If you found $100 on the ground, what would you do with it? That’s tough even for me since the smallest amount seems insignificant. I may pop it into savings. I may buy something that I’ve been thinking about buying and watching the deals. Maybe spend $50 and save $50?
What if you found $1000 on the ground (maybe it had a note that says “enjoy” implying it wasn’t lost)? That is much easier for me—I’d definitely save it for my future enjoyment. For some reason, a nice big chunk of money feels great when I save it. Maybe that’s why I feel some people tend to save more of their tax refund than a pay raise which is divided over 24-26 payments?
What determines how you decide to spend or save? That is by far the most important financial question you could ever answer. It starts with your very first dollar and probably only ends with the last spending option you have in your lifetime. How do you value your “enjoy life now” decisions? Please DO NOT live poor today in an attempt have a great future, unless of course you enjoy the extreme frugal lifestyle/challenge. We don’t know what will happen in the future. Also, everyone has a different type of enjoyment. Finding your family’s balance may be the key to lifelong happiness.
So back to saving. I had an unfair advantage from the start. I was one of about 500,000 lucky people who received a $1000 “gift” in 1982. The state of Alaska started sharing their oil wealth with residents, every year. But, my parents made me save my $1000 dividend in a new investment account. It sucked not being able to buy something cool like ALL my friends were doing in grade school, junior high, etc. Yes, I did get something good for my birthday and Christmas, but I had to wait until those special days. So each year my dividend was forced saved into my account and I wasn’t really sure why. When I turned 16 and wanted a car, I was sure that money—which was now into the THOUSANDS—was going to come to good use. NOPE, I had to get a basic $1000 junker car. In retrospect, that may have been a smart plan because a 16 year-old driver on icy roads, could lead to a serious crunch—which I did not. Over the next dozen years, these dividends climbed into the 5 figure range. Thank you oil revenues.
This is where my part of the savings habit gets interesting. I started my first summer job when I was 13 (I never told them I wasn’t 16) and earned almost $100/wk. My father told me he would match what I earned, I presume to encourage me from being lazy. He was shocked that I earned about $900 which he matched. I immediately saved his “matching” money and spent my hard earned income. I did this for the next 4 or 5 summers. The “parent match” can be a HUGE motivator, and if directed into a Roth IRA, a huge windfall in the future.
This is where I present a unique perspective my parents had on working. They didn’t mind my summer job, but did not want me working (for peanuts) during the school year, taking my focus away from studying. They said, “school is your job.” I didn’t mind that strategy because school was easy enough and I had my nights, weekends and holidays free. I also never fell into the income/spending mode that so many of my friends did with their paychecks. I had a small allowance to manage (track and spend) so all was well. Turns out sticking to, and completing my educational goals have been rewarding. I always had the education and experience to allow me to apply for any position—unlike some of my less educated peers. I believe my education level in my HR file, my experience, my great performance reviews and my positive attitude (I didn’t let work stress me out because I always had a money cushion) helped me avoid over half a dozen RIFs that affected many people I worked with.
My work experience started when I got a laborer job my second year in college. In my third year of college I shifted into a part-time professional technical job which set up my entire future. I still feel I had a great path. There’s a quote that resonates with me “the harder I work, the luckier I get.” Putting yourself into positions of challenge, may just lead to wonderful opportunities.
Throughout every job and EVERY paycheck, I’ve saved, we’ve saved. 20+ years of saving together adds up. 20+ years of anything adds up. Think of exercising for 20 years. You will be fitter and hopefully healthier. Think of 20 years eating crappy (I did) and your body will be, well crappy.
It’s never too early to start saving. It’s never too early to invest wisely. If only I knew about total market index funds (low fee, of course) instead of savings accounts, money markets, CDs, and bonds (which paid well in the 80’s and even 90s) I would have been Financially Independent YEARS earlier. It’s never too late to learn anything. You can save and learn now.
By the way, over 30 years later, that $10,000+ forced savings now makes up the foundation of my FI. Not just in dollar value, but in delayed gratification lessons and buying basic items to solve my needs instead of flashy/shiny new items. I’ve only come to realize this lesson in the past 10+ years. THANK YOU to my parents!!!