for myself.
This day-to-day frugality I learned growing up extended to many other areas. My war-raised parents would always scrape any residual butter off the butter wrapper, keep and use the dripping from the roast meat, and re-purpose left overs into several meals. I learned that storing bars of soap before using them makes them last longer (they dry out apparently), and fabric conditioner should only be used sparingly and for specific loads of laundry like towels. Again, these habits were soon lost as I felt they were no longer needed in my modern, affluent life.
It’s a good thing that my early life lessons were deeply ingrained. In attempting to ‘relearn’ frugality I have a good background to rely on. Many of the changes Mr. PIE and I have made in our spending recently have lead me to reapply the ideals I learned growing up. Another unexpected upside is that chatting with my parents about grocery and gas prices is now a pretty enjoyable experience as it’s a newfound passion of mine and an old one for them!
Budget and save for future expenses
I have to smile whenever I see a Pinterest or Twitter article about teaching kids about money through their allowance. Invariably they espouse the concept of having kids split their allowance into portions labelled Keep, Give and Save (or something similar). Of course, if this is on Pinterest the three separate containers are delightfully crafted from mason jars and tied with burlap. (I love Pinterest, honestly – but if I see another Mason jar…..!)
In the days before the internet my parents managed to use this concept with my brother and me (minus the mason jars). It’s probably passed down in parent lore. While Mr. PIE and I haven’t delved into (read: haven’t got our act together) allowances for the small PIE’s, I can tell you that it certainly worked for me. Each week I was given £1.00 (this was a long time ago!) which was to be split between three very ordinary looking money boxes. I recall the ratio was something along the lines of 40p to keep, 40p for gifts and 20p to save.
I believe that one of the things that made this process really work was that my parents made it very clear what the expectations for this money was. If I wanted something for myself, I had to tap the ‘Keep’ pot. I was expected to raid the ‘Give’ pot at birthdays and Christmas, although my expenses here were usually subsidized. Once a reasonable amount of money was sitting in ‘Save’ it got transferred to my Building Society savings account. These requirements and the amount of money I received changed as I grew older. I specifically remember discussing what types of things I was expected to buy for myself when my allowance went up to £5.00 (gasp!) It included clothes and outings with friends to name a couple.
What lessons did I learn from this? I guess without realizing it I was learning how to budget, pay myself first and live within my means. Occasionally I would negotiate a subsidy for a specific purchase (can’t beat learning negotiation skills). My satisfaction at seeing my saving grow back then was a similar feeling as I have watching our investments grow today.
Don’t talk about money – and get very uncomfortable if anyone tries
A peculiar thing happened in my house every week while I was growing up. My parents would sit down and tally up who owed whom what from the week’s expenses. I say peculiar because I never understood, to this day, why they had separate finances. Oh, and I haven’t asked them!
The Brits have certain characteristics thrust upon them – stiff upper lip and all that! Refusing to get into any depth of conversation about personal matters may well be one of the truest. Apart from the weekly tallying, finances in any form were never discussed in my house. I never knew until I was much older that the bakery business my Dad was part of was not a ‘partnership’ as he had alluded to. He was an employee and walked away with nothing then he left. My parents never had the slightest interest in my starting salary when I began work, or what I made when I came to The US. This was all personal territory and as such should not be talked about.
When I return to the UK with my new-found ability to talk about personal subjects (thanks America!) I find my conversations falling flat. I recently told my parents about our plans for early retirement and began to give some information about how investments and savings were paving the way. I was met with nods, some interest, and uncomfortable shifting in seats when I mentioned anything about investing or understanding expenses. A similar thing happened recently when I joked that getting laid off with a decent severance would be a pretty nice deal. We. Just. Don’t. Talk. About. That.
While not talking about money isn’t the worst thing in the world, I’m happy that Mr. PIE and I are willing to disclose all sorts of information to the small PIEs about our finances. The alternative is learning very slowly, as I did.
Work hard and be prepared to do the dirty work
While this is not directly related to investing and saving, I feel that this is a particularly important part of my upbringing. I come from a thoroughly blue collar family and they know how to work hard. No one was ever chasing a promotion or looking for the next best career move; they simply did the best job they could and never skimped on quality.
I grew up working with my Dad in the bakery, or at home with him cake decorating. These jobs both require long, unsociable hours and an ability to meet timelines with quality goods. While this was an education in itself that I take with me even now, the greatest learning I took with me was one my Dad both voiced and lived: “you can’t ask your employees to clean the toilets if you’re not prepared to do it yourself.”
Don’t borrow money
Consumer loans simply weren’t part of my parents’ lives as they grew up. Of course they got a mortgage when they bought the house I grew up in, but as far as I know that was the limit of their debts. I distinctly remember the day the mortgage was paid off in full and a bottle of champagne was popped.
Negotiating the finances of student life was not the huge issue it is now in the US, or ever increasingly in the UK. Back then (I do sound old, don’t I?) University tuition was 100% covered. Your local council would also provide a ‘grant’ to cover living expenses. This was means tested, and I received the full stipend minus a ridiculously small amount that my parents were meant to pay. This and more arrived in the form of care packages, stocks of food and train tickets.
When I arrived at University, the grants had recently been frozen to allow student loans to be phased in. The terms were generous and the amounts were small. This is where I came face to face with the prospect of accruing my first debts, and it didn’t scare me – but it did bother my parents! I had an interesting prospect: I didn’t actually need the money to live on; I had done well budgeting what I had and subsidizing it with summer work. What I planned to do with the money was travel to Hong Kong! It seemed so obvious to me at the time. I could get my hands on some low interest cash and travel! Why wouldn’t I do that?
My parents cautioned against it and very wisely too. However, my argument was: “Right now I have the time but not the money. Later I’ll have the money but not the time!” I talked them around and became the proud owner of, wait for it……an £800 loan! I can stand by that decision today because I quickly landed a well-paid job on graduation and was rapidly debt free again. It could have been a different story had I not gained employment so quickly.
This debt limitation has been a cornerstone of life to Mr. PIE and me. Yes, we were both very lucky to emerge from the UK education system with very little debt. Yes, we took on a large mortgage when we bought our house in the US, and we have carried car loans also. What we have done is paid our mortgage down quickly, and paid off car loans well before their maturity. We have also never carried any credit card debt. Not carrying debt has been a foundation of our life, and almost certainly a teaching from our parents.
What I have learned from my parents
I didn’t learn about investing – that’s for ‘other folks’. Instead I learned about budgeting and saving. I didn’t learn how to talk honestly about personal finance, instead I learned about hard work and frugality. It has taken many years before I fully appreciated what I did learn from my parents. It took living a little of the affluent ‘American Dream’, then trying to relearn frugality to fully appreciate what was ingrained in me. I can only hope Mr. PIE and I pass on equally valuable and quirky lessons to our kids.
What money lessons did you learn from your parents? Do you have their money quirks? What money smarts do you want to pass on to your kids?